The Failure of the U.S. Labor Market to Distribute Gains

Failure of U.S. labor market to distribute gains: a cause of poverty

The issue of poverty in the United States is complex, and no one root cause is sufficient to explain why, in a wealthy developed nation, such poverty should exist. However, a principal factor which may contribute to the nation’s poverty lies in problems with the U.S. labor market. According to Freeman, while the U.S. has witnessed a “substantial growth in GDP per capita” (20), only a relatively small portion of the population, the wealthiest Americans, has seen the benefits of that rise in GDP. Many poor and working class Americans do not have access to this wealth and receive little actual benefit from the nation’s increased wealth and prosperity. While productivity has increased in recent years, the gains from the nation’s economic growth has not increased the real wages and benefits for U.S. workers (Freeman 20). The U.S. labor market fails to distribute gains to low wage workers, resulting in their poverty, which in turn, puts their children at a higher risk for being in poverty themselves.

There are some who claim that the real reason why poverty exists in the U.S. is not because there is a problem with the labor market that makes it difficult to earn adequate wages, but, instead, that the poor are simply unwilling to work. One such proponent of such a view is Lawrence Mead. Mead claims that “the hallmark of today’s poor adults is that “they seldom work consistently,” and “are notably less self-reliant” (211). Furthermore, that, while “much of poverty could be blamed on the fact that unskilled wages were too low for many people to escape poverty” in the past, nowadays it is a “simple fact that rising wages has pulled most of the working poor out of pover...

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...he nation’s prosperity as increases in benefits and wages to poor and working class Americans. Most of the gains due to the rise in the GDP in recent years wind up in the hands of the wealthiest of Americans. The increase in income inequality has cause stagnation in real wages among low skilled workers and has led to an increase in poverty. Unable to gain the education necessary to escape the cycle of low skilled jobs with little chance of upward mobility, children of parents who are in poverty stand a higher chance of being in poverty themselves. The solution to the problem of poverty is not simple; especially when it may involve changes in the way the U.S. labor market functions. However, as it stands now, failures of the labor market lead to higher rates of poverty, and unless the problem is addressed, we are unlikely to see a reduction in the U.S. poverty rate.