Full Time Poverty: Inadequate Income in a Recession

Poverty due to inadequate income is a big problem in the United States and in other countries around the world as well. Inadequate income is used to describe the level of income of people who have jobs but do not make enough money to support themselves or a family with. No one who works a full time job should be listed at or below the national poverty level. It has become a bigger issue in recent years as the cost of living rises and income does not. Inadequate income causes many problems in the economy.

As the cost of living has increased, people who were living paycheck to paycheck are now ‘robbing Peter to pay Paul’ each month. Late fees on the bill they didn’t pay last month eat into the budget for the next month and  people feel trapped because there is never an opportunity to get ahead of bills and catch their breath.

Desperation may cause a person to turn to credit cards or cash advance companies to try to get a little relief from the constant pressure. Credit cards are a temporary solution that creates a larger problem in the end. Credit card rates may appear to include low interest but if you miss or are late with a payment, the interest rate increases. Minimum monthly payments are now going to pay interest only, depending on the balance, and the principle balance never drops. Cash advance companies charge a ridiculous amount of interest for a loan that comes due on the borrowers next pay day.

Americans who work a normal full time 40 hour week for minimum wage do not make enough money to pay for the necessities, much less anything else. In some cases, companies are placing a bigger burden on employees when it comes to healthcare premiums and deductibles than they have in the past. Increasing health cost are increasing each year by at least as much as any pay increase and in some cases, employees cannot afford to pay the premiums and deductibles required to have health insurance.

Americans who earn inadequate income do not have money to spend on new homes or cars. They aren’t able to take vacations and have to curb holiday spending to make sure all of their bills are paid. Living at or below the poverty level does not lend itself to aiding in stimulating the economy.

Increasing the minimum wage did not help to stimulate the economy as most employers that pay minimum wage opted to leave available positions unfilled and divide the work among remaining employees rather than allow a wage increase that would hurt their profits.

Right now, America seems to be a country of haves and have nots. The Haves being companies, employers and special interest groups who are looking to protect their profit margins at the expense of their employees and the American consumer. The Have Nots will continue to struggle just to stay afloat and make the best decisions they can to keep from drowning.

The recession has shown us just how many people are working for inadequate income and living week to week to make ends meet. The numbers of people having to file bankruptcy have increased in the past couple of years. These filings are not by people who were trying to live above their means. They hadn’t bought homes and vehicles they couldn’t afford. They hadn’t run up credit card debt on extravagant purchases. They were making enough money to barely hang on and one misfortune, like an injury or illness, had put them over the edge.

A budget for people who live at the poverty level is like a house of cards. Just a small amount of pressure from an unexpected source will cause the house to collapse and leave their finances in a mess that seems overwhelming.  Their options so limited that they can’t find a better solution than bankruptcy as a way out. The solution does not appear to be raising the minimum wage again. It didn’t work before.  A better solution would be to regulate healthcare premiums and lower the taxes taken out of the income so that people are able to take home a larger portion of their income.

Inadequate income is a problem that will have to be addressed and corrected before the economy can rebound from this recession.  The Haves are going to have to cooperate in order for the Have Nots to be able to earn and keep enough of their wages to survive.