How can we reduce poverty in the US?

Poverty and income inequality

The weakness of the social security net is undoubtedly one of the downsides of America's economic model. Low incomes and wealth reduce not only educational opportunities, but also life expectancy. One of the most important and well-known differences between Europe and the USA is the extent of income inequality. These differences have worsened drastically in the last two decades of the 20th century, for example between 1977 and 1999 the income of the richest hundredth of citizens rose by 115 percent. American unemployment insurance is a matter of state.

Nevertheless, there are many basic similarities, for example that the state of unemployment could not have been caused by one's own fault, unemployment benefit is usually paid for a maximum of 26 weeks, recipients of unemployment benefit have to report weekly and can be obliged to take further training measures, the amounts in unemployment insurance is paid exclusively by employers in most countries, and the average replacement rate is around 35 percent of last earnings. Among various factors, the following contributes to the widening gap between rich and poor: First, much of the wealth of the top class is based on the poor's low-paid work.

A good example is the department store group "Wal-Mart", which is the largest private employer in the USA and at the same time the largest exploiter. Second, a significant amount of wealth in the financial sector is created in ways that are inscrutable to most, such as excessive debt and late payment interest, dunning fees and account management fees. And thirdly, the gentrification (i.e. the refinement of a district through both population changes and restoration and renovation activities) in many urban residential areas is mostly pushing the poorer urban population to the outskirts. In addition, income inequality is making education increasingly a privilege of the upper class, as the extent to which "normal employees" can afford tuition fees of $ 40,000 or more per year without a scholarship is obvious.

In the United States, the proportion of income earned by the top hundredth of US households has grown from seven percent to 16 percent since 1979, while that of the bottom four fifths of society has decreased by seven percent.

Every fifteenth US citizen now lives below the poverty line. About 20.5 million people earn 50 percent less than the official poverty line says. Having to live on the equivalent of 4,000 euros a year leads to an increase in the dependency on food stamps. For nearly 46 million people in the United States, these food stamps are essential, and their daily route takes them to so-called soup kitchens.

Poverty has not decreased in any of the 50 US states; in 40 of them it has increased since 2007. The US states in the south and the Midwest are particularly hard hit. One of the contributors to this development is undoubtedly the crisis that began in 2007 with the US real estate crisis and developed from a banking and financial crisis to an economic crisis that now affects the whole world. The economic effects of such crises are mostly borne by the poorer sections of the population, which among other things explains the enormous increase in poverty in the USA. But since every crisis brings not only losers but also winners, one question remains open: Who are the winners here?

The introduction of the health reform in 2010 shows similarities with the European health system. Perhaps mutual learning from one another is the new way forward, and perhaps an orientation on how the currently discernible fluctuating recovery of the US economy has come about could also help Europe to overcome the economic crisis.