Poverty Treadmill

By Guest Writer Adam Kapusin

I grew up in the Central Florida town of Leesburg. It wasn’t a large town, but we did have a Walmart AND a Target. My family was working class and made enough to get by and provide me with what I needed. My house was a double-wide mobile home that my stepfather purchased in the 1980s. Looking back at how much my parents made and what our bills were, I could tell that we were getting by, but there was very little left to actually improve our lives.

While I was able to leave for college thanks to the Florida Bright Futures Program (Thank you, Governor Chiles), many high school graduates in Leesburg aren’t as fortunate. Most families in Leesburg aren’t able to financially support their adult children in any way, so once they graduate high school, they are on their own. So bare with me as we go down the Math Rabbit Hole.

According to US News, the graduating class of Leesburg High School was approximately 325 students. Of those, only 47% (152 students) were proficient in reading, and 40% (130 students) were proficient in mathematics. If we assume that half of those proficient in math and reading can get into college, that’s 65 students from the graduating class of 325 who are pursuing the education route to better their station in life. Furthermore, let’s assume 7.5% of the graduating class go into the military, either through JROTC or a recruiter. That’s another 24 students who are leaving the town to improve their lives. Let’s also assume another 10% (33 students) move into a trade field (i.e., plumber, electrician, auto mechanic, etc…), that’s 325-65-24-33 = 203 (over 60%) high school graduates who will need to make a living immediately.

Here’s the scary truth: Those 203 high school graduates will be in a perpetual state of poverty. These are those that society leaves behind. Over 60% of a high school’s graduating class every year is left to rot. Don’t believe me? Here’s some more math:

Let’s look at the life of one of those 203 high school graduates. Call him Bob. Bob isn’t allowed to live at home for long because his working-class family can’t afford to support him, so he needs to move out on his own. His parents give him two months to find a job and save up enough money for a place of his own because that’s the way they did it. First, Bob needs transportation. He is able to find an older model car. Secondly, Bob needs to find a job. Bob gets a job working at the local McDonald’s in Leesburg making a crisp $11/hour. Bob hears that this is over 50% higher than the minimum wage jobs out there, so Bob is excited.

Here’s the breakdown of Bob’s paycheck with a week of 40 hours. $11/hour * 40 hours = $440/week (for reference, this is over $100 more than my mother made a week when I was going up). Bob’s federal income tax bracket is 12% (which is $52.80). Social security payments are 3.5% (which is $15.40), and health insurance is $50/pay period. This means Bob is bringing home a whopping $321.80/week from his job at McDonald’s.

Now that Bob has a job, he’s able to save up for an apartment of his very own. Since he’s not paying for rent or gas, he decides to save $200/week from his paycheck for a security deposit. He then looks for an apartment. One bedroom, one bathroom apartments in the town of Leesburg are going for $750-$800/month and require first’s and last’s month’s worth of rent as a security deposit. Bob is able to save up, and by the two-month deadline that his parents placed on him, he has the $1500 security deposit and can move into his own apartment.

Now is when the really hard part starts. As discussed, Bob brings home $321.80/week. Most months are four weeks, so this means that he brings home $1,287.20/month. After paying his $750/month rent, Bob has $537.20. His power bill is approximately $75/month, so he’s down to $462.20. Bob is responsible and prefers to make his meals at home. This allows his food bill to be close to $50/week or $200/month. This brings him down to $262.20. He needs a phone so that McDonald’s can reach him in case of shift changes. He’s frugal and gets a Cricket pre-paid telephone for $50/month. He is now down to $212.20/month. Gas for his car will run him $30/week or $120/month. He’s down to $92.20. Factoring in a singular streaming service for some form of entertainment and Bob has $80 at the end of each month after necessities.

Bob is living on his own. He’s surviving. Bob can’t save up for repairs for his older model car or to purchase a new one. He can’t afford to take a day off from work. Bob’s gross pay is $88/day in a typical eight-hour day, which is more than he has left over after paying his basic needs.

And here’s the real kicker. Bob has no way of improving his life other than pure luck. He can’t afford to save up to go to a trade school or college. He has to rely on his managers to see his hard work and reward him with a merit increase of $0.25-$0.50/hour (for reference, an increase of $0.50/hour would increase Bob’s net pay to $338.60/week. A whole $17 more per week) or hope that his managers promote him to a better paying job.

The majority of high school students graduating now are being thrust onto a poverty treadmill. They are thrust into a world that they aren’t prepared for, working jobs that only allow them to survive with no way of getting out. This is just for a single person without any children. As these young adults start having families, they realize that they are working extra hours solely to afford to put their children in daycare. Most daycares are around $150-$250 per child per week, which is close to $1,000/month per child.

What’s the solution, then? The easy answer is to raise the minimum wage to give everyone more money to pay their basic bills. But, in reality, this doesn’t work too well. Corporations are designed to make as much money as possible, and if you raise the labor costs, they will find ways to offset those costs. Either by raising prices or cutting workers or worker hours.

The more practical solution is to decrease the wage gap between executives and the average worker. It is not uncommon for an executive of a publicly-traded company to make 1,000 to 2,000 times what the average worker at their company makes. This is absurd and counter-productive. We currently have a system that puts most of the money into the hands of those who don’t spend it on things that help the economy. Providing an executive with an extra $1,000,000 would allow them to purchase an extra house or a few more crypto-currency coins. Providing 10,000 workers with an extra $100 would provide for additional jobs through retail and manufacturing.

This is why my solution to get the American people off the poverty treadmill is to cap what executives can make based on the average salary of their workers. There is little reason why an executive should make more than 500 times what their average workers make. If the average wage among non-executive positions at a company is $50,000/year, the top executives should make no more than $25,000,000/year. If their contract says that they should, anything over $25,000,000 should be redistributed equally to all full-time employees. This would put the money back into the hands of those who keep the economy chugging along and inspire more loyalty in the company as the better the company does, the more money the employees make.

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