Cycles of Poverty: Inheritance of Poverty vs. Inheritance of Wealth

Alex Smith
6 min readAug 15, 2023

Now, to explore poverty’s cycles we must do our best to explain how it both propagates, and is inherited from person to person. The chart below attempts to illustrate this:

Now with the way poverty is inherited in the U.S. I feel I must explain a few things as to what is responsible for people falling into poverty:

Decreasing wages: Wages are decreasing constantly in value due to inflation:

Now this illustrates only part of the picture, but already there must be something up:

Now this image is incredibly striking in terms of those making the minimum wage. This was based on 2014 data, and so that value according to the BLS CPI calculator would be $5.67 today in 2023 dollars. Now, how the fuck would anyone be able to live off $5.67 an hour is the first question, and the second question is why is that still what minimum wage is exactly ($7.25, it really is all very confusing now isn’t it)?

Now, given that there is no mandate for raises, many positions will remain at this wage, and there is no incentive for an employer to raise these wages for folks, as inflation increases by any percentage (of which it has been continually increasing by above 0% since basically forever) those with stagnant wages will see the value of their wages decrease.

Meanwhile, we see that those who do work at decreasing wages working jobs at increasingly higher hours, this leads to burnout, especially if there is other outside obligations they have (e.g. family members, children, etc.).

Now those children they have, they also stand to inherit this poverty. Given that the folks in poverty often work ever-increasing hours with little to no ability to engage with their kids, they either are never there or when they are, are hard to engage with as they are absolutely exhausted. This can lead to situations where kids are taken away from parents (and put into the ATROCIOUS foster care system) which can exacerbate the struggles that the child may face.

NOW, I want to disclaim here that there are those that there are parents I am sure, who are able to do it all (however, I believe the probability of burnout is much increased as a result). I also want to disclaim here that the fact that they are in this position does not make them terrible parents, they are instead products of their circumstance. There is much complexity and nuance to this situation for a later date perhaps.

Back to the subject at hand, overall there is a higher probability that not only do the kids of those in poverty will face larger barriers, early in life, but there is also a HIGH probability that these kids will not graduate high school, let alone college. College especially is one that guarantees (although at a decreasing rate) additional social and economic mobility that graduating high school cannot provide.

Education is an asset or more specifically a degree is an asset that cannot be transferred, only attained at an “accrediting institution.” As we are continually seeing the cost of such a degree increase further and further, there lies another barrier that those who are already so poor that they can hardly afford to survive cannot afford to cross without taking on debt.

Now this all highlights one of many of our radically inaccessible institutions, but it doesn’t even begin to scratch the surface when it comes to inflation and the intensity by which those with no means to change their circumstances live.

Inheritance of Wealth

Now this may seem to be more self-explanatory than inheriting poverty, and yet it is hard to explain without explaining how it is hardly ever lost. There are plenty of stories of rags to riches out there, and a very lacking amount of riches to rags. So I will also try to explain this idea of entrenchment of wealth alongside it.

Now as one can see by this chart, there are a few woefully entrenched institutions. One of which is the current way that wealth is taxed, which as one of the largest oversights will get its own article entirely. One of the easier ones to explain is how the transferring of assets, and especially that of the inalienable and non-material assets. The non-material assets are the ones that are not talked about remotely. The non-material ones are non transferable by normal means, and yet make them even easier to monopolize.

These assets include education, which with a high initial investment, despite its loan opportunities (which are unfortunately predatory overall), make it inaccessible to anyone without a significant income or access to connections to such. This is especially true for “merit-based admissions.” Which are unfortunately disguised ways by which wealth and access to wealth is still required to access these institutions. As many of the extracurriculars, team sports, science fairs, and competitions cost a growing amount of money for parents to enroll their kids in them.

Now this also doesn’t take into account that high school students or even middle school students may have obligations to their family’s business or to help provide for a family’s living expenses by working. This in itself can culminate into tough decisions of whether to support their family or to pursue their own (quite expensive) higher-education. Which for many can mean being effectively shunned by their community, or feel enormous pressures to succeed.

Networks, Another Immaterial Asset

A Bachelor’s degree and its importance cannot be understated, as the income that is possible with a degree far exceeds that of a high-school graduate. It is even more poignant that internships and master’s degrees are the becoming more and more necessary to stand out among applicants for entry-level roles. This also is often true to advance further along career paths as well. All of these allow for greater and greater access and accumulation of wealth which leads to further wealth for their children and their children's children.

The other immaterial asset is one’s network, the people that one is connected too through their family, friends, and co-workers. The people who can help someone in their time of need. This is also an asset that one with wealth can transfer easily to their kids by the same means of preparing them for higher education, through extracurricular activities which often double as childcare.

When one thinks about this, and recognizes the ridiculous costs associated with these programs (which is often due to the demand for them from these same people) it is hard not to recognize the inherent inequities that are set in stone as folks continue to .

Education and Networks are two of many variables that I will explore in other articles, but hopefully this provides a good overview of its influence on the entrenchment of wealth.

Consequences

It is then those that live in this cycle of poverty who often find themselves unable to escape their situation without assistance. It then comes down to who they know, the income they are able to make after graduating with a degree and student loans, or how lucky they end up being in their circumstances they were born too. For those lucky enough to be born to considerable wealth, they will much more likely than not never have to face the grim realities of those facing considerable circumstances.

It is this cycle, and the fact that pure luck resides at its center that makes the cycle of considerable wealth and poverty so incredibly and blatantly toxic to us residing in the United States. Especially when we rest a large part of our country’s reputation on the fact our country is full of opportunity, and that it is instead grit and gumption that belies a person’s capacity for generating wealth and independence.

Although this work only scratches the surface of wealth and poverty’s cyclical natures, I believe it roughly illustrates the traps that our country’s economy and especially its issues with rampant inequality lie.

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Alex Smith

Your not-so-average early twenties cishet white male activist with a huge heart and a penchant for dismantling societal institutions :)