Inequality and the Causes of Poverty in North America

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SEATTLE — In North America, an estimated 98 million people live in poverty. What led to so many people living below the poverty line? Possible causes of poverty in North America range from low wages, to worker inequality, industry diversification and a widening gap between the rich and the poor.

The United States has 12.7 percent of its population (40 million people) living in poverty; seven and a half percent of Canadians (4.9 million people) live in poverty; and nearly half of Mexico’s population is living in poverty (53.3 million people).

Poverty in Mexico

Mexico has a severe problem with 45.4 percent of the population living in poverty. The number is staggering when one considers that Mexico ranks among the top 11 wealthiest countries by GDP. Critics argue that Mexico’s tax system benefits the wealthy and offers little redistributive qualities since it taxes consumption more than income. This requires poorer citizens to pay higher percentages of their income.

A recent report by Oxfam titled, “Extreme Inequality in Mexico,” found that money also is growing in influence within Mexican politics. Consuelo Lopez of Oxfam expressed his reservations about this topic in the following statement: “We are concerned about the excessive influence of private economic powers over public policy and it is alarming to see how this affects the exercise of citizen’s rights.”

Poverty in the United States

The situation in the United States is relatively less severe but the causes of poverty in North America do tend to follow a trend. According to the U.S. Census Bureau’s July 2016 statistics, the United States has a population of 325,719,178; a median household income of $55,322; and a per capita income of $29,829.

Interestingly, the United States spends more on national defense than China, Saudi Arabia, Russia, United Kingdom, India, France and Japan combined.

Philip Alston, the United Nations emissary, surveyed the United States in 2017 and found that “the United States is one of the world’s richest, most powerful and technologically innovative countries; but neither its wealth nor its power nor its technology is being harnessed to address the situation in which 40 million people continue to live in poverty.”

The United States provides Social Security, food stamps, earned-income tax credit and so on that keep 40 million people out of poverty; without these programs, poverty would be nearly doubled. In addition, half the jobs in the nation pay less than $34,000 a year, according to the Economic Policy Institute; a quarter pay below the poverty line for a family of four — less than $23,000 annually.

Wealth Inequality in North America

Wealth inequality is a recurring theme among the causes of poverty in North America. According to Citizens for Public Justice, one in seven Canadians live in poverty. The top 10 percent of Canadians hold 47.9 percent of the country’s wealth while the bottom 50 percent hold less than 6 percent.

Prime Minister Justin Trudeau was elected on a platform of tax fairness. Since he won his election in 2015, his government has pursued small private corporations for exploiting loopholes, while ignoring the problem of tax loopholes used by larger corporations such as moving money through offshore tax havens.

Poverty in Canada

Canada’s five most profitable corporations, the “Big Five” banks, account for a disproportionate amount of tax avoidance: $5.5 billion in 2016 alone.

Living Wage Canada says that 70 percent of Canadians living in poverty are working, but not making enough money to cover living costs. There has been a five-fold increase in minimum wage work in the past 17 years in Ontario. At the same time, corporate Canada is sitting on an estimated $600 billion in “dead money” that does not benefiting the economy.

The biggest factors contributing to poverty in North America are tax laws that ensure loopholes for the rich and an overabundance of low wage jobs. Across the continent, corporations and wealthy individuals dodge taxes that detract from what would go to help 98 million people.

It’s easy to say “why don’t those 98 million just get a job,” but that assumes they don’t already. Most available jobs offer wages that aren’t enough to stay above the poverty line, and even those can be difficult to obtain. Keeping these realities in mind while also implementing poverty-reduction tactics will hopefully decrease these countries’ incidences of poverty with each passing year.

– Sam Bramlett
Photo: Flickr

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