Financial Resource

January (Bureau of Labor Statistics, 2008).

                         Kelso (1994), argues that over the last forty years, there has been a major shift of American firms first to the west and then to the south. Part of this shift was due to the rise of the Cold War and the decision of the government to enlarge U.S. military power (kelso, 1994). He argues that as America elected to invest more in defense and in the aerospace industry, cities like Seattle and Los Angeles on the West Coast began to boom while the growth of a high technology and information based technology led to the growing affluence of California and the San Francisco Bay area. Later with the expansion of inter-state highway system and growth of jobs, markets were created in the south.

                         Iceland (2006) also argues that although the service sector of the economy has generated millions of jobs, but again polarized earning distribution based on educational attainment separates better paying jobs from poorer paying jobs. He supports a Marxian analysis of class conflict and exploitation and emphasizes on business owners favor hiring inexpensive labor to maximize profit. This also accounts for the inflow of cheap labor to the United States from Mexico and other countries. Greater access to credit has put cars, computers, credit cards, and even homes within reach for many more of the working poor. But this remaking of the marketplace for low-income consumers has a dark side. Roubini notes that, “Having access to credit should be helping low-income individuals, but instead of becoming an opportunity for upward social and economic mobility, it becomes a debt trap for many trying to move up (Grow and Epstein, 2007).

                          Inspite of public assistance and wide initiatives taken by both Federal and State governments, poverty still exists. Meticulous analysis of the situation and effective formulation of policies is needed to solve the problem of poverty in the United States. Scholars like Rank (2004), Blank (2007) and others have shown that the United States Government spends fewer funds addressed towards poverty than any other industrialized country. Thus a major structural failure is found at the political level (Rank, 2004). Most European countries provide a wide range of insurance programs, unemployment assistance, and wide universal health coverage along with considerable support for child care (Rank, 2004). Such social programs are far more generous than those in the United States (Rank, 2004). While, low-income families in the United States work more than those in other countries, they are still not able to make up for lower governmental income support relative to their European counterparts (Blank, 2007, 141-142).

                          The gross disparities among impoverished people in the United States along racial lines have led many scholars to speculate that institutional racism is responsible for much of the poverty in the United States. Racial discrimination in employment and   education contribute to the growth of poverty. Some scholars like Massey and Denton (1993) interpret the statistics in terms of institutional racism while others like Kelso (1994) interpret the statistics as evidence of deficiencies and suffering of blacks.   In spite of efforts to remove racism, slavery and Jim Crow segregation, Massey and Denton (1993) argue that racial segregation still exists and that the fundamental cause of poverty among African Americans is segregation. They argue that segregation has created and perpetuated a black underclass by limiting educational and employment opportunities. Massey and Denton (1993) have shown that Blacks were shown homes in racially mixed areas or areas adjacent to predominantly black areas.

                           Also, changing patterns of family formation are more pronounced among racial and ethnic groups. Family patterns are also one of the causes of poverty in the United States. There is a wide gender gap in wages. In 2004 the median income of FTYR male workers was ,798, compared to ,223 for FTYR female workers (DeNavas-Walt et al, 2005) Pearce (1978) argues that ‘poverty is rapidly becoming a female problem’. Iceland (2006) supports this statement and showed that in 2000, the female poverty rate (12.5%) was 26% higher than the male poverty rate (9.9%) (Iceland, 2006). According to Iceland, women have fewer economic resources than men, and they are more likely to be the head of single- parent families. It also leads to the greater likehood that single, divorced or widowed women will be poorer than their male counterparts because of less social security income or other retirement income in addition to higher female life expectancies. Women’s lower wages, lower retirement benefits and the increasing number of single mothers have led some scholars to talk about the “Feminization of Poverty.”

Federal policies

                       After the Second World War, by 1963, creation of jobs by President John F. Kennedy’s tax policies could not remove the problem of poverty. Poverty was still recognized as a major national problem. President Lyndon B. Johnson’s War on Poverty led to a host of programs that included Medicare, Medicaid, Food Stamps, Aid to Families with Dependent Children, and others. These entitlements eventually consumed half the federal budget and could not alleviate poverty. The U.S. economy had been devastated by the recession of 1979-83 when the United Statess manufacturing infrastructure was shattered by the Federal Reserve’s skyrocketing interest rates causing unemployment to shoot up by sixty-five percent in four years (Cook, 2007). By the end of the 1980s the economy was in another recession, leading to the election of Bill Clinton who in 1992 replaced the incumbent George H.W. Bush. The investment boom of the 1990s was fueled by foreign capital lured in by the Treasury’s strong dollar policies. Jobs were created as the dot.com bubble expanded, trade barriers fell, and utility trading giants like Enron took off. NAFTA was enacted to promote free trade, welfare-to-work brought low-income women into the job market, and the Earned Income Tax Credit was extended. The party ended when the stock market crashed in December 2000 and millions of people lost their retirement savings and other investments. Recession was returning even as George W. Bush was being declared president by the U.S. Supreme Court in December 2000. The economic crisis deepened after the September 11, 2001 attacks when .4 trillion in wealth vanished during the worst five days of the stock market since the Great Depression (Cook, 2007). Cook (2007) argues that today, poverty is becoming a national catastrophe. Cook (2007) argues that from 2002 through 2006 the economy was floated by the housing bubble, with many lower income people getting into homes of their own through the proliferation of sub prime mortgages. With the financial woes in late 2008, many American citizens are left with inflated home prices and no way to pay for them.

                      The 1960’s policy initiatives and declaration of ‘unconditional war on poverty’ by the then president Lyndon Johnson marked a discrete change in the federal government’s willingness to intervene for the purpose of improving the economic situation of poor Americans. Despite the billions of dollars spent on programs like CETA (Comprehensive Employment Training Act), The Manpower Development and Training Act, Head Start, and the Elementary and Secondary Education Act, the government efforts to deal with the origins of poverty have met with minimal success. During this period, implementation of the Social Security old-age program insured virtually all retired workers against the risk of outliving their savings. The Social Security Act of 1935 sought to protect the incomes of those who did not work because of age or a poor economy by establishing a federal framework for unemployment insurance, old-age benefits, and assistance to women. In early 1964, the two most pressing priorities of President Johnson’s antipoverty agenda involved passing a massive tax cut designed to stimulate the economy and organizing a task force to shape the ‘War on Poverty’. The Economic opportunity Act (EOA) signed by Johnson created a long list of programs designed to help individuals develop marketable skills, political power, and civic aptitude. But this anti-poverty legislation oversaw other programs like Community Action Program, Job Corps, VISTA, Head Start (1965), Legal Services (1965) which were not included in its framework. While extensive programs like the Food Stamp Program, Medicare for elderly, Medicaid applied to qualified poor residents, the Elementary and Secondary Education Act for poor students overshadowed the EOA. The Higher Education Act eased the financial burdens of millions of college students. The Civil Rights Act opened up new spaces in the American marketplace, while the Voting Rights Act did the same for the political marketplace. The Fair Housing Act established an important base of law to combat housing discrimination. As a result the EOA slowly lost importance. Again, Murray (1984) argues that welfare benefits had soared so high so as to make living in poverty a meaningful option for the poor. Even Burton (1992) has supported the above viewpoint and argues that the programs have done more to cause poverty than to alleviate it.

                          When Nixon assumed power, he tried to deal with poverty in a more direct way than

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