United States lived below the poverty line, as defined by the U.S. Census Bureau, in 2005. This percentage was significantly larger for particular population groups, specifically children, minorities, and individuals living in certain geographic areas such as inner cities. Economic theory suggests that when poverty affects a significant portion of the population, these effects can extend to the society at large and produce slower rates of economic growth. This is borne out by the fact that areas of the United States with higher poverty rates experience, on average, slower per capita income growth than more affluent areas.
Poverty results in costs both in terms of an outlay of funds by government agencies to support various programs to assist those in poverty in addition to economic costs associated with productivity losses that affect the economy as a whole. This report stated that individuals living in poverty face an increased risk of adverse outcomes including (a) poor health and (b) involvement in criminal activity. Both or either of these adverse outcomes usually results in reduced participation in the labor market.
While the mechanisms by which poverty affects health are complex, some research suggests that adverse health outcomes can be due at least in part to limited access to health care, as well as greater exposure to environmental hazards. The report also acknowledges that poor health can be both a cause and an effect of poverty. Specifically, poor health often pushes families into poverty as a result of the loss of income of a wage earner, and the medical costs they incur continue to force individuals or families further into poverty. Poverty tends to limit individuals' ability to remain healthy and develop job skills. This in turn decreases their potential to contribute talents, ideas, and labor to the economy.
Poverty is associated with lower educational quality and attainment, both of which ...