Poverty

According to the U.S. Census Bureau About 14.8% of Tennessee’s population is considered to be in poverty. While the typical late 20th Century response to poverty has been government subsidies, the evidence indicates that it is time for a new approach to addressing the poverty issue. First of all it must recognized that poverty is not caused by low wages. People not being able to get full time employment causes poverty. Minimum wage laws limit the number of people employers can hire. Secondly minimum wage laws prohibit an employer from hiring someone with very few skills at a low pay rate so that they can get experience. Workers with low skills cannot get work due to minimum wage laws. This means that these same workers cannot get necessary work experience to move on to better paying jobs. In short, minimum wage laws cause unemployment. Evidence indicates that as the number of jobs subject to minimum wage laws increased, so did unemployment. Secondly the State causes unemployment with strict business licensing laws and other regulation of businesses. These requirements make it very costly for the poor to start their own business. The government creates a whole level of bureaucracies to administer all these business regulations. Taxpayers must foot the bill for bureaucrats who only regulate and produce no wealth and government subsidies for the poor. Ultimately the poor suffer also. For example when a landlord must pay for business licenses and high taxes (to support bureaucrats and subsidize the poor) he will have to raise the rent he charges his tenants. A full deregulation of all business will allow the poor to get the experience they need to advance in existing companies or even start their own business. Apple computers is just one example of a company started as a home business. Between 1991 and 1995 3.4 million jobs were lost by the largest U.S. companies, 3.8 million jobs were created by the smallest ones. 90% of jobs created during this period came from companies with less than 100 employees. Statistics show that the poor who can get practical experience in a part-time job can rise up from poverty. Unfortunately statistics also show that the urban environment in which many poor find themselves combined with our current welfare system entrap the poor in perpetual poverty.

Let us look at two possible models for caring for the poor. In both models we will be spending $10.00 to care for the poor.

Model 1:

We pay $10.00 in taxes to help the poor

$1.00 goes to the tax collectors
$1.00 goes to the Federal Welfare Administrators
$1.00 goes to the Tennessee Welfare Administrators
$1.00 goes to the County/Local Welfare Administrators
$6.00 goes to the poor

Model 2:

We give $10.00 to a local charity

$1.00 goes to administer the local charity
$9.00 goes to the poor

Consider who is being helped in each model. Consider which model will do more for the poor. When taxes are reduced more can be given to charities. When government regulations on working and employment are removed more people can begin to work and earn a living wage. When minimum wage laws that hurt the poor and unskilled and uneducated workers are repealed, more people will become employed for better pay.