Unemployment is probably the most concrete cause of poverty. There is a high correlation of poverty and unemployment. It is clearly evident that through the years, the unemployment rate declined with the poverty rate. But to a large extent, many poor people actually work (the working poor). Although they may have a stable source of income, their salaries aren’t enough to offset their expenses. The root of their problem comes from underemployment.

Another fast-rising cause of poverty in relation to this is what is known as Market Discrimination. The existence of barriers in the labor market that either result in a concentration of members of those groups in low-wage employment or a reduction in the availability of opportunities is one of the common causes for the high poverty rates among minorities and female-headed families.

Female-headship and family size have also been important factors in explaining the high poverty rate. In the US, there has been a consistent increase in female-headed households, which, as noted earlier, have considerably higher incidences of poverty. Also, poor families tend to have more children than higher income ones. Household size directly increases poverty. More children in the family directly increase the probability of those in the home being poor because available resources have to be divided among more members. It also reduces the labor force participation rate since more time is required to take care of the younger family members. Those who start off poor are likely to be even poorer since they have larger families.

Another contributor to poverty is culture. Some people are born into an environment of poverty and have a lifestyle that maintains it. They may have poor attitudes toward work, a weak work ethic, a low aspiration for independence, and a lack of motivation to achieve. These are not conducive to success and make the individual tend to be largely dependent on public support. This Culture of Poverty argues that individuals brought up in poverty tend to acquire behavioral traits that lead to failure, traits that are passed on from one generation to another.

The last important factor that contributes to poverty is old age and poor health. People who fall under these mostly do not participate in the labor market or are retired individuals who must rely on savings, which may not last through their retirement. Along with longevity, health problems emerge as a serious issue for it eats up a significant portion of resources. Even younger families can become poor due to a family member’s affliction.

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