Several months ago, I made an offhand reference to the amazing article by Gillian White in The Atlantic. It was one of those articles that just hit me in the gut and significantly redirected my thinking. I found my mind slipping back again and again to the ideas in that article.
Last summer, I ended up reading the book by Peter Temin, which is heavily referenced in the article. The book largely expands upon the issues in the article, which can be summed up as saying that the factors that put someone in an impoverished situation keep them in that impoverished situation.
I want to go over a few quotes in the article. First,
Temin identifies two types of workers in what he calls “the dual economy.” The first are skilled, tech-savvy workers and managers with college degrees and high salaries who are concentrated heavily in fields such as finance, technology, and electronics — hence his labeling it the “FTE sector.” They make up about 20 percent of the roughly 320 million people who live in America. The other group is the low-skilled workers, which he simply calls the “low-wage sector.”
Temin basically divides America into two groups based on the type of job they have. Does the job require significant personal skill and tech savvy, or does it require very few skills going in the door? That’s the key dividing line. The skilled, tech savvy jobs tend to earn a good salary and have good benefits, while the unskilled jobs – not that they don’t require skills, but that those skills aren’t required to come in the door – tend to earn low salary and have poor benefits.
This matches up well with my own experience. The only exceptions to that rule are jobs that have a high stress or personal threat level, such as that of a prison guard. Those jobs often pay fairly well and have good benefits while not requiring a strong skill set or tech savvy coming in the door, but they come with a ton of stress and threat. In other words, if you don’t have tech savvy and extensive skills, the only way to quickly get a job that pays well is to take on some other form of stress or threat.
And how is one to move up from the lower group to the higher one? Education is key, Temin writes, but notes that this means plotting, starting in early childhood, a successful path to, and through, college. That’s a 16-year (or longer) plan that, as Temin compellingly observes, can be easily upended.
Education is the key for moving from one group to another. In general, the only way to really pull this off in a lasting way is through one’s children, which is a multi-decade process. A really concerned parent in the lower group can actually push their child into the higher group.
This is what my parents did for me. My father was a factory worker and a jack-of-all-trades, but he was not a skilled or tech-savvy laborer beyond what he picked up in his workplace (I’ll give him credit, though – he was open to a lot of training that his coworkers were not and this opened some avenues for him as his factory became modernized later in his working years). My mother was a homemaker. My family growing up was clearly in the “lower” group.
However, my parents did everything they possibly could to set me up to be in the “higher” group. They stretched every dollar to give me tools for learning and access to every learning material they could easily grab. They basically shoved me out the door to college and insisted that I build a social network there made up of people on a track to success. I owe them more than I can ever measure.
A third quote:
For minorities especially, this means contending with […] trends Temin identifies earlier in his book, such as mass incarceration and institutional disinvestment in students, for example. Many cities […] lack adequate funding for schools. And decrepit infrastructure and lackluster public transit can make it difficult for residents to get out of their communities to places with better educational or work opportunities.
(Note: I edited this quote a bit to keep the discussion on track, as this begins to touch on huge societal issues that are far outside the scope of a personal finance site. I’m trying to keep the focus on things that individuals can control to improve their destiny and the destinies of those in their immediate family.)
There are many areas of the country, both rural and urban, where there is simply a lack of investment in schools and in infrastructure, which makes it hard to receive any kind of competitive education in that area. Beyond that, there often aren’t transportation options to be able to take a child to another area where better educational options are available.
Often, the parents in those situations are working, but they’re not making enough to be able to afford to move to a higher cost of living area and they don’t have the spare time to take their kid across town to a different school every day when they’re working two jobs. So, the child goes to the decrepit school near their home, surrounded by kids in similar circumstances along with a lot of kids coming from backgrounds where there is very little structure at all. Those schools are underfunded, too.
A child has to have an extremely motivated parent (and some luck, and probably a few caring teachers willing to stick it out in a district like that) in order to build a brighter future for themselves.
A final quote, and this is the key one:
He offers five proposals that he says might help the country return to more equal footing. Some are fairly clear levers that many before him have recommending pulling: expanding access to and improving public education (particularly early education), repairing infrastructure, investing less in programs like prisons that oppress [the] poor [and] minorities, and increasing funding for those that can help build social capital and increase economic mobility.
These are great moves for a society focused on maximizing opportunities by those trapped in poverty, but no matter how much the government helps, it comes down, at least in part, to helping yourself and helping your family. Someone might give you the best ladder in the world, but it’s still up to you to climb it.
Obviously, at first glance, what you’ll see in Temin’s proposals is that they’re oriented toward a better society in a broad sense where there is something closer to equality of opportunity.
However, if you really look at those steps for a moment, it’s pretty easy to translate those steps into individual action. Those things are steps that anyone who is self-motivated to improve their situation can start taking today.
I’m going to be the last person to claim that it is easy to do so. It’s not. When the deck of societal infrastructure is stacked so strongly like this, it’s going to take a lot of personal work to overcome it. The recipe is there, though.
You can translate almost every elements into individual behavior that can help you improve your current situation now, without waiting around for society to fix itself.
Here are six key steps for handling some of the extra challenges that are part of escaping the poverty trap, both for yourself and for your family.
Get an education.
As the article makes clear, one of the key differences between the low-income group and the high-income group is education. People in the high-income group bring skills to the table that companies are willing to pay well for, and the only way to get those skills is through education.
How do you do this, particularly in an area where tuition at a university is almost backbreaking in its cost and takes years and years to complete? That shuts out many people in the low-income group, right there.
The best route is to take on a serious pattern of lifetime learning in your own life and direct that learning at a specific job you can see in your own life. Go to your workplace and see if you can identify people who are working at jobs that are in the high-skill high-pay group. Who are the people making decisions? Who are the people handling the highly technical tasks? Go up to those people and start a conversation. Ask what you really need to know to have a job like theirs. Ask, very directly, what you can do to get your foot in the door there.
Take what they tell you seriously and work at it. Devote time every single day to acquiring those skills that they’re talking about. The thing is, you have the resources available to you to do this. You have the internet, you have free public libraries. You just have to use them.
Start learning. Read the books they suggest. Work on the skills they suggest. Don’t worry about getting a formal education; that might come down the line, but it doesn’t need to happen quite yet.
I recommend setting aside at least an hour a day for devoted, focused learning. If you’re struggling with a topic, back up and read about the basic things that you’re not understanding. Put the things you’re learning into practice as much as you can. If you struggle with the literacy aspect, practice and practice and practice some more by reading books of all kinds that push you just a little and then just a little more so that you’re caught up, even if this means starting with a simple book. That’s fine. If you dedicate an hour a day to learning, you’ll improve faster than you expect.
More importantly, do not be afraid to ask for help. Ask questions of all kinds. Never stop asking questions. When you get an answer, try to process that answer and incorporate it into what you know.
This isn’t naive advice. I witnessed a janitor become a computer programmer mostly because he read books in his spare time and asked questions all the time. I witnessed a fast food worker become a regional manager. How? She read books and asked questions all the time. Both of those people chose to educate themselves outside of the classroom using free resources, and their genuine desire to learn became obvious to those around them, and that’s something that employers want.
There will probably come a point where additional formal education is necessary, but it is definitely not necessary to climb up the first few rungs on the ladder until you’re at a point where you can actually obtain that education realistically.
Focus your financial choices on foundations rather than frills.
The key to financial success is to make every single money choice in terms of what will benefit yourself five years in the future rather than yourself right now.
For example, buying some frivolous item at the store benefits you right now, but it does absolutely nothing for yourself five years down the road. On the other hand, making an extra debt payment doesn’t really benefit you right now, but it enormously benefits you down the road.
This seems so easy, but in truth it’s actually pretty hard. Our mind screams for the short term. It demands that we do the things that seem enjoyable right now, because our brains have a hard time instinctively seeing past the next few weeks. It’s because of that “feature” of our brains that 78% of Americans live paycheck to paycheck.
Make every possible choice you can in terms of what benefits “future you” the most. Use that as your rule of thumb for every dime that you spend. That means buying a lot less unnecessary stuff. It means buying store brand versions of necessities. It means making meals at home largely out of inexpensive staples – beans and rice should be your friends. It means living in a cheap apartment and driving a beat-up car. It means paying down your debts as fast as possible and building an emergency fund in a savings account (or under your mattress, if you’re locked out of the banking system for now). It means keeping your bills paid, but finding ways to cut down on your bills along the way.
This is hard, and you’re going to make the wrong choice sometimes. Just remember, the perfect is the enemy of the good. If you only accept perfection, then you’re going to fail. What you want is to be making the better choice more often than you once were, and for your bad choices not to be completely destructive.
It is often said (and is originally attributed to Jim Rohn) that you are the average of the five people you’re closest to. This is because our routines and habits tend to line up with the people we’re closest to in our life.
Thus, it makes sense that if you make a conscious effort to build strong relationships with people who are in a better situation than you and have better life skills and habits than you, that they will help lift you up, if for nothing else than the fact that some of those skills and habits will rub off due to your regular exposure to them.
What does that mean for you? It means making a conscious effort to try to build good, strong friendships and professional relationships among people who are closer to where you want to be in life rather than where you currently are in life.
You can do this by joining civic organizations and building friendships there. You can do this by consciously connecting with people at the next step up in your workplace. You can do this by focusing on strengthening friendships with the most successful people in your life. You can do this by trying to strongly connect with the successful people in your family.
Build relationships with these people – real relationships, not just ones where they give and you receive. Help them out at least as much as they ever help you, because the reality is that most “help” that people give in social structures is amplified, meaning that the amount of effort given by the helper is much smaller than the perceived benefit by the helped.
Give without expectation of anything in return, and you’ll find that when you need things – advice, a word of reference, and so on – some of those people are there for you. You’ll also find that the more you associate with successful people, both personally and professionally, the more their habits that have led to success will rub off on you and the more ideas you’ll learn along the way. That’s value, and it takes time to build.
Avoid dependence and vices.
When you rely on a substance to help you manage the challenges of day to day life, you’re giving up a lot of your personal freedom for momentary peace of mind. The resources – time, money, energy, health – you give to that vice make your problem worse, and all you get in return is a few fleeting moments of an altered state. It’s an exchange that simply isn’t worth it.
One of the single most powerful steps you can take toward escaping the poverty trap is to simply eliminate your dependence on any vices – alcohol, cigarettes, opioids, marijuana, other drugs, anything. If you consume something that isn’t necessary to continue your life and do so as a matter of habit, it is taking you away from where you want to be in life because of the resources it consumes. Not only that, vices typically alter your mental state, causing you to make poor decisions while under the influence of that vice.
It can be very hard to break away from an addiction, but one thing you can do that helps is to start building new relationships in your life and, at the same time, start de-emphasizing relationships with people who share that vice. When you spend time with people who have a particular vice, you’re often drawn to share in it; when you spend time with people who do not have that vice, you’re less incentivized to continue, not just because of the social aspect, but because of the patterns you observe.
If you find yourself indulging in vices when alone, seek help. Talk to a medical professional and do whatever it takes to break your personal connection to that vice.
Use your employment as a stepping stone, not as a destination.
Many people caught in the poverty trap look at their job as solely an exchange of time for money. They do not see the additional benefits they get out of their time at work.
Rather than looking at it as simply an exchange of your time and energy for money, where you do the minimum tasks you’re instructed to do and collect a paycheck, dig deeper. Do the tasks you’re assigned as well as you possibly can. Look for ways to do more. If you’re not sure what to do, talk to your supervisor and ask questions about what can be done to improve things, or ask about what concerns the supervisor has regarding the workplace in general.
At every opportunity, you should not just use your job as a way to make money, but as a stepping stone to a better job. Every job can and should be treated this way. What can you do in this job that will set you up for a raise or for a promotion? What can you get out of this job that will set you up for a better job when you switch employers?
Reliability is one big factor. Doing what you’re asked to do is another. Looking for things that need to get done and just doing them is another. Asking good questions and learning more about how the business operates is another. Incorporating that info into better choices at work is yet another. Showing up is important, but what you do when you show up is important, too.
Take the long view.
None of these solutions are going to provide an automatic ladder right out of the poverty trap. You’re not going to wake up tomorrow and be in a clearly better place if you execute well today. Instead, you need to take the long view.
Remember earlier, when I discussed making financial decisions that are best for that “future self” version of you, the one that’s five years in the future? You should be making most life decisions oriented around that person, in every area you can. Is consuming that vice going to help your future self? No. Is skipping work going to help your future self? No. Is showing up to work and doing the bare minimum going to help your future self? No. Is sitting around all evening snacking on unhealthy foods and watching television going to help your future self? No. Is hanging out with the same old people who are heading nowhere going to help your future self? No.
Make choices in every aspect of your life that are geared toward making a better life for your future self, and you’ll find that a few years down the road, you’re going to have a better life. You built the foundation for that life with the choices you make today.
It’s not going to be easy, but that doesn’t mean it’s impossible. It’s just going to take a lot of time, and success won’t arrive immediately. Just trust in the process. Know that if you make most of your decisions solely to benefit your future self, your future self is going to have a far better life. If you make your decisions mostly to make things somewhat more pleasant in just this moment, you’re not going to head anywhere good in the future and you’re not going to be escaping the poverty trap.
There may come a future where the opportunities are more clear for everyone, but that day isn’t here yet. Today, you need to take matters into your own hands.