The poverty trap. . .

One of our organizational goals is to move toward the day, as quickly as possible, when the minimum wage inside Central Dallas Ministries is a "living wage." 

But, what exactly does that mean in real dollars? 

Often, in such discussions, people will throw out a range of $12-$15 an hour. 

John Greenan, Executive Director of the Central Dallas Community Development Corporation, sent me a link to what follows as it appeared on Aaron M. Renn's provocative blog, Urbanophile. 

Poverty is complicated when you are living in its midst.  Poverty is awfully hard to escape, harder than the vast majority of Americans can even begin to understand. 

What follows should give us great pause.

Megan Cottrell: Don’t Fall in the Poverty Trap – You May Never Get Out

[ Megan Cottrell's One Story Up blog might be one of the most important in the United States. It is certainly a must-read for anyone in Chicago. She covers housing and poverty, two un-glamorous subjects that have all but been abandoned by newspapers. These aren't topics beloved of urbanist blogs either, but they are critical to understanding our cities and building successful lives for all citizens. As Megan notes, the phenomenon she describes affects up to 40% of all Chicagoans. I encourage you to check out her work. ]

Until you earn about $40,000 a year, you’re pretty much stuck in poverty, an economist’s numbers show.

In fact, until you get past $40,000 a year, any raise or higher paying job you get might actually sink you deeper into poverty.

Take a look at this story from economist Jeff Liebman, who now works in the Obama Administration.

The poverty trap is still very much a reality in the U.S.

A woman called me out of the blue last week and told me her self-sufficiency counselor had suggested she get in touch with me. She had moved from a $25,000 a year job to a $35,000 a year job, and suddenly she couldn’t make ends meet any more. I told her I didn’t know what I could do for her, but agreed to meet with her. She showed me all her pay stubs, etc. She really did come out behind by several hundred dollars a month. She lost free health insurance and instead had to pay $230 a month for her employer-provided health insurance. Her rent associated with her section 8 voucher went up by 30% of the income gain (which is the rule). She lost the ($280 a month) subsidized child care voucher she had for after-school care for her child. She lost around $1600 a year of the EITC. She paid payroll tax on the additional income. Finally, the new job was in Boston, and she lived in a suburb. So now she has $300 a month of additional gas and parking charges. She asked me if she should go back to earning $25,000.

To continue reading and to view a very revealing graph, click here.