Economic Caste as a Way of Life

MSNBC reports that December saw the creation of an additional 167,000 new jobs which left the year-end unemployment rate unchanged at 4.5%. However, the article also examines the growing divide between the graduate-degree haves and have-nots.

Once again, skilled, blue-collar jobs left the country in droves in 2006. They were replaced by positions in the education, health-care, and professional services industries at equal or higher average salaries. The problem is, of course, a skilled factory worker with a HS diploma or even Bachelor's education can not find work as a nurse, high school teacher, lawyer, or publicity manager without undergoing several years of retraining at the college and graduate level.

So, these middle-income workers, who often earned up to $22-25/hour for their specialized skill sets, are now taking minimum-to-low-wage jobs because you don't need a related degree in order to become a supervisor at Burger King or a meter reader for the gas company, but you do need to pay your bills on time and feed your kids.

The problem faced, time and time again, is that poverty breeds poverty. No one designs anything of quality for poor people because they can't pay for it. Therefore, what little income they have often goes out as soon as it comes in, not just because their debt-income ratio is so high, but also because they have to buy substandard goods and are constantly replacing or repairing them. This trend runs from housing (which I've brought up many times) to groceries to clothing and transportation.

The manufacture of toxic clothing can be addressed by lawsuits and regulation. Cheap mass transportation issues can be solved on a regional and state level, and benefit more than just the poor. But, by far, the most dangerous of these are the housing and food nexuses. Substandard housing, as we've seen even locally [1, 2, 3], comes with a nightmare of health issues in addition to the costs of reconstruction and/or finding a new place to live. The hidden cost in eating low-cost foods is in decreased health and increased medical costs. Yet, unfortunately, most people living below a living wage have no or minimal health insurance to help them address such health concerns as they arise. Instead, those health problems have to fester, unaddressed, while they continue work, until the problems cannot be avoided, by which time their care and treatment is financially exponential.

Really, poverty is big business, but it is definitely not a good quality business. It becomes a Catch-22, as the health issues mount and the work and income floods out the door, creating an abyss from which whole cultures still haven't risen, in spite of the health of their government's pockets (and here I'm talkin' Appalachia as well as Nigeria).

Enter Acumen Fund, which is a philanthropic venture capital group dedicated to identifying and giving financial boost to the best entrepreneurs and organizations focused on delivering critical, affordable goods and services--such as healthcare and housing. The Acumen Fund's goal is to improve livelihoods, health and opportunities for the poor, while proving there's money in doing it.

Looking for a fiscally savvy yet socially progressive firm to invest your money and/or time with? Check them out. They are trying to break the economic caste cycle permanently.