Final answer:
The working poor situation arises from low minimum wage rates, and the ineffectiveness of government benefits that reduce as earned income increases, leading to questions about the adequacy of wage levels and assistance program designs.
Step-by-step explanation:
Understanding the Working Poor and Minimum Wage
The query focuses on the economic situation of individuals working full-time and yet living below the poverty line. This situation often arises due to the minimum wage rates, which in many states are around $7.25 per hour. Considering a standard 40-hour work week, this sums up to a gross income of $290 per week, or $15,080 per year before taxes, which is barely above the federal poverty line for a single individual and certainly below for a family.
The concept of working poor is also highlighted by the hypothetical scenario involving Susan, a single mother, who can work up to 2,000 hours per year at $8 per hour. Despite this, due to governmental support reduction policies, her income would only increase significantly if she worked more than the hours needed to surpass the guaranteed government benefits threshold. This illustrates how the structure of welfare and work incentives can impact the decision to work additional hours.
In conclusion, individuals may be compelled to work full-time yet remain poor, either due to low minimum wage rates or the effective marginal tax rate resulting from reduced government benefits as earned income increases. This is an important issue from both a moral and economic viewpoint, and raises questions about the adequacy of the minimum wage and the design of government assistance programs.