America, despite its prosperity and economic growth, still struggles with a relatively impoverished population. The way of addressing this issue is to redistribute wealth from other members of the population through welfare programs. While this is expected to be an effective system to alleviate the burden of the lower class, what it creates is a dependence on the state to support the family (Fraser and Gordon, 1994). This so called welfare state limits the self-efficacy and independence of the individual. In addition, despite an overall increase in spending on welfare since the beginning of the War on Poverty in 1964, poverty has not been decreasing at as quick a rate previous to this point leading little net change in the population of individuals below the poverty line (Fisher, 1986 and the U.S. Census Bureau, 2014). This paradox of redistribution indicates that as we focus support on the poor, we will fail to reduce overall poverty (Korpi and Palme, 1998).

Despite our previous attempts at reducing poverty, it still remains a major issue. Poverty continues to hold back the country as a whole. We can not fully advance unless we find a better solution to this issue. The current system is not effective and the welfare state has failed to effectively reduce overall poverty. Whether we adapt the system for the modern age, or create one that is entirely new, the fact remains that the issue must be addressed.

A major factor the current poverty rate lies within the current welfare system. The problem of over dependence on the state and the existence of a welfare trap. In this state of dependency the family unit is supported primarily by the state. The system allows those supported by it to be sustained, but not to rise economically. The objective of the welfare system is to, over time, decrease the rate of those below the poverty line. This is not what we see happening. Instead it seems that the current system has, for a portion of the population, atrophied an ethic that honors supporting one’s family without assistance. Those who are out of work and a relying on government programs for a long period tend, on average, to have fewer marketable skills to apply in the job market. This may make it difficult to find a job and to build experience. This is compounded by the issue that for welfare recipients in some states, the after tax income from a minimum wage position might be less that the benefits received from welfare (Tanner and Hughs, Cato Institute, 2013). This long term reliance may also have legacy effects upon future generations. If a mother relied on welfare programs, their daughter will likely do the same (Levine and Zimmerman, 1996). There may be a wider correlation in income across generations. This so called welfare trap is a root in the persistence of a population below the poverty line in America.This trap may not only make it difficult for the individual to move off of welfare, become more self-sustaining and grow their wealth, but will continue to affect their children. They may follow a similar trend, the problem will affect their children and the cycle continues. This trap defeats the purpose of the initial system by failing to decrease the percentage of the population under the poverty line, even maintain the current percentage in certain circumstances. If the system, in any instance, is accomplishing the opposite of its purpose, then it is in need of reform.

Another major factor in economic status and poverty rate is one’s self efficacy. Self efficacy is the belief in one’s innate ability to achieve goals. A higher perceived self efficacy correlates with a higher rate of success. In the context of poverty, low perceived self efficacy may be a contributing factor in one’s economic status. A lower perceived self efficacy correlating to a lower net income and overall success, while a higher perceived self efficacy correlates to a higher net income and overall success. However, poverty may also have an inverse effect on perceived self efficacy, meaning that the state of poverty lowers one’s perceived self efficacy (Wuepper and Lybbert, 2017). In other words, “perceived self efficacy reduces poverty, and poverty reduces perceived self efficacy.” This can also affect groups or communities in what is called perceived collective efficacy and is based upon interrelationships between the perceived self efficacy of individuals, as they do not exist in isolation. This can affect how communities can improve their social environment together and whether the members of said community attain success (Bandura 1982). The development of individual perceived self efficacy depends on the environment and the collective perceived self efficacy. This suggests that when it comes to responding to events or stimuli, whether individually or collectively, it is not only the event that matters, but the perception of said event. In the context of poverty, it is not only the economic situation matters, but the perception and the action that follows. Those who are poor are not in this economic state exclusively due to external events, though they are a large factor, but also due to their level of perceived self efficacy and their response. Internal factors being just as important in determining one’s economic status as external factors.

The final factor is the paradox of the welfare system. Despite increases in spending, a noticeable decrease in poverty rates has not been observed. In fact the poverty rate in recent years remains similar to the 1966 rate (U.S. Census Bureau, 2014).  This suggests a fundamental error in the method for resolving poverty. The current system of redistribution is simply not resolving the issue effectively. Providing only monetary support may not be enough to foster reductions in the poverty rate. Rather, a reduction in the poverty rate may also require more than additional funding. It may require a restructuring of the current system in order to encompass more than the economic factor of poverty.

Poverty is a multi-leveled issue that will not be easily resolved in the near future. It is simply based in factors that are not only economic, but social and psychological as well. It is tied to other institutions such as the prison system, the standardized school system and health systems. In order to reduce the poverty rate these factors must be more readily accounted for. While direct spending may still have a place in the reduction of poverty, the fostering of perceived self efficacy in individuals and the reduction of dependence on the state may share equally important roles. A fostering of perceived self efficacy and work ethic in the school system through earned success can create more readily equipped individuals who are better able to handle situations later in life. A revision of the after tax income in minimum wage positions in conjunction with the creation of a better living wage will provide even those working entry level positions with the means to sustain themselves. In order to create change and decrease the poverty rate overall revision of the current welfare system is utterly necessary.