It is now fashionable to argue against the myth of escaping poverty by “pulling yourself up by your bootstraps.” In her book Hand to Mouth: Living in Bootstrap America, Linda Tirado argues against the idea that poverty is due to a moral failing or character flaw. According to Ms. Trado, poverty is a self-perpetuating cycle; it is a structural problem rather than a personal fault. It could be you stuck in the same endless, intergenerational cycle of poverty, living paycheck to paycheck and made homeless by any number of setbacks that are mere annoyances to the middle class. Perhaps if the elites didn’t blame the poor for their misfortune, better policies could be enacted.
Nevermind that the “pulling yourself up by your bootstraps” meant an absurdity from the start—if you think about it, it’s always meant something physically impossible.
Ms. Tirado’s personal experience of poverty is undoubtedly real and shared among the poor in America. There are insights to be found in the ways families struggle to achieve a better life yet somehow never manage to leave the trailer park or the ghetto. Nonetheless, I think Ms. Tirado has a very incomplete and self-defeating outlook on poverty, and my family’s immigrant story shows an alternative to this depressing worldview.
No Way Out?
Is there no way for a poor person to reliably and permanently leave poverty behind? Is luck or superstar talent the only way out?
Lack of wealth is no guarantee of poverty, and nowhere is this more evident than the history of immigrants in the United States.
We’ve all heard stories of lottery winners and star athletes who return to poverty, and in fact, lottery winners are far more likely to declare bankruptcy than the average American. Obviously, wealth alone is no guarantee of financial success. On the flip side, lack of wealth is no guarantee of poverty, and nowhere is this more evident than the history of immigrants in the United States.
Immigrants Prove the American Dream Is Possible
As the study “Immigrants in the one percent: The national origin of top wealth owners” argues, immigrants are over-represented in the top 1 percent of Americans. While most come here with few assets, many groups rise to the top within a single generation.
In contrast to a theoretical contingent which argues that Mexican immigrants are mostly downwardly mobile, our findings imply that there are large numbers of Mexican immigrants among the very wealthiest households in the US. Given that wealth can be passed to future generations and that Mexican immigrant business owners often pass businesses to their children, the presence of Mexican-origin households in the elite directly contradicts the notion that Mexican immigrants are destined to the underclass.
although we find that immigrants have less wealth overall than natives, they appear to decumulate resources more slowly in retirement. Consistent with the literature on lifecycle wealth accumulation, we find some evidence that these patterns may be due to differential concentrations of illiquid wealth and use of bequests and transfers.
In other words, the most common way of escaping generational poverty is to build equity over a lifetime and leave it to your children. Why do some groups find this easier than others? Why have many countries leaped out of poverty in the last few decades, while others remain mired in it?