poverty trap

(noun) A scenario created when low-income individuals or families living in poverty, lose welfare or tax benefits when they secure employment or a higher salary, resulting in an overall worse economic condition because of the loss of their benefits.

Example: John had a full-time job in a developing industry.  John was not able to afford childcare for his two pre-school children while he was at work. John was forced to switch to part-time employment that allowed him to care of his children with additional help from welfare. Because John had to leave his full-time job he loses benefits beyond pay such as future advancement opportunities, insurance,  and a pension.

Audio Pronunciation: (pov·er·ty trap)

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Usage Notes:

  • Plural: poverty traps
  • The poverty trap is a disincentive to work or improve a person’s current socioeconomic status.

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