I think there are a few things that are contributing to the problem.
In no specific order of importance:
1. Wages have basically been stagnant since 1980. When you adjust for inflation wages have only increased about $8,000 per year over the last 33 years. That works out to roughly 12 cents per hour per year increase.
2. At the same time that wages have been stagnant, many things have increased dramatically. Housing costs have gone through the roof, cars are more expensive, the cost of education has gone up. All of these things, and others, have increased at a much faster rate than have wages. This causes the average person to have more debt and if they lose their job, get sick or hurt it can financially destroy them.
3. If a person has one dependent, works a minimum wage job and works full time they are still below the federal poverty line. Roughly 3.6 million workers in the US currently make minimum wage or less.
4. There is little incentive to getting out of the poverty. If you have a kid and you make minimum wage you can qualify for a lot of different welfare programs. If you get food stamps, child care assistance, housing assistance, health insurance and possibly even money, when you combine that with your wage you can actually live a decent life. It isn't glamorous by any means, but you can have a decent place to live, food on your table and pay your bills and still have money left over each month. The reality is that if you are doing this you would need to likely jump up to $12-$13 per hour from the $7.25 you are making in order make enough money to live an equivalent lifestyle. Why work hard and try to get a better job when you are likely going to have to struggle when you can just flip burgers for 25-30 hours a week and live just a well?
5. We stress the wrong types of education. This might rub some people wrong, but parents and teachers need to be more pragmatic with kids. Last year there were twice as many people that graduated from college with liberal arts degrees than with degrees in some kind of applied science. Paying for your kid to get a degree in music or art history or film or writing is likely not going to help them get a job in their desired field. All is is going to do is put you and or your kid in debt. If a person is going to go to college or any kind of trade school they should focus on learning something they can actually use in the real world. I know some will disagree with me, but the reality is that writers write and painters paint and singers sing. You can work as an accountant or an engineer or in a bank and still pursue that dream, but at least you have a marketable skill to fall back on if and when it doesn't work out and you aren't just sitting there with potentially tens of thousands of dollars of debt and working at The Gap folding shirts.
6. The overall education system in this country is fucked. My nephew has a high school diploma. Not a GED or some kind of certificate, an actual high school diploma and he can barely read or write. My 10-year-old niece reads and writes better than him. When he was in 8th grade he had a total of 18 classes that year (6 per semester) he failed 15 of them (he only passed P.E.) and yet he was allowed to go on to high school. Now sure, there is some responsibility here that has to be put on the parent and his mom is a terrible parent, but the school system should not allow that. When I was in 8th grade in 1984 had I gotten those grades they would have held me back no matter what my mom would have said (for the record she would have killed me so I wouldn't be typing this right now
). School funding is being cut and handled poorly and the overall system is in shambles. If you live in a nice neighborhood you likely will have a good public school to go to, but if you are poor or live in a shitty neighborhood good luck.
7. We have our priorities messed up in this country. There are currently more people in prison then there are high school teachers in America. That troubles me. Some of those prisoners will be in prison for life (deservedly so), but most of them will eventually get out. They have zero, let me repeat that, ZERO prospects. Can they get their shit together and become a productive member of society? Sure, they could, but likely it is not going to happen. The deck is so stacked against them they are likely going to either end up back in prison or somehow in the system. Many of these people, some would estimate as many as 40%, are there for non-violent drug crimes.
8. Kids are not taught how money works or how to deal with it. The idea of saving, investing and trying to grow your money is something that is a foreign to most people as Mars. When they get money they spend it on shit they don't need. They also get credit too easily and on things they don't need to get credit on. Somehow debt is no longer a bad thing.
These are just a few things off the top of my head.
Sorry for the long post. It is late and I can't sleep and I have a few glasses of scotch in me LOL.