Using findings of the Panel Study of Income Dynamics (PSID), this report discusses how people become poor and why they stay that way. The PSID reveals that the requirements for getting out of poverty in the United States are so minimal that it takes a mutually reinforcing cluster of behaviors to remain in poverty, even for blacks and females. The following activities are enough to ensure permanent escape from poverty: (1) attending public school and completing high school; (2) finding a job and remaining with it; and (3) avoiding out-of-wedlock births. Of all men aged 20 to 64 with a high school education, only .6 percent were in poverty in 1970; 4.7 percent of black male heads of households were in near-poverty by 1980; and 2 percent of all women with high school educations were poor. Though 8.5 percent of black women with high school educations were poor, over 90 percent were not. Current public policies have the following effects: (1) they dissuade young people from acting in a manner leading to prosperity, thus creating a problem of poverty among the elderly in the future; and (2) they prevent the young disabled from leading productive lives. The urgent task of the state is not to get more money into people's hands, but to do what a government can to nourish and protect an environment within which people who have enough money to lead a decent existence are able to do so without fear of crime, drugs, and ineffective schooling for their children. (PS)