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• According to the Census Bureau, individuals, families, or households are living in poverty if their total incomes fall below the designated income levels

• Poverty threshold: or poverty level, is the lowest income – as determined by the government – that a family or household of a certain size or composition needs to maintain a basic standard of living

– $17,603

• Poverty rate: is the percentage of individuals or families in the total population, or a subset of the population, that are living in poverty

• Both the number and percentage of Americans living in poverty have dropped in the last several years

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• Jacob Riis – wrote book called, How the Other Half Lives, 1890– Is about widening

gap between the rich and poor

• Factors that contribute to differences in income– People come from different

economic & social backgrounds– Individual’s income is

determined by the market value of what the goods and services that person has to offer• Basketball player versus

soccer player

• MEASURING INCOME INEQUALITY– Income Gap – is the amount

of income inequality in the nation

– Lorenz Curve – measures the amount of inequality in the distribution of income

– Gini Index – another statistical measure of income inequality

• LIMITATIONS OF INCOME DISTRIBUTION

1. Definition of income is to limited

2. Most measures of income distribution do not differentiate among families or households of different sizes, ages, or number of wage earners

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•“Are the rich getting richer and the poor getting poorer?”

• MAIN CAUSES OF WIDENING DISPARITY IN INCOME

1. Changes in households

2. Changes in labor market

3. Rapid changes in technology

4. Growth of a global economy

• CHANGES IN HOUSEHOLDS– Married couples living

with their children have made up a large percentage of the wealthier households in the United States

– Single-parent and single-person households tend to have lower incomes

• CHANGES IN LABOR MARKET– Downsizing, which causes

increased unemployment and resulted in may workers settling for lower-paying jobs

– Decline in real-value of minimum wage because of inflation

– Increased use of temporary workers – get paid less

– Labor union membership decreased

• CHANGES IN TECHNOLOGY– Drop in demand for lower-

skilled workers– Need for education now

more important than ever

• GROWTH OF A GLOBAL ECONOMY– US companies moving

jobs overseas where laborers are paid less

• Programs that increase access to educational resources and provide training for low-skilled workers

• Increase taxes or the wealthy and spending more money on programs that help low-income groups

• Raise minimum wage

• Not allow companies building plants overseas where labor is cheaper