Chapter 6

Poverty and Economic Inequality

Chapter Outline

The Global Context: Poverty and Economic Inequality around the World

Sociological Theories of Poverty and Economic Inequality

Consequences of Poverty and Economic Inequality Strategies for Action: Antipoverty Programs, Policies,

and Proposals Understanding Poverty and Economic Inequality

Defining and Measuring Poverty

Poverty is the lack of resources necessary for material well-being: food, water, housing, land, and health care.

Lack of resources that leads to hunger and physical deprivation is absolute poverty.

Relative poverty refers to a deficiency in material and economic resources compared with some other population.

International Measures of Poverty

World Bank: “poverty threshold” of $1 a day to compare poverty in the developing world.

World Health Organization: household is considered poor if it cannot meet 80% of calorie requirements using 80% of its income to buy food

Human Poverty Index (HPI)

Based on three measures of deprivation:

1. Deprivation of life.

2. Deprivation of knowledge.

3. Deprivation in living standards.

Poverty Thresholds: 2004 (Householder Younger Than 65)

Household Makeup Poverty Threshold

One adult $9,827

Two adults $12,649

One adult, one child $13,020

Two adults, one child $15,205

Two adults, two children $19,157

Measures of Human Poverty in Developing Countries

Longevity KnowledgeDecent Standard of

Living

Probability of not surviving to age 40

Adult illiteracy Based on: • % without safe water• % without health

services• % of children who are

underweight

Measures of Human Poverty in Industrialized Countries

Longevity KnowledgeDecent Standard of

Living

Probability of not surviving to age

60

Adult functional illiteracy rate

% living below the poverty line, which is

50% of median income

Global Economic Inequality

2.8 billion people, nearly half the world’s population, survive on less than $2 a day.

More than 1.2 billion people, 1 in 5 people on this planet, survive on less than $1 a day.

Every day, 18% of the world’s population goes hungry.

In 2000 the average income of the richest 20 countries was 37 times that of the poorest 20 countries.

Culture of Poverty

Institutional breakdowns create a “culture of poverty” whereby the poor develop norms, values, beliefs, and self-concepts that contribute to their own plight.

Characterized by female-centered households, an emphasis on gratification in the present rather than in the future and a lack of participation in social institutions.

Question

The poor are poor because the American way of life doesn't give all people an equal chance.

A. Strongly agreeB. Agree somewhatC. UnsureD. Disagree somewhatE. Strongly disagree

Structural-Functionalist Perspective

Poverty and economic inequality serve positive functions for society:

Low-paid, poor workers are willing to do dirty, dangerous, difficult work others refuse to do

Poverty provides work for those in “poverty industry” (e.g. welfare workers).

Poor people provide market for inferior goods.

Conflict Perspective

Economic inequality results from bourgeoisie exploiting proletariat.

Corporations and the wealthy buy political influence.

Free-market reform policies benefit wealthy corporations and investors, but increase poverty.

Wealthfare - Laws and policies that benefit corporations and the wealthy.

Symbolic Interactionist Perspective

Persons who are labeled “poor” are stigmatized as lazy; irresponsible; lacking in motivation, ability, and morals.

Wealthy persons are viewed as capable, hard working, motivated, deserving of wealth.

Question

According to conflict theorists, who are the exploited workers?

A. bourgeoisie

B. proletariat

C. underclass

D. nacrimas

Answer: B

According to conflict theorists, the proletariat are the exploited workers.

Economic Inequality in the U.S.

Between 1979 and 2002 average after-tax income of the top 1% of the population rose from $298,000 to $631,700—an increase of 111%.

In 1982 the average pay of a CEO was 42 times that of the average production worker.

Economic Inequality in the U.S.

In 2003, although the average CEO earned $155,769 per week, the average production worker took home $517 in his or her weekly paycheck.

If the federal minimum wage had grown at the same rate as CEO pay since 1990, it would have been $15.76 in 2003, instead of $5.15.

Question

In which of these groups did your total family income, from all sources, fall last year before taxes, that is?

A. $1K - 14,999

B. $15K to 24,999

C. $25K and up

GSS National Data

EducationNo High School Degree

High School Graduate

College Graduate

$1K to 14,999

49.5% 22.6% 13.2%

$15K to 24,999

21.1 20.7 13.3

$25K and up 29.3 56.7 73.5

Wealth

Total assets minus debts. Wealth includes the value of a home, investments,

real estate, the value of cars, life insurance (cash value), stocks, bonds, mutual funds, trusts, checking and savings accounts, individual retirement accounts (IRAs), and valuable collectibles.

In 2001, the wealthiest 1% of households owned more than 33% of all national wealth, whereas the bottom 80% of households owned only 16%.

Question

People who are rich don't care about those who are less rich.

A. Strongly agree

B. Agree somewhat

C. Unsure

D. Disagree somewhat

E. Strongly disagree

U.S. Poverty Rates by Age

Age Poverty Rate

Under 18 17.8

18 to 64 11.3

65 and older 9.8

All ages 12.7

U.S. Poverty Rates by Family Structure, 2004

% U.S. Children Living Below the Poverty Line by Family Type, 2002

U.S. Poverty Rates by Race and Hispanic Origin, 2004

Question

What is the poverty status of your household?

A. Poor

B. Non-poor

C. Borderline

GSS National Data

Race White Black

Poor 9.8% 27.7%

Non-Poor 87.6 67.1

Borderline 2.6 5.2

Educational Problems and Poverty

Children from poor families score lower on tests of cognitive skill.

Poor children often go to inferior schools. Poor parents have fewer resources to provide

educational experiences for their children.

Family Stress and Parenting Problems

Stresses associated with low income contribute to substance abuse, domestic violence, child abuse and neglect and divorce.

Couples with incomes under $25K are 30% more likely to divorce than couples with incomes over $50K.

Poor parents are more likely to leave children at home alone.

Poor adolescent girls are more likely to have babies as teenagers or become young single mothers.

Characteristics of the Homeless in U.S. Cities

41% are single men 40% are families with children 23% are mentally ill 17% are employed 10% are veterans 14% are single women 5% are unaccompanied minors 30% are substance abusers

Intergenerational Poverty

Problems associated with poverty (health and educational problems) create a cycle of poverty from one generation to the next.

Public Assistance and Welfare Programs in the United States

Many public assistance programs are means-tested, households are not eligible for benefits unless income and/or assets fall below a specified guideline.

Government assistance programs for the poor include Supplemental Security Income, Temporary Assistance to Needy Families (TANF), food programs, housing assistance, medical care, educational assistance, child care, child support enforcement, and the earned income tax credit (EITC).

Public Assistance and Welfare Programs in the United States

Temporary Assistance to Needy Families (TANF)Created in 1996, provides minimum monthly income to single parents and their children. 

Public housing - Program that provides federally subsidized housing owned and operated by local public housing authorities.

Earned income tax credit (EITC) - A refundable tax credit based on a working family's income and number of children.

Question

Many poor people simply don't want to work hard.

A. Strongly agree

B. Agree somewhat

C. Unsure

D. Disagree somewhat

E. Strongly disagree

Welfare Myths and Realities

Myth: People receiving welfare are lazy.

 Realities: Unemployed adult welfare recipients experience a

barriers that prevent them from working: poor health, job scarcity, lack of transportation, lack of education, and/or the inability to pay for child care.

In 2002 1/4 of adult TANF recipients were employed, earning on average $678 per month.

More than 1/4 of food stamp recipients in 2003 earned $640 per month.

Welfare Myths and Realities

Myth: Most welfare mothers have many children. Reality:

Mothers receiving welfare have no more children, on average, than mothers in general population.

In fiscal year 2003 the average number of individuals in TANF families was 2.5, including an average of 1.9 children. The average size of households receiving food stamps in 2003 was 2.3.

% of Individuals Living Below Poverty Level in Households That Receive Means-Tested Assistance: 2001

Type of Assistance Percentage

Total 67.5

Receiving cash assistance 22.8

Receiving food stamps 33.6

One or more individuals in household covered by Medicaid

52.5

Live in public or subsidized housing 17.9

Living-wage Laws

Require state or municipal contractors, recipients of public subsidies or tax breaks, or, in some cases, all businesses to pay employees wages significantly above minimum wage, enabling families to live above poverty line.

Millennium Development Goals

An international agenda for reducing poverty and improving lives.

The target date for achieving most of the MDGs is 2015, with 1990 as the benchmark.

Although China and India have made significant progress toward achieving the MDG of reducing poverty, in sub-Saharan Africa poverty rose between 1990 and 2001.

List of Millennium Development Goals

1. Eradicate extreme poverty and hunger.

2. Achieve universal primary education.

3. Promote gender equality and empower women.

4. Reduce child mortality.

5. Improve maternal health.

6. Combat HIV/AIDS, malaria, and other diseases.

7. Ensure environmental sustainability.

8. Develop a global partnership for development.

Quick Quiz

1. The major cause of homelessness is:

A. mental illness among the homeless.

B. substance abuse among the homeless.

C. unemployment.

D. lack of affordable housing.

Answer: D

The major cause of homelessness is alack of affordable housing.

2. Government programs that have eligibility requirements based on income are called what?

A. merit-based programs

B. requirement oriented programs

C. means-tested programs

D. none of these choices

Answer: C

Government programs that have eligibility requirements based on income are called means-tested programs.

3. Children are more likely than adults to live in poverty.

A. True

B. False

Answer: A. True

Children are more likely than adults to live in poverty.

4. Gene's corporation is failing yet he receives low interest government loans, tax reductions, and lower fines when it breaks federal regulations. Gene's corporation is not unique, in fact it is one of many who receive what conflict theorists call:

A. hegemony.

B. wealthfare.

C. welfare.

D. interest giving.

Answer: B

Gene's corporation is not unique, in fact it is one of many who receive what conflict theorists call wealthfare.