Poverty and Economic Inequality

Sociology 230

Dr. Babcock

Unit 3

Chapter 6

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.

Prevalence of Poverty in USA

Poverty

Washington, DC, the capitol of one of

the wealthiest nations in the world,

has one of the highest rates of

poverty in the United States.

Human Poverty Index (HPI)

Based on three measures of deprivation:

1. Deprivation of life.

2. Deprivation of knowledge.

3. Deprivation in living standards.

Measures of Human Poverty in Developing

Countries

Longevity Knowledge Decent Standard of Living

Probability of not

surviving to age 40

Adult illiteracy A composite measure based on:

1. % of people without safe water.

2. % of people without health services.

3. % of children under 5 who are underweight

Measures of Human Poverty in Industrialized

Countries

Longevity Knowledge Decent 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

Poverty Thresholds: 2006

(Householder Younger Than 65)

Household Makeup Poverty Threshold

One adult $11,201

Two adults $14,417

One adult, one child $14,840

Two adults, one child $17,330

Two adults, two children $21,834

Global Poverty and Economic Inequality

Global Economic Inequality

More than one-fourth of the world’s population live on less than $2 a day and about 1.4 billion

people live on less than $1.25 a day.

Every day, nearly 1 in 5 of the world’s population goes hungry.

Global Riches

The richest 1 percent in the world

own 40% of global household wealth;

the richest 2% own more than half of

global wealth; and the richest 10%

own 85% of total global wealth.

The income gap between rich and

poor is seen as the biggest threat to

the world over the coming decade,

according to World Economic

Forum’s (WEF’s) Global Risks 2014

report,

Globalization has helped a few

In 2014, there were 1,645 billionaires

including 268 newcomers. U.S. still

dominates with Bill Gates as the

richest person in the world

Where do you stand?

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.

◦ Laws and policies that benefit corporations, such as low-interest government loans to failing

businesses and special subsidies and tax breaks to corporations, are known as corporate

welfare.

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.

Economic Inequality in the U.S.

In 2005, the top 1% of U.S. households with the highest incomes received 21.8% of all income,

representing their largest share of national income since 1928.

The top 10% of Americans collected 48.5% of all reported income in 2005.

The top 300,000 Americans in 2005 collectively received as much income as the bottom 150

million Americans.

The cycle is self-perpetuating: the rich get richer from investments in the financial markets, and

secure better educations for their children so the next generation succeeds.

Minimum-wage and middle-income earners cannot keep pace, making it less likely their children

will have the opportunities to move up.

Loss of manufacturing (outsourcing and downsizing) has contributed to the decline of the middle

class

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.

U.S. Poverty Rates by Age, 2005

Age Poverty Rate

Under 18 19.0

18 to 64 15.7

65 and older 9.7

All ages 13.2

Feminization of Poverty

Women are more likely than men to live below the poverty line—a phenomenon referred to as the feminization of poverty.

The 2008 poverty rates for U.S. women and men were 14.4% and 12.0%, respectively

Women are less likely to pursue advanced degrees and tend to have low paying jobs.

However, even with the same level of education and occupational role, women earn much less than men.

The elimination of alimony following divorce contributes to FoP

Teen motherhood (unwed) contributes to FoP

Inadequate child support contributes to FoP

Racism and ethnic discrimination contribute to FoP

Relationship Between Education and

Poverty: 2005

U.S. Poverty Rates by Family Structure, 2005

U.S. Poverty Rates by Race and Hispanic

Origin, 2005

Awareness of Poverty

Students across the country participate in Hunger Banquets—an event created by Oxfam, an organization dedicated to eliminating hunger and poverty.

Based on worldwide statistics, 55% of the attendees are randomly chosen to receive rice and water, 30% receive beans and rice, and 15% receive a full-course meal.

Natural Disasters and Poverty

Natural disasters, such as the 2011 tsunami, are more devastating to the poor, who lack resources

to cope with and recover from devastation.

Natural Disasters and Poverty

Most of the more than 1,300 people who died in the wake of Hurricane Katrina were poor and Black.

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.

Couch-homeless

Individuals who do not have a home of their own and who stay at the home of family or friends.

The Homeless

More than 2 million Americans are homeless.

Over 200,000 will sleep rough tonight

Public Assistance and Welfare Programs in

the United States

Public assistance programs are means-tested, households are not eligible unless income and/or assets fall within guidelines.

Government 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).

President Clinton signed into law massive changes to the welfare system in 1996

◦ There is a five year (sixty-month) lifetime limit for TANF, SFA and GA-S cash assistance

◦ Able-bodied Americans must be employed to receive assistance

◦ Some states are considering drug-testing welfare recipients (Florida, Utah, Ohio found less than 2% of those on assistance failed drug tests)

◦ Women are more apt to fail a drug test mandated by states

◦ Source: http://saprp.org/pm_keyResFind.cfm

Welfare Myths and Realities

Myth: People receiving welfare are lazy.

Realities:

Unemployed welfare recipients experience 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.

Most of the poor are children, elderly, or disabled (not work eligible)

Over half of adults receiving TANF in 2005 participated in work (it is required by law that able-bodied adults who receive assistance must be employed)

There are not enough jobs for everyone seeking employment

Welfare Myths and Realities

Myth: Most welfare mothers have many children.

Reality:

Mothers receiving welfare have no more children than mothers in the general population.

In year 2009 the average number of individuals in TANF families was 2.3, including an average of

1.8 children.

It is not possible to move out of poverty by having more children!

Since 1996, all able-bodied adults who apply for welfare must be employed. That is difficult when

there are children in the household as most minimum wage jobs cannot cover child care

% Individuals Below Poverty Level in

Households That Receive Assistance: 2005

Type of Assistance Percentage

Total 67.8

Receiving cash assistance 20.9

Receiving food stamps 37.9

Medicaid 54.7

Public or subsidized housing 17.3

Living-wage/Minimum Wage Laws

Living Wage: Requires 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.

More than 90% of all countries have some kind of minimum

wage legislation.

2008: The minimum wage was set to $7.25 an hour.

Over 5% of all hourly-paid workers (or approximately 1% of

the total U.S. population) earn an hourly wage at or below the

minimum wage

Washington has highest minimum wage of any state in the U.S:

$9.19 per hour as of January 1, 2014

According to the Economic Policy Institute, the minimum wage

would have been $18.28 in 2013 if it kept pace with labor

productivity. A more realistic minimum wage would be $22

per hour

Alabama, Louisiana, Mississippi, South Carolina & Tennessee do

not have a minimum wage—Mississippi is the poorest state,

Tennessee is #3, Louisiana is #5, South Carolina is #7 and

Alabama is the ninth poorest state.