CHAPTER 11: ECONOMIC CHALLENGES

1. CHAPTER 11: ECONOMIC CHALLENGES SECTION 3: POVERTY & INCOME DISTRIBUTION PAGES: 264-268

2. POVERTY IN THE UNITED STATES • According to the Census Bureau, individuals, families, or households are living in poverty if their total incomes fall below the designated income levels

3. POVERTY IN THE UNITED STATES • 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

4. POVERTY IN THE UNITED STATES • 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

5. DISTRIBUTION OF INCOME PAGES: 265-266

6. DISTRIBUTION OF INCOME • Jacob Riis – wrote book called, How the Other Half Lives, 1890 • Is about widening gap between the rich and poor

7. DISTRIBUTION OF INCOME • 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

8. DISTRIBUTION OF INCOME • 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

9. DISTRIBUTION OF INCOME • LIMITATIONS OF INCOME DISTRIBUTION • Definition of income is to limited • Most measures of income distribution do not differentiate among families or households of different sizes, ages, or number of wage earners

10. GROWING INCOME GAP

11. GROWING INCOME GAP • “Are the rich getting richer and the poor getting poorer?”

12. GROWING INCOME GAP • MAIN CAUSES OF WIDENING DISPARITY IN INCOME • Changes in households • Changes in labor market • Rapid changes in technology • Growth of a global economy

13. GROWING INCOME GAP • 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

14. GROWING INCOME GAP • 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

15. GROWING INCOME GAP • CHANGES IN TECHNOLOGY • Drop in demand for lower-skilled workers • Need for education now more important than ever

16. GROWING INCOME GAP • GROWTH OF A GLOBAL ECONOMY • US companies moving jobs overseas where laborers are paid less

17. NARROWING THE INCOME GAP • 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