Poverty: Defined and Explained

1. Poverty: Defined and Explained

2. Measuring Poverty Government Definition • Recently revised by the Census Bureau to include many of the criticisms from all sides. • For a family of four in the year 2010, it ranges from $20,590 to $25,018. **

3. Measuring Poverty New Government Definition • The percentage of the population below the new poverty line is 16%. • Under the old system the percentage would have been 15.2% **

4. Measuring Poverty Reported Income • The traditional method of counting poverty was to use reported cash incomes only. • Ignores all sorts of government programs that provide money and non-monetary assistance. • Ignored differences in cost of living, and changes in the economy and in spending. **

5. Measuring Poverty Reported Income Plus Cash Benefits • To accurately measure poverty, we need to include all of the cash benefits from government assistance programs, as well as reported cash income. • Examples include: • Social Security • Unemployment Compensation **

6. Measuring Poverty Cont’ Reported Income Plus Cash and Non-cash Benefits • We need to include non-cash benefits, as well as cash benefits and cash income, when we measure poverty. • Examples of non-cash benefits include: • Food Stamps • Housing Subsidies **

7. Measuring Poverty Cont’ Other problems: • Any decent measure of poverty needs to include differences in cost of living between different parts of the country. • And the study would need to incorporate changing patterns in medical costs. **

8. Measuring Poverty Cont’ • When we include all types of government cash benefits, poverty falls. • When we also add in non-cash government benefits, poverty falls even further. • Government welfare reduces the poverty rate. **

9. Measuring Poverty Cont’ • The new count is 49.1 million people below the new adjusted poverty level in 2010. • There is a decrease in the percentage of children living below the poverty level. • There is an increase in the percentage of elderly living below the poverty level. **

10. Measuring Poverty Cont’: The Near Poor • The Census Bureau also has developed a better set of measurements to count what are called the near poor. • The near poor are those whose income is between the official poverty level and 50% above the official poverty level. **

11. Measuring Poverty Cont’: The Near Poor • Nearly all of them own houses, cars, and major appliances (newer type TVs, for example). • Yet by other standards they are struggling: very little or no savings, poor health care plans, only a paycheck away from disaster. **

12. Measuring Poverty Cont’: The Near Poor • The total number of near poor is estimated at 51 million. • Thus the total of poor and near poor is 100 million, one third of the population. **

13. Changes in Poverty

14. Changes in Poverty • Who is among the poor and near poor changes every year! • Large numbers of people move in and out of poverty every year. • This movement is called “Churning” **

15. Changes in Poverty • Think of a hospital wing with 13 beds. In 12 of those beds, patients move in and out, more or less quickly. • In the last bed is a permanent patient. • Poverty is similar, with large movements of people into and out of it.**

16. Changes in Poverty • Churning is due to a large number of factors. They include: • Unemployment/Re-Employment • Divorces/Remarriages • School • Unexpected deaths, Disabilities **

17. The Business Cycle & Poverty • When there is a recession, poverty rises. • After the recession is over, poverty begins to fall. • When there is economic growth, poverty falls. • This is due to people losing their jobs & then finding new jobs. **

18. The Business Cycle & Poverty • We are therefore facing a long period when wages will remain stagnant. • There is also the possibility that wages will slide further in the next year or two. • This means that the number of near poor will continue to rise. • It also means that the number of poor will continue to rise. **

19. The Business Cycle & Poverty • What is new about this recession is that: • Most families had stagnant or falling family incomes before the recession. • The number of unemployed and underemployed is larger than any recession since the 1930’s. • Wages have not recovered from their fall since the recession started. **

20. The Business Cycle & Poverty • The number of people below the poverty level, has risen continuously since 2007. • The number of near poor has also risen continuously since 2007. **

21. Divorce & Children • In most cases of divorce, separation and abandonment, women are left with all or nearly all the child rearing. • Alimony is rarely granted to women today. • Men cease paying child support after a year, on average. **

22. Divorce & Children Cont’ • Therefore women are left with the children, and their bills. • For many women and children, divorce means going from two incomes to one, and the lower income at that. **

23. Deaths and Disabilities • If one of the income earners dies the family can be thrown into poverty. • A disability can be even worse, since it means loss of income and a continuing drain to pay for medical expenses.

24. School • Higher education can contribute to temporary poverty rates. • Many young people are poor while at college, and perhaps for a few years afterwards, until they obtain a permanent career path. • The costs of college can be very burdensome. • Older students’ families can become poor temporarily while a parent is at school.

25. School • According to the mainstream media, student debt loads add up to over $1 trillion dollars, the largest type of debt. • This will act as a drag on their standard of living, and on the economy as a whole, for decades.