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
Probability of not
surviving to age 40
Adult illiteracy
Decent Standard of Living
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 ablebodied 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.