Poverty: Defined and Explained. Measuring Poverty Government Definition –Recently revised by the Census Bureau to include many of the criticisms from.

Poverty: Defined and Explained

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.

**

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%

**

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. **

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 **

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

**

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.**

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. **

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. **

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.

**

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.

**

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.

**

Changes in Poverty

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” **

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.**

Changes in Poverty

• Churning is due to a large number of factors.

They include:• Unemployment/Re-Employment • Divorces/Remarriages• School• Unexpected deaths, Disabilities **

The Business Cycle & Poverty

1) When there is a recession, poverty rises.

2) After the recession is over, poverty begins to fall.

3) When there is economic growth, poverty falls.

• This is due to people losing their jobs & then finding new jobs. **

The Business Cycle & Poverty

1) We are therefore facing a long period when wages will remain stagnant.

2) There is also the possibility that wages will slide further in the next year or two.

3) This means that the number of near poor will continue to rise.

4) It also means that the number of poor will continue to rise.

**

The Business Cycle & Poverty

• What is new about this recession is that:

1. Most families had stagnant or falling family incomes before the recession.

2. The number of unemployed and underemployed is larger than any recession since the 1930’s.

3. Wages have not recovered from their fall since the recession started. **

The Business Cycle & Poverty

1) The number of people below the poverty level, has risen continuously since 2007.

2) The number of near poor has also risen continuously since 2007.

**

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. **

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. **

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.

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.

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.