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Poverty in AmericaThe Economics of Poverty
StatisticsPoverty in America
• Over half the world lives on
under $2.00 per day.
• In 2003, over 12% of all Americans were classified as
below the poverty line.
• New York Ranks Number 18 with
over 13.5% below poverty line.
StatisticsPoverty in America
• Nationally, Onondaga County ranks number 81, with 12.9% impoverished.
What is Poverty?Poverty in America
• Relative Poverty: A situation where people are poor in comparison to other poor
people.
• Absolute Poverty: A situation where people are classified as impoverished
according to a standard.
Income DistributionPoverty in America
• Income Distribution: The division of income in the economy among different groups of people.
Income DistributionPoverty in America
Distribution of income in 2002, according to rich vs. poor.
Poorest 20% of Nation 3.4%
Poorest 40% of Nation 12.2%
Poorest 60% of Nation 27.1%
Poorest 80% of Nation 50.3%
100% of Nation 100%
The chart shows how the richest 20% of Americans income make up almost 50% of the Nation’s total income. The poorest 20% of the nation receive only 3.4% of the nation’s total
income.
What is Poverty Line?Poverty in America
• A level of income below which a household is considered poor.
Poverty line annual income according to household size.
One Person Family $ 9,183
Two Person Family $ 11,756
Three Person Family $ 14,480
Four Person Family $ 18,307
Five Person Family $ 21,141
Six Person Family $ 23,588
Seven Person Family $ 25,865
National
Poverty BreakdownPoverty in America
• When below the poverty line, where does one’s money go?
Yearly Food Expenditures: $ 3,649Per person per day that is: $ 2.51
Monthly Spending: $ 1,216“This money is used for rent, fuel, utilities, insurance,
transportation, clothing, medical and dental needs, educational expenses, entertainment, and taxes” (Brux 135).
Has Poverty Improved?Poverty in America
• Since the mid 1990s we poverty percentages have been slowly decreasing, with the exception
of 2001 and 2002.
Percentage of population living under poverty line:
1960 22.2
1970 12.6
1973 11.1
1980 13.0
1990 13.5
1994 14.5
1995 13.8
1996 13.7
1997 13.3
1998 12.7
1999 11.8
2000 11.3
2001 11.7
2002 12.1
Lowest
Who is Impoverished?Poverty in America
• Broken down by race, age, and residence.
Race and EthnicityWhiteBlackHispanicAsian
AgeAged under 18Aged 18-64 YearsAged over 65
ResidenceUrbanSuburbanRural
10.221.821.810.3
16.710.610.4
16.78.914.2
Causes of PovertyPoverty in America
• Recession, or decline in national GDP, is a major cause of poverty in the United
States.
Decrease in Labor Productivity:Fewer skills, limited education, and limited experience make
obtaining a job less likely.
Economic Changes:Technological advances in the economy have helped to create poverty in America. Firms have replaced human workers with
robots in many cases. In other cases, not everyone adapts to the change in technology well, and are left behind.
Causes of PovertyPoverty in America
• Recession, or decline in national GDP, is a major cause of poverty in the United
States.
Personal Problems:Lack of job readiness can also lead to unemployment
and poverty. Those with mental disabilities, inexperience, or immaturity are placed in this category.
An example includes single parent homes, where parents must take off work to tend to their children.
Some people basically lack the maturity level to work. Many times these people go to work late, unprepared, or not at all.
Causes of PovertyPoverty in America
• Recession, or decline in national GDP, is a major cause of poverty in the United
States.
Minimum Wage:Minimum wage is a government set level at which an
employer cannot pay any less per hour for one’s services.
Nationally, the minimum wage is set at $ 5.15 per hour. With a forty hour work week this adds to $ 10,712, well below the poverty line.
In New York State, the minimum wage will go to $ 7.15 per hour in January of 2007, a yearly income of $ 14,872… still far below the
poverty line.
Combating PovertyPoverty in America
Medicaid:A program offered to those who cannot afford medical
care on their own.
Broken down by household size, income.
One Person Family $ 692
Two Person Family $ 900
Three Person Family $ 1,017
Four Person Family $ 1,025
Five Person Family $ 1,034
Six Person Family $ 1,134
Seven Person Family $ 1,275
Combating PovertyPoverty in America
New York’s Child Health Plus:A program offered to those who cannot afford medical
care for their children.
Social Security:Federal Government Program offered to those retired,
survivors of dead workers, and disabled.
Unemployment:Funding from federal and state governments paying
those who do not have a job.
Next, Watch Swish Movie on Poverty.Then, download and complete worksheet due in one week.
