Chapter 2: Economic Inequality Flashcards
(33 cards)
Economic Inequality
Unequal distribution of income is an indicator of economic inequality
Income
the amount of money one earns from employment, business, investments, and other economic activities
Wealth
the value of all the assets one owns subtracted by the debts one owes.
The Very Rich
Old Rich:
families that have been wealthy for generations
(the Rockefellers, the Vanderbilts, and the DuPonts)
New Rich:
self-made individuals who have created their own wealth
(Bill Gates, Warren Buffet, Oprah Winfrey)
The New Rich outnumber the Old Rich by more than 2 to 1
(Thibault, 2009)
What Is Poverty?
The American poverty line for a family of 4 is an income of $22,025 or less per year
However, the state of being impoverished is subjective.
Absolute Poverty
The government decided that the typical family spends 1/3 of its income on food
Therefore to find the poverty line multiply the cost of food times 3
Absolute Poverty: the lack of minimum food and shelter necessary for maintaining life, the condition of families living below the poverty line
Absolute Poverty:
Politics
Conservatives contend that the figures overestimate the extent of poverty because they do not count as income the many noncash benefits
Liberals argue that the rate underestimates the extent of poverty because nowadays the typical family spends only 1/5 of its income on food, due to increases in nonfood costs
National Academy of Sciences poverty experts suggest that both deducting nonfood costs and adding noncash benefits to the income will provide a more accurate poverty line
This calculation will increase the official poverty because the nonfood costs are higher than the noncash benefits.
nonfood costs are higher than the noncash benefits.
nonfood costs are higher than the noncash benefits.
Relative Poverty
Relative Poverty: a state of deprivation resulting from having less than the majority of the people in their society
When relative poverty is included, the percentage of the impoverished Americans doubles
The Faces of Poverty
According to the U.S. Census Bureau (2010), a little over 13%, or nearly 40 million Americans, live in poverty today
Children under 18, single mothers, the less educated, the unemployed, low-wage workers, racial/ethnic minorities, women, the homeless, and rural & inner-city residents are more likely to fall into poverty
Children
About 19% of the children 17 and younger are poor, while the poverty rate of all the other age groups falls below the national average of 13%
50 years ago, seniors age 65 years or older had the highest rate of poverty
Due to substantial increase in government support of Medicare and Social Security benefits, the elderly now have the lowest poverty rate of all age groups
Similar assistance is needed for children
Single Mothers
The poverty rate of single mothers is 29%, nearly 5x’s higher than the rate for married parent
(6%).
Usually unemployed because they have to care for their children
Single mothers are much more likely than married couples to be poor, largely because they are unemployed due to having to care for their children.
The Less Educated
Those who have not completed high school are 2x’s as likely as high school graduates to be poor, and 5x’s as likely as college graduates to be poor.
Before 1970, it was relatively easy for a high school dropout to find employment and earn a decent wage, but much less so today.
The Unemployed
As many as half of all poor adults do not work.
The disabled, welfare recipients, and individuals with little skill or education.
Compared to the employed, the unemployed are less likely to be married and more likely to live alone or with relatives (Stewart, 2006).
The Underclass:
a term conjuring up images impoverished criminals, drug addicts, welfare mothers, or able-bodied men on welfare who are too lazy to work.
The Underclass
a term conjuring up images impoverished criminals, drug addicts, welfare mothers, or able-bodied men on welfare who are too lazy to work.
Low-Wage Workers
Working Poor:
Individuals who work for a wage that makes them fall below the official poverty line
These individuals often work two jobs and are usually unskilled.
They could have escaped poverty if they were paid a living wage (above $10/hour) rather than the minimum wage ($7.25/hour)
Racial/Ethnic Minorities
African Americans and Hispanics are twice as likely to be poor as whites.
The poverty rate of whites is 11%, African Americans is 25% and Hispanics is 23%
The greater prevalence of poverty among these minorities can be attributed to discrimination against them and the massive loss of manufacturing jobs in the inner city
Feminization of Poverty
Since 1970 about 9% of men and 13% of women have lived below the poverty line
Feminization of Poverty:
the persistent and pervasive phenomenon of women living in poverty at higher rates than men
Increases in the rates of divorce, separation, out of wedlock birth, divorced fathers not paying child support, along with the reduction in government support for welfare have caused many women to become single mothers or heads of poor households.
The fact that women live longer than men has further contributed to a growing number of older women living alone in poverty
The Homeless
There are about 672,000 homeless people, many of which are families with children, alcohol & drug abusers, and the mentally ill.
Reasons include the increased shortage of inexpensive housing for the poor, the declining demand for unskilled labor and the erosion of public welfare benefits that has taken place over the last two decades.
Rural and Inner-City Residents
Globally, developing countries have higher poverty rates than do developed ones
Among the developed countries, the Southern United States has the highest rate of poverty because it has a lot of rural people.
People who live in the rural areas are more likely to fall below the poverty line.
Within the urban areas, the inner city has an exceptionally high poverty rate because of the scarcity of jobs (U.S. Census Bureau, 2009b).
Percent of Persons in Poverty, by State:
Poverty rates are highest in the South and lowest in the Northeast.
Poverty rates are more than 3x’s higher in Mississippi, which has the highest rates of poverty in the U.S., than in New Hampshire, which boasts the lowest.
Explanations of Poverty
There are 2 kinds of explanation for the existence of poverty:
One is based on the popular belief that the poor are to blame for their poverty.
The other sociologically attributes poverty to the positive functions it performs for society.
Blaming the Poor
Most people assume America is a land of opportunity where hard workers prosper
Anthropologist Oscar Lewis (1961) and Edward Banfield (1974) both claimed that the poor were fatalistic, lived for the moment, and unconcerned about the future.
However, in 60% of all poor families, at least one person works (Ehrenreich, 2001)
The discoveries that Banfield & Lewis found among the poor may well be the effect rather than the cause of poverty.
Defending the Poor
According to sociologist Herbert Gans (1971), poverty exists because poor people serve useful functions for society:
- -The poor make it possible for society’s dirty work to be done (washing dishes, scrubbing floors, hauling garbage,etc)
- -By working as maids and servants, poor people make it easier for the affluent to pursue their business and professional careers.
- -Poor people create jobs for social workers and other professionals who serve the poor.
- -Poor people also produce jobs for police and other law enforcers, because the majority of criminals they deal with come from the ranks of the poor.
