Poverty vs.

the Economy
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Poverty vs. The Economy
Poverty is a lack of goods and services necessary to maintain a minimal adequate
standard of living. The definition of the term adequate varies, however, with the general
standard of living in a society and with public attitudes toward deprivation. No university
accepted definition of basic needs exists because poverty is a relative concept. In poorer
countries it means living at the brink of subsistence, while in our country few improvised
families confront starvation, although many suffer from undernourishment. A key issue in the
area of poverty is inequality. Inequality has been a problem in all societies. No society
distributes income evenly. Despite all the conceptual and technical problems of measurement,
the government has devised a widely cited poverty index that reflects the different
consumption requirements of families depending on their size and composition, on the sex
and age of the family head, and on weather they live in rural or urban areas. Based on past
surveys, the designers of the poverty index determined that families of three or more person
spend approximately one-third of their income on food. Thus, the poverty level for these
families was, therefore, set at three times the cost of the economy food plan. For smaller
families and persons living alone, the cost of the economy food plan was multiplied by higher
factors in order to compensate for the larger fixed expenses of smaller households. The
poverty thresholds are updated every year to reflect changes in the consumer price index but
overall rises in standard of living. (levington, page 147) Another issue is that the poverty index
has several flaws. First, it does not allow for regional variations in the cost of living or for
higher costs in the central city areas, where many of the poor are concentrated. Second, the
flood costs for the budget were designed for temporary or emergence use and are thus
inadequate for a perment diet because they provide only the barest subsistence. Finally, the
government statistics fall to take into consideration nonmonetary benefits and assets in
determining the number of poor. If these were counted, the numbers in the official poverty
ranks would be reduced. The growing gap between the poverty level and median family
income demonstrates the inaccuracy of adjusting a poverty level for price increase but not for
rising living standard and productivity gains. Alternative definitions and concepts also have a
major impact on the poverty estimates that if transfer payments or income support programs
such as social security are not counted, then about twenty percent of all American families
lived in poverty during 1988, Government income transfers are, however, included in the
official poverty index, and this fact reduced the relative number of destitute Americans. If
in-kind programs such as Medicaid, subsidized housing, and food stamps were also included,
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then the percentage in poverty might have been further reduced, (Fitchen, page 97)
Another issue is that some particular groups are more likely to experience poverty than
others. For instance, blacks are three times as likely to be poor as whites. Families headed by
women are nearly five times more likely to be poor than other families. Families where the
head has no more than eight years of schooling are nearly five times as likely to be poor
compared to families headed by college educated person. Minority and female headed units
are not only more likely to be poor but less likely to escape from poverty. The poor face
multiple impediments to self-sufficiency, including joblessness, less than a high school
education, and dependence on welfare.
Their are four different major groups of poor people. They are the elderly, children,
employed working-age adults, and unemployed working-age adults. Each of these groups has
different problems that are addressed by different programs.
Few elderly people hold jobs, and that is the main cause of poverty among the elderly.
Some of the elderly poor are willing and able to hold regular jobs, but most cannot. An
increasing number of elderly people living alone must support themselves. As the elderly
become more numerous and live longer, meeting their income needs becomes increasingly
burdensome. The best and often the only practicable way to help the aged poor is to give
them some form of income support. Their more costly health-care needs must be met. Two of
five persons classified as poor are children under 18 years of age. This fact is of special social
concern, because poor children who are denied opportunities from the start are unfairly
hindered in preparing themselves for productive adult lives.
Low-income families are often driven into poverty by birth of additional children. In
society that ignores need in setting wages and that balks at providing child care for women
who might earn needed income, a higher incidence of poverty among larger families is a
logical consequence. Poor children also have special needs beyond those which can be
provided by giving their families higher incomes. In particular, health care, compensatory
educational, and vocational training are essential to provide permanent freedom from poverty.
Although the problems is often overstated, unemployment remains a major cause of
poverty. The poor are the victims of forced idleness more frequently than the nonpoor. Poor
family heads are about 5.5times as likely to be unemployed as are the nonpoor.(Katz, page
71)
Being employed does not in itself guarantee an adequate income. Many persons worked
full time year round and still remain poor. For these people and their families, poverty results
from low paying jobs as well as from large families and periods of unemployment. The
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working poor also experience another labor market difficulties. Many leave the work force
voluntarily because of illness or disability or become discourage about the prospects of finding
a job and stop looking. A greater number of the working poor are employed at low- paying
jobs. In 1988, 40 percent of all poor persons worked but could not overcome poverty. One-fifth
of all poor families had two or more wage earner for part of the year and remained poor.
(Levitan, page 114)
The problems for the working poor are frequent joblessness, low wages, deficient
education, and inadequate skills. The plight of the working poor can be alleviated by
employment programs that streamline the operation of the labor market, increase the
productivity of low-income workers, and create opportunities for employment and
advancement. Legislation to eliminate discrimination must also be enforced when such
employment and training programs are implemented.
Programs provide goods and services directly to the needy to supplement their income.
Whatever the means of helping the poor with cash or in-kind income, public attention must
usually be focused on a specific problems in order to receive political attention.
The necessary goods and services sometimes are not available on the market, and
direct provision is a more effective way of providing essential aid. Low-costing housing, for
example, desperately needed to combat homelessness, is not profitable to construct and will
not be provided by the private sector of the economy without direct government action.
Granting housing to the poor in the absence an increase in an affordable housing supply
might raise rents on existing units, as it did during the 1980's.
In a few cases the government may be able to provide goods and services more
efficiently than the private sector because of the savings that are inherent in such large-scale
transactions.
The government offers other services not so much to alleviate the suffering of today's
poor as to enhance the opportunities of their children to escape from poverty. Helping families
to avoid having more children than they desire is one of the most productive ways of
eliminating poverty. Proper care for mother and child is also extremely important, so that the
young will be healthy. The government also provides some compensatory education from
preschool to college for poor children.
Overall, is isolating the impact of these programs upon beneficiaries is not always easy.
Birth control and maternal care, designed to give children a better start in life, also leave the
mother in a better position to become economically self sufficient or, at least, contribute to her
own support. Similarly, the difference between cash subsides and rehabilitative programs is
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often blurred, for instance, stipends are necessary for the poor if they are to complete an
effective training program. These various strategies for helping the poor complement each
other. Not only must today's poverty be alleviated through cash and in-and aid, but steps must
be taken to reduce it in the future by better preparing young people and by giving the poor a
better chance in the job market.
Bibliography
Fitchen,Janet M.(1981). Poverty and Rural America
New York,York: Random house Publishing Company.
Jansson, Bruce S. (1988). The Reluctant Welfare State, A
History of Amercians Social Welfare Policies. Belmont, California: Wadsworth Publishing
Company.
Katz, Michael B. (1990) The Undeserving Poor the War on Poverty to the war on Welfare,
New York, New York.
Levitan, Sar A. And Shapiro, Issac. (1987), Working But Poor. New York, New York: The free
Press.
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