Chapter 14 4 Poverty the Distribution of Income

Chapter 14. 4 Poverty & the Distribution of Income Pgs. 394 - 400

The Distribution of Income � Families are ranked by income ◦ This is broken into 5 equal groups of families ◦ What is the total income of each group? ◦ Equal distribution would make the total income the same for each group �This isn’t what the US is like �The people at the top have more $ than those at the bottom � The Lorenz Curve

Reasons for Income Inequality � Education ◦ The more education you have, the more $ you make ◦ This doesn’t mean college � Wealth ◦ Access to better schools ◦ Better “networking” ◦ Income through investments � Discrimination ◦ Legal or not, this still happens ◦ Women & minorities are still dealing w/ this

Cont. � Ability ◦ If you can do something others can’t ◦ Let’s face it, I can’t dunk a basketball � Monopoly Power ◦ Are you in a union? ◦ Are you a part of a professional organization?

Poverty � What defines “poverty”? ◦ Poverty guidelines (poverty line) � 2011 - 1 person: $10, 890; family of 4: $22, 350 � People in Poverty ◦ 30 -40 million Americans live in poverty ◦ The largest ethnic group in poverty is? �White; African Americans are over represented � The ◦ ◦ Growing Income Gap Movement to service jobs Disparity in education Decline of unions Changes in family structure

Antipoverty Programs � Income Assistance � General Assistance ◦ TANF & SSI – cash given directly to people ◦ Help that isn’t cash ◦ Food Stamps, WIC, Medicaid � Social Service Programs ◦ Foster care, day care, Headstart, latchkey � Tax Credits ◦ EIC: Government pays part of your annual taxes ◦ Michigan just eliminated this for state taxes

Cont. � Enterprise Zones ◦ Tax breaks to motivate business growth ◦ Usually on poor neighborhoods � Workfare Programs ◦ Work for the benefits ◦ Some kind of public works ◦ Can help people develop new skills

Cont. � Negative Income Tax ◦ This is a proposal, not a real program ◦ Set minimum income – pay people who earn less ◦ For example �Taxes = (25% of income) - $8, 000 �Example #1: $0 income = -$8, 000 in taxes �Example #2: $12, 000 income = $4, 000 - $8, 000 = -$4, 000 taxes �You wouldn’t pay taxes until you earned at least $32, 000 �People want to work �Example 1 only made $8, 000, Example 2 made $16, 000 �Cheaper than existing programs