Income and Employment Inequalities (poverty)

Background Knowledge The United States is a capitalist country. Capitalism is an economic system in which trade, industries, and the means of production are largely or entirely privately owned and operated for profit. The USA is a country with a strong capitalist ethic and favours minimal state intervention – individualist rather than collectivist. The opportunity to become rich is part of the American Dream. Many Americans believe in the American Dream and there are thousands of people who have achieved it. However, for every ‘winner’ there are many more ‘losers’. In terms of income, it seems that minorities suffer inequality – especially African Americans and Hispanic Americans.

Unemployment At the end of 2014, 5.5% of Americans were unemployed, but the figures for different ethnic groups vary greatly. Today, around 4.6% of Whites and 4.6% of Asian Americans are unemployed compared to 10.5% of African Americans – so blacks are twice as likely to be unemployed as whites. 6.5% of Hispanics are unemployed which again shows that minorities are more likely to be unemployed. Source - http://www.bls.gov/web/empsit/cpsee_e16.htm

Income Compared to other developed countries, the USA is a very unequal society. According to the UN , the Gini coefficient (which gives a measure of wealth or income inequality within a country) for the USA is 40.8 and rising (UK 36). What this means is that the richest people in the USA have, on average, a far greater share of the total income or wealth than the poorest people. Ethnicity is crucial when looking at social and economic inequalities in the USA. White and Asian Americans are most likely to have higher incomes and be employed. African Americans and Hispanic Americans are least likely to have high incomes and be employed.

Income In 2012, among the ethnic groups, Asian households had the highest average income which stood at $68,636. The average income for White households was $57,009, and it was $33,321 for Black households. For Hispanic households the average income was $39,005. In other words, on average, Asian Americans earn more than twice as much as black Americans. Also, on average black Americans earn about 58% of what white Americans earn. Clearly, there is extreme economic inequality for black and Hispanic Americans compared to white and Asian Americans.

Poverty Poverty rates in the USA are high for a developed country. 14.5% of the US population were classed as living in poverty in 2013 – that’s roughly 45.3 million Americans. American poverty levels peaked (recently) in 2010 when the rate was 15.1%; the result of the global economic crisis and recession. The table on the next slide shows the extent of poverty for different ethnic groups…

Poverty So from the table on the last slide, in 2012… 15% of Americans lived in poverty 27.2% of African Americans in poverty 25.6% of Hispanic Americans in poverty 9.7% of non-Hispanic whites in poverty So, in 2012 blacks were almost 3 times as likely to be living in poverty compared to whites.

The official measure of poverty is the Federal Poverty Line. Millions of Americans in 2016 live below the poverty line. The National Centre on Poverty reported that 13 million American children were living in families with incomes below the official federal level. Black and Hispanic Americans are more likely to be living in poverty therefore experience more social and economic inequality compared to Asian and White Americans. Source: https://www.healthcare.gov/glossary/federal-poverty-level-FPL/ http://familiesusa.org/product/federal-poverty-guidelines

2016 Federal Poverty Levels •$11,880 for individuals •$24,300 for a family of 4

African-American Poverty Reasons for the high levels of poverty are different. Black Americans have suffered systematic and long-term discrimination. Many have also fallen victim to the poverty cycle. The level of black poverty has steadily decreased over the years. However, black Americans do still experience greater inequality than white Americans or any other ethnic group. This has resulted in a Black “underclass” living in ghettos where they find it more difficult to get a proper education, employment, health and even justice in the courts. This has led to a rise in crime and substance abuse. African Americans are the biggest group reliant on welfare.

African-American Poverty Although African-Americans only account for roughly 13% of the population in the USA they account for 24.4% of the poor population.

Black Middle Class However, there has been a rise in a black middle class as there has been better access to education. Today many black Americans are moving into better homes and housing barriers are gradually disappearing - no more ‘white flight’. Many have integrated into white neighbourhoods and there has also been a development of black middle class neighbourhoods. For example, Atlanta and Los Angeles have thriving black middle class areas.

Case Study: Black Middle Class The Queens district of New York is home to black middle class families whose average income was higher than that of white families in the same area. This was largely due to the growth of two-parent families. Today middle-class black Americans are well established as a separate community and do not have to live side by side with lower income black Americans - those that are left behind in the ghetto, left to deal with drugs, violence and crime.

Hispanic Poverty The reasons for poverty amongst Hispanics are different. Mainly due to immigration from South and Central America. Poverty levels are not equally distributed amongst the Hispanic groups. Mexicans and Puerto Ricans have higher poverty levels than Cubans. Mexicans and Puerto Ricans represent the economic migrants who are in search of the American Dream, whereas Cubans have a strong tradition of being successful in business.

Examples of rich and poor neighbourhoods in the USA? Compton in Los Angeles, California (poor) Harlem in New York City, New York (poor) Newport Beach, Orange County, California (rich) The Hamptons, Long Island, NY (rich) Upper East Side of Manhattan, NYC, NY (rich) http://www.blackenterprise.com/news/the-10-most-dangerous-neighborhoods-america/

Video Clips… https://www.youtube.com/watch?v=wNNBjqdKZRQ – wealth inequality stats http://inequality.org/tax-rich-animated-fairy-tale/ - animation about wealth inequality in USA

Park Avenue: Money, Power and the American Dream http://inequality.org/park-avenue-money-power-american-dream/

Questions What wider issue has caused the levels of poverty to increase in the USA in recent years? Which groups are most likely to suffer from poverty in the USA? Compare the poverty and unemployment experiences of different ethnic groups in the USA. Higher: Practice KAKAE paragraph To what extent do African Americans experience economic inequality? Nat 5: Practice Explain Paragraph Explain, in detail, one reason why African Americans experience economic inequality in the USA