© SOUTH-WESTERNCONTEMPORARY ECONOMICS: LESSON 3.4  12.1 Students understand common terms & concepts and economics reasoning. Standard Address 1

© SOUTH-WESTERNCONTEMPORARY ECONOMICS: LESSON 3.42 LESSON 3.4 Providing a Safety Net  Determine why incomes differ across households, and identify the main source of poverty in the United States.  Describe government programs that provide a safety net for poor people. Objectives

© SOUTH-WESTERNCONTEMPORARY ECONOMICS: LESSON 3.43 LESSON 3.4 Providing a Safety Net  median income  social insurance  income-assistance programs Key Terms

© SOUTH-WESTERNCONTEMPORARY ECONOMICS: LESSON 3.44 Income and Poverty  In a market economy, income depends primarily on earnings, which depend on the value of each person’s contribution to production

© SOUTH-WESTERNCONTEMPORARY ECONOMICS: LESSON 3.45 Why Household Incomes Differ  The median income of households is the middle income when incomes are ranked from lowest to highest.  The main reason household incomes differ is that the number of household members who are working differs.

© SOUTH-WESTERNCONTEMPORARY ECONOMICS: LESSON 3.46 Why Household Incomes Differ  High-income households typically consists of well-educated couples with both spouses employed.  Low-income households typically are headed by a single mother who is young, poorly educated, and unemployed.

© SOUTH-WESTERNCONTEMPORARY ECONOMICS: LESSON 3.47 Official Poverty Rate  The federal government determines the official poverty level and adjusts this benchmark over time to account for inflation.  The U.S. official property level of income is many times greater than the average income for most of the world’s population.  Poverty is a relative term.

© SOUTH-WESTERNCONTEMPORARY ECONOMICS: LESSON 3.48 Number and Percentage of U.S. Population in Poverty: 1959–2001

© SOUTH-WESTERNCONTEMPORARY ECONOMICS: LESSON 3.49 Poverty and Marital Status  Poverty rates among female-headed families are five to six times greater than rates among married couples.  Poverty rates among female-headed families are two to three times greater than those for male-headed families.

© SOUTH-WESTERNCONTEMPORARY ECONOMICS: LESSON Poverty and Marital Status  Since the mid-1990s poverty rates have trended down for all types of families, before rising slightly in the recession year of  Births to single mothers make up the primary source of poverty in the United States.

© SOUTH-WESTERNCONTEMPORARY ECONOMICS: LESSON U.S. Poverty Rates and Types of Households

© SOUTH-WESTERNCONTEMPORARY ECONOMICS: LESSON Why do incomes differ across household, and what is the main source of poverty in the U.S. economy?  Incomes differ across households because of the number of individuals in the household who work and the age and education of these individuals.  Families headed by females with no husband present are the number-one source of poverty in the U.S.. Checkpoint: pg 85

© SOUTH-WESTERNCONTEMPORARY ECONOMICS: LESSON Programs to Help the Poor  Social insurance  Income-assistance programs  Earned-income tax credit  Welfare reform

© SOUTH-WESTERNCONTEMPORARY ECONOMICS: LESSON Social Insurance  Social insurance programs are designed to help make up for the lost income of people who worked but are now  Retired  Temporarily unemployed  Unable to work because of disability or work- related injury  The Social insurance system tends to redistribute income from rich to poor and from young to old.

© SOUTH-WESTERNCONTEMPORARY ECONOMICS: LESSON Social Insurance Programs  Social Security  Medicare  Unemployment insurance  Worker’s compensation

© SOUTH-WESTERNCONTEMPORARY ECONOMICS: LESSON Income-Assistance Programs  Income-assistance programs provide money and in-kind assistance to poor people.  Cash transfer programs  Temporary Assistance for Needy Families (TANF)  Supplemental Security Income (SSI)  In-kind transfer programs  Medicaid

© SOUTH-WESTERNCONTEMPORARY ECONOMICS: LESSON Earned-income tax credit  The Earned-income tax credit supplements wages of the working poor.

© SOUTH-WESTERNCONTEMPORARY ECONOMICS: LESSON Welfare Reform  Temporary Assistance for Needy Families (TANF)  Welfare reform has reduced welfare rolls and increased employment.

© SOUTH-WESTERNCONTEMPORARY ECONOMICS: LESSON Income Redistribution— Composition of Federal Outlays

© SOUTH-WESTERNCONTEMPORARY ECONOMICS: LESSON What are the main government programs that try to offer a safety net?  The main government programs that try to offer a safety net are social insurance programs and income-assistance programs.  The main social insurance programs are Social Security and Medicare.  The main income-assistance programs are TANK, SSI and Medicaid. Checkpoint: pg 88

© SOUTH-WESTERNCONTEMPORARY ECONOMICS: LESSON Key Concepts #1. #2. #3. #4. Assessment

© SOUTH-WESTERNCONTEMPORARY ECONOMICS: LESSON Key Concepts Assessment

© SOUTH-WESTERNCONTEMPORARY ECONOMICS: LESSON Key Concepts #5. Assessment