 Poverty = when a person’s income and resources to not allow him/her to achieve a minimum standard of living  Minimum standard varies from country to country  Ex: someone who herds sheep and lives in a hut  In the US = considered poor; in other countries = could be a comfortable life  Poverty threshold (aka poverty line) = the minimum income needed to pay for the basic expenses of living  People who live below live in poverty  Calculated by finding the cost of nutritional food x3 (food costs are about 1/3 of a person’s expenses)

 The Census Bureau issues the poverty thresholds  Used to estimate the # of people in poverty across the US each year  Classifies by type of residence, race, economic, and demographic characteristics  The Department of Health and Human Services (HHS) issues the poverty guidelines  Determines whether a person or family is eligible for assistance through federal programs

 The "absolute poverty line“ = the threshold below which families or individuals are considered to be lacking the resources to meet the basic needs for healthy living  having insufficient income to buy food, shelter, and clothing needed to stay healthy

 Poverty rate = % of people living in households that have incomes below the poverty threshold  Based on the population as a whole  Poverty rate in US was 11.3%; by 2004 rose to 12.7%  Children more at risk  “Anyone who has ever struggled with poverty knows how extremely expensive it is to be poor.”

 4 major factors have the strongest influence on who lives in poverty in the US:  Discrimination  Demography  Changes in the labor force  Education  Is a lower level of education a cause of poverty or a result?

 Income distribution = the way income is divided among people in the US  Income inequality = the unequal distribution of income  Unless everyone earns the same amount, there will always be a difference between the incomes of the wealthiest citizens and those of the poorest

 Lorenz curve = shows the degree of income inequality in a nation.

 Welfare = gov’t economic and social programs that give assistance to the needy  Criticized for wasting gov’t funds and for harming rather than helping people  For Low-Income Households  1) Food stamp program helps those with low incomes to buy groceries  2) Medicaid = offers health care for the poor and is funded by both federal and state gov’t  Only health care coverage for about 40 million Americans, ½ of them children  3) Earned-income tax credit  Gives a refund of payroll taxes deducted from paychecks

 Antipoverty programs more effective in other nations  In US: 1 out of 9 children lifted out of low-income bracket  In Canada: lift 1 out of 3 children  In some European countries, it is 1 out of 2  The poorest children in the US are poorer than the poorest children in Canada, Germany, and most other developed nations

 Pays benefits to retirees, survivors, and the disabled  2004: $500 billion  Will increase as the baby boomers reach retirement age  Funded through payroll tax  At retirement, all workers are entitled to monthly checks  Medicare = health insurance program for seniors  Between 1960 and 1995, poverty rate of 65 and older went from 35% to 10%

 Underwent changes, including new incentives for working  Workfare = requires welfare recipients to do work in return for benefits  Direct financial aid, Temporary Assistance for Needy Families (TANF), now has a limit of 5 years