Starter Is a lower level of education a cause of poverty or a result of poverty?

Unemployment, Poverty, and Income Distribution CHAPTER 13.1, 13.2

Why unemployment and inflation matters? As the nation goes through business cycles, it faces the problems of unemployment and inflation. Persistent unemployment can lead to poverty. During periods of inflation, wages buy less.

Unemployment Unemployment rate--percent of labor force jobless and looking for work Civilian labor force--people over 16 who are working, looking for work Bureau of Labor Statistics determines unemployment rate divides number of unemployed workers by total in civilian labor force does not count discouraged who have stopped looking or underemployed Underemployed--work part-time, want full-time or work below skill level

Full Employment Full employment--no unemployment caused by decreased economic activity Always some degree of unemployment: people relocate; look for better job; can't find appropriate job Unemployment rate of 4 to 6 percent considered full employment in U.S. other rates in countries with different labor markets, economic policies

Types of Unemployment Frictional unemployment--temporary, experienced by people changing jobs Seasonal unemployment--due to seasonal work Structural unemployment--jobs exist but workers not qualified Cyclical unemployment--caused by decreased activity in business cycle

Poverty Poverty--lack of income, resources to have minimum standard of living No universal standard for poverty; varies from country to country Poverty threshold--official minimum income to pay for basic needs set by government Poverty rate--percent of people in households below poverty threshold - based on population as a whole Poverty does not hit all sectors of society equally. Most at risk: children; minorities; inner city, rural, and single-mother families

Poverty About half of world's population of 6 billion live in poverty In U.S. 40 million live below poverty line Good economic times may not move large numbers out of poverty

Factors affecting Poverty Education--the higher the level of education, the higher the income Discrimination against minorities, women sometimes face wage discrimination, occupational segregation Demographic trends--single-parent families have more economic problems Change from manufacturing to service jobs has resulted in lower wages for low-skilled workers

Income Distribution Income distribution--how income is divided among people in a nation Income inequality--unequal distribution of income; some always exists

Anti-poverty Programs Welfare--economic, social programs providing assistance to the needy some criticized for wasting government funds, harming recipients Now government also uses tax breaks, grants, job training, self-help Food stamp program gives card, government deposits funds in account card can be used only to buy food at grocery stores Medicaid offers health care; funded by federal and state governments Earned-income tax credit--refunds taxes deducted from paychecks money usually spent in own communities, helping boost their economies

Anti-poverty Programs Social Security program pays benefits to retirees, survivors, disabled Medicare is government health insurance for seniors Unemployment insurance helps laid-off workers while looking for job Social Security, Medicare funded by payroll taxes; reduced poverty Unemployment insurance paid mostly by taxes on employer