Poverty April 29, 1999

Concentration of Wealth Top 10% of US households control 78% of private wealth Bottom 54% of US households had negative wealth (I.e. debt)

Poverty Definitions 1999 Size of 48 Contiguous Family States and D.C. Alaska Hawaii 1 $ 8,240 $10,320 $ 9, ,060 13,840 12, ,880 17,360 15, ,700 20,880 19, ,520 24,400 22, ,340 27,920 25, ,160 31,440 28, ,980 34,960 32,170 For each additional person, add 2,820 3,520 3,240

Individuals in Poverty (1996)

Poverty by Year and State

Distribution of Poverty 2/3 are White, 1/2 live in urban slums, 50% live in the South Poor are more likely to be: –unemployed –minority –uneducated –female household –sick, –living in depressed regions

Choice 1: The Welfare Trap Cut back End the reward system in welfare end incentives for single parent households strict time limit

Does Welfare Perpetuate Welfare 50% of recipients exit AFDC in first year 75% exit AFDC in first two years 40% of women who exit through earned income remain poor 42% of women return to welfare within two years of leaving it 75% of those reentering welfare exit again and 50% exit within 12 months of return

While women whose mothers never received welfare are statistically less likely to apply for welfare as adults than women whose mothers did, statistical research has not established that welfare causes dependency in the next generation.

Choice 2: Rights of the Poor Right to a decent standard of living Fix up holes in the safety net (Health care) True minimum wage More for head start

Are Welfare Recipients Receiving too Much? Since 1970, states have allowed inflation to erode 45 percent of the value of welfare payments. In addition, many state governments have cut benefits: In 1970, the average monthly welfare check per family was $676 (in 1993 dollars).[35] In 1993, the average monthly welfare check per family was $373.[36]

Choice 3: Workfare Require able-bodied individuals to work Encourage people to stay in school Problem with transportation, illiteracy, mental health, child care

Choice 4: Job Strategy Assist working poor work with private businesses Provide a decent wage floor Provide social support infra structure

Unemployment is not generally voluntary Result of frictional unemployment (jobs and workers in different places) Structural (unemployed lack the skills) Technological (new production processes eliminate jobs)