1. © SOUTH-WESTERNCONTEMPORARY ECONOMICS: LESSON 3.41 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

2. © SOUTH-WESTERNCONTEMPORARY ECONOMICS: LESSON 3.42 LESSON 3.4 Providing a Safety Net  median income  social insurance  income-assistance programs Key Terms

3. © SOUTH-WESTERNCONTEMPORARY ECONOMICS: LESSON 3.43 Income and Poverty  In a market economy, income depends primarily on earnings, which depend on the value of each person’s contribution to production

4. © SOUTH-WESTERNCONTEMPORARY ECONOMICS: LESSON 3.44 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.

5. © SOUTH-WESTERNCONTEMPORARY ECONOMICS: LESSON 3.45 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.

6. © SOUTH-WESTERNCONTEMPORARY ECONOMICS: LESSON 3.46 Number and Percentage of U.S. Population in Poverty: 1959–2001

7. © SOUTH-WESTERNCONTEMPORARY ECONOMICS: LESSON 3.47 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.  Since the mid-1990s poverty rates have trended down for all types of families, before rising slightly in the recession year of 2001.

8. © SOUTH-WESTERNCONTEMPORARY ECONOMICS: LESSON 3.48 U.S. Poverty Rates and Types of Households

9. © SOUTH-WESTERNCONTEMPORARY ECONOMICS: LESSON 3.49 Programs to Help the Poor  Social insurance  Income-assistance programs  Earned-income tax credit  Welfare reform

10. © SOUTH-WESTERNCONTEMPORARY ECONOMICS: LESSON 3.410 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

11. © SOUTH-WESTERNCONTEMPORARY ECONOMICS: LESSON 3.411 Social Insurance Programs  Social Security  Medicare  Unemployment insurance  Worker’s compensation

12. © SOUTH-WESTERNCONTEMPORARY ECONOMICS: LESSON 3.412 Income-Assistance Programs  Income-assistance programs provide money and in-kind assistance to poor people.  Cash transfer programs  In-kind transfer programs

13. © SOUTH-WESTERNCONTEMPORARY ECONOMICS: LESSON 3.413 Earned-income tax credit  Supplements wages of the working poor

14. © SOUTH-WESTERNCONTEMPORARY ECONOMICS: LESSON 3.414 Welfare Reform  Temporary Assistance for Needy Families (TANF)  Welfare reform has reduced welfare rolls and increased employment.

15. © SOUTH-WESTERNCONTEMPORARY ECONOMICS: LESSON 3.415 Income Redistribution— Composition of Federal Outlays