Essay/Term paper: Poverty vs. the economy

Essay, term paper, research paper:  Economics

Poverty vs. The Economy


Poverty is a lack of goods and services necessary to maintain a
minimal adequate standard of living. The definition of the term adequate varies,
however, with the general standard of living in a society and with public
attitudes toward deprivation. No university accepted definition of basic needs
exists because poverty is a relative concept. In poorer countries it means
living at the brink of subsistence, while in our country few improvised families
confront starvation, although many suffer from undernourishment.
A key issue in the area of poverty is inequality. Inequality has been
a problem in all societies. No society distributes income evenly. Despite all
the conceptual and technical problems of measurement, the government has
devised a widely cited poverty index that reflects the different consumption
requirements of families depending on their size and composition, on the sex and
age of the family head, and on weather they live in rural or urban areas. Based
on past surveys, the designers of the poverty index determined that families of
three or more person spend approximately one-third of their income on food.
Thus, the poverty level for these families was, therefore, set at three times
the cost of the economy food plan. For smaller families and persons living
alone, the cost of the economy food plan was multiplied by higher factors in
order to compensate for the larger fixed expenses of smaller households. The
poverty thresholds are updated every year to reflect changes in the consumer
price index but overall rises in standard of living. (levington, page 147)
Another issue is that the poverty index has several flaws. First, it
does not allow for regional variations in the cost of living or for higher costs
in the central city areas, where many of the poor are concentrated. Second, the
flood costs for the budget were designed for temporary or emergence use and are
thus inadequate for a perment diet because they provide only the barest
subsistence. Finally, the government statistics fall to take into consideration
nonmonetary benefits and assets in determining the number of poor. If these
were counted, the numbers in the official poverty ranks would be reduced.
The growing gap between the poverty level and median family income
demonstrates the inaccuracy of adjusting a poverty level for price increase but
not for rising living standard and productivity gains. Alternative definitions
and concepts also have a major impact on the poverty estimates that if transfer
payments or income support programs such as social security are not counted,
then about twenty percent of all American families lived in poverty during 1988,
Government income transfers are, however, included in the official poverty index,
and this fact reduced the relative number of destitute Americans. If in-kind
programs such as Medicaid, subsidized housing, and food stamps were also
included, then the percentage in poverty might have been further reduced,
(Fitchen, page 97)
Another issue is that some particular groups are more likely to
experience poverty than others. For instance, blacks are three times as likely
to be poor as whites. Families headed by women are nearly five times more
likely to be poor than other families. Families where the head has no more than
eight years of schooling are nearly five times as likely to be poor compared to
families headed by college educated person. Minority and female headed units
are not only more likely to be poor but less likely to escape from poverty. The
poor face multiple impediments to self-sufficiency, including joblessness, less
than a high school education, and dependence on welfare.
Their are four different major groups of poor people. They are the
elderly, children, employed working-age adults, and unemployed working-age
adults. Each of these groups has different problems that are addressed by
different programs.
Few elderly people hold jobs, and that is the main cause of poverty
among the elderly. Some of the elderly poor are willing and able to hold
regular jobs, but most cannot. An increasing number of elderly people living
alone must support themselves. As the elderly become more numerous and live
longer, meeting their income needs becomes increasingly burdensome. The best
and often the only practicable way to help the aged poor is to give them some
form of income support. Their more costly health-care needs must be met.
Two of five persons classified as poor are children under 18 years of
age. This fact is of special social concern, because poor children who are
denied opportunities from the start are unfairly hindered in preparing
themselves for productive adult lives.
Low-income families are often driven into poverty by birth of
additional children. In society that ignores need in setting wages and that
balks at providing child care for women who might earn needed income, a higher
incidence of poverty among larger families is a logical consequence. Poor
children also have special needs beyond those which can be provided by giving
their families higher incomes. In particular, health care, compensatory
educational, and vocational training are essential to provide permanent freedom
from poverty.
Although the problems is often overstated, unemployment remains a
major cause of poverty. The poor are the victims of forced idleness more
frequently than the nonpoor. Poor family heads are about 5.5times as likely to
be unemployed as are the nonpoor.(Katz, page 71)
Being employed does not in itself guarantee an adequate income. Many
persons worked full time year round and still remain poor. For these people and
their families, poverty results from low paying jobs as well as from large
families and periods of unemployment. The working poor also experience another
labor market difficulties. Many leave the work force voluntarily because of
illness or disability or become discourage about the prospects of finding a job
and stop looking. A greater number of the working poor are employed at low-
paying jobs. In 1988, 40 percent of all poor persons worked but could not
overcome poverty. One-fifth of all poor families had two or more wage earner
for part of the year and remained poor. (Levitan, page 114)
The problems for the working poor are frequent joblessness, low wages,
deficient education, and inadequate skills. The plight of the working poor can
be alleviated by employment programs that streamline the operation of the labor
market, increase the productivity of low-income workers, and create
opportunities for employment and advancement. Legislation to eliminate
discrimination must also be enforced when such employment and training programs
are implemented.
Programs provide goods and services directly to the needy to
supplement their income. Whatever the means of helping the poor with cash or
in-kind income, public attention must usually be focused on a specific problems
in order to receive political attention.
The necessary goods and services sometimes are not available on the
market, and direct provision is a more effective way of providing essential aid.
Low-costing housing, for example, desperately needed to combat homelessness, is
not profitable to construct and will not be provided by the private sector of
the economy without direct government action. Granting housing to the poor in
the absence an increase in an affordable housing supply might raise rents on
existing units, as it did during the 1980's.
In a few cases the government may be able to provide goods and
services more efficiently than the private sector because of the savings that
are inherent in such large-scale transactions.
The government offers other services not so much to alleviate the
suffering of today's poor as to enhance the opportunities of their children to
escape from poverty. Helping families to avoid having more children than they
desire is one of the most productive ways of eliminating poverty. Proper care
for mother and child is also extremely important, so that the young will be
healthy. The government also provides some compensatory education from
preschool to college for poor children.
Overall, is isolating the impact of these programs upon beneficiaries
is not always easy. Birth control and maternal care, designed to give children
a better start in life, also leave the mother in a better position to become
economically self sufficient or, at least, contribute to her own support.
Similarly, the difference between cash subsides and rehabilitative programs is
often blurred, for instance, stipends are necessary for the poor if they are to
complete an effective training program. These various strategies for helping
the poor complement each other. Not only must today's poverty be alleviated
through cash and in-and aid, but steps must be taken to reduce it in the future
by better preparing young people and by giving the poor a better chance in the
job market.

Bibliography

Fitchen,Janet M.(1981). Poverty and Rural America
New York,York: Random house Publishing Company.

Jansson, Bruce S. (1988). The Reluctant Welfare State, A
History of Amercians Social Welfare Policies. Belmont, California:
Wadsworth Publishing Company.

Katz, Michael B. (1990) The Undeserving Poor the War on Poverty to the war on
Welfare, New York, New York.

Levitan, Sar A. And Shapiro, Issac. (1987), Working But Poor. New York, New
York: The free Press.