Economics vs. Poverty |
Poverty has several definitions however it basically means “a state of privation or lack of the usual or socially acceptable amount of money or material possessions.” There is no universally accepted definition of “socially acceptable money or material possessions” that exists because poverty is a relative concept. In other poorer countries it is said to mean living at the brink of subsistence, while in America many suffer from undernourishment, not many confront starvation. A key concern in the area of poverty is the reality of inequality. Inequality has been and continues to be a problem in all societies. There is no society that distributes income evenly. In spite of all the theoretical and technical problems of measurement, the government has developed a widely cited poverty index that reflects the diverse intake requirements of families depending on their size, sex, age and family location, while also surveying the gender of the head of household. Based on previous surveys, the creators of the poverty index determined that families of three or more persons would spend approximately one-third of their income on food. Based on the poverty index the poverty level for these families would be set at three times the cost of the economy food plan. For smaller families and people who lived alone, the cost of economy food plan were multiplied at higher factors taking in consideration larger fixed expenses for these households. The Census Bureau updates the poverty thresholds every year. Another area of concern is that the poverty index has some defects. One of them being it does not allow for regional deviations in the cost of living or for higher costs in the central city areas, which is where many of the poor are concentrated. Another defect being the food costs for the budget were designed for temporary or emergency use and are inadequate for a permanent
diet because they provide only the barest essentials. Finally, the government statistics have failed to take into consideration nonmonetary benefits and assets in determining the number of poor. If these areas were considered, the numbers in the official poverty statuses would reduce. There continues to be a growing gap between the poverty level and median family income which reveals the inaccuracy of adjusting a poverty level for price increases but not for the rising living standards and efficiency gains. Alternative definitions and concepts also have a major impact on the poverty estimates. If transfer payments or income support programs such as social security are not counted, then in 1988 about twenty percent of American families lived in poverty. Government income transfers are, however, included in the official poverty index, and this reduced the relative number of poverty stricken Americans. “If in-kind programs such as Medicaid, subsidized housing, and food stamps were also included, then the percentage in poverty might have been reduced yet further.” (Fitchen, page 97) Another challenge is that minority groups are more likely to experience poverty than others. For instance, African Americans are three times as likely to be poor as Caucasians. Families headed by women are nearly five times more likely to be poor than other families. Families where the head of household has no more than eight years of schooling are nearly five times as likely to be poor as compared to families headed by a college educated person. Minority and female heads of household units are not only more likely to be poor but less likely to escape from poverty facing multiple obstacles to self-sufficiency, including unemployment, less than a high school education, and dependence on welfare.
The poor are categorized into four different groups; elderly, children, employed working age adults and unemployed working age adults. Each group has different areas the need addressed by different...