Chapter 6 - Social Problems

Ratio of CEO Compensation to Average Worker Pay, 1965-2014

-1965 = 20:1 -1978 = 30:1 -1995 = 123:1 -2000 = 376:1 -2014 = 303:1

Labor Force Participation and Poverty in the U.S.

-A common image of the poor is that they are jobless and unable or unwilling to work. Although the poor in the United States are primarily children and adults who are not in the labor force, many U.S. poor are classified as working poor—individuals who spend at least 27 weeks per year in the labor force (working or looking for work), but whose income falls below the official poverty level.

Conflict Theory on Wealth

-Karl Marx (1818-1883) proposed that economic inequality results from the domination of the bourgeoisie (owners of the factories, or "means of production") over the proletariat (workers). In a capitalistic economy, the bourgeoisie accumulate wealth as they profit from the labor of the proletariat, who earn wages far below the earnings of the bourgeoisie. Marx predicted that inequality resulting from capitalism would lead to the collapse of society. Based on an ambitious analysis of data on income and wealth in 20 countries over a period of three centuries, French economist Thomas Piketty (2014) concluded that inequality is intrinsic to capitalism and is likely to increase to levels that threaten democracy. -Modern conflict theorists recognize that the power to influence economic outcomes arises not only from ownership of the means of production but also from management position, interlocking board memberships, control of media, financial contributions to politicians, and lobbying. The conflict perspective views money as a tool that can be used to achieve political interests. Wealthy corporations and individuals use financial political contributions to influence political elections and policies in ways that benefit the wealthy. The interests of the wealthy include things such as keeping taxes low on capital gains, and the wealthy are more likely than the general public to oppose increasing the minimum wage and other policies that would create upward mobility among low-income Americans (Callahan and Cha 2013). -The power of the wealthy to influence political outcomes was reinforced by the 2010 Supreme Court ruling (5 to 4) in Citizens United v. Federal Election Commission that corporations have a First Amendment right to spend unlimited amounts of money to support or oppose candidates for elected office. Senator Bernie Sanders, who wants to overturn the Supreme Court's Citizens ruling, explained: "What the Supreme Court did in Citizens United is to tell billionaires like the Koch brothers and Sheldon Adelson, "You own and control Wall Street. You own and control coal companies. You own and control oil companies. Now, for a very small percentage of your wealth, we're going to give you the opportunity to own and control the United States government." That is the essence of what Citizens United is all about. (quoted in Easley 2015, n. p.)" -Super PACs also give the wealthy increased leverage in the political process. A Super PAC is a political action committee that is allowed to raise and spend unlimited amounts of money for the purpose of supporting or defeating a political candidate, as long as the monies are not given to any political candidate's campaign. During the 2012 election cycle, two wealthy Americans (Sheldon and Miriam Adelson) gave a combined $91.8 million to Super PACs. "The Adelsons gave more to shape the 2012 federal elections than all the combined contributions from residents in 12 states: Alaska, Delaware, Idaho, Maine, Mississippi, Montana, New Hampshire, North Dakota, Rhode Island, South Dakota, Vermont, and West Virginia" (Callahan and Cha 2013, pp. 18-19).Super PACs also give the wealthy increased leverage in the political process. A Super PAC is a political action committee that is allowed to raise and spend unlimited amounts of money for the purpose of supporting or defeating a political candidate, as long as the monies are not given to any political candidate's campaign. During the 2012 election cycle, two wealthy Americans (Sheldon and Miriam Adelson) gave a combined $91.8 million to Super PACs. "The Adelsons gave more to shape the 2012 federal elections than all the combined contributions from residents in 12 states: Alaska, Delaware, Idaho, Maine, Mississippi, Montana, New Hampshire, North Dakota, Rhode Island, South Dakota, Vermont, and West Virginia" (Callahan and Cha 2013, pp. 18-19). -Laws and policies that favor the rich, such as tax breaks that benefit the wealthy, are sometimes referred to as wealthfare. For example, the richest fifth of the U.S. population receives housing subsidies through the mortgage interest tax deduction that amounts to nearly four times the housing assistance provided to the poorest fifth (Garfinkel 2013). Corporate welfare refers to government subsidies to corporations, including direct payments and tax breaks. The profitable oil and gas industries receive large federal subsidies, and many states give corporations tax breaks as part of their economic development efforts to entice businesses to locate operations in their state. -Although the official federal corporate tax rate is 35 percent, legal tax loopholes enable corporations to pay significantly less than the 35 percent rate. Many corporations pay a tax rate of less than 20 percent and some have paid no taxes in a given year (Americans for Tax Justice 2014). One example of a corporate tax loophole is the practice known as corporate tax inversion, in which a company lowers its taxes by merging with a foreign company and changing to an offshore address. Inversions largely occur on paper and typically do not involve moving operations overseas. -Conflict theorists also note that "free-market" trade and investment economic policies, which some claim to be a solution to poverty, primarily benefit wealthy corporations. Trade and investment agreements enable corporations to expand production and increase economic development in poor countries and to sell their products and services to consumers around the world, thus increasing poor populations' access to goods and services -Yet, such policies also enable corporations to relocate production to countries with abundant supplies of cheap labor, which leads to a lowering of wages, and a resultant decrease in consumer spending, which leads to more industries closing plants, going bankrupt, and/or laying off workers. -Furthermore, most trade and investment agreements include a key provision that allows corporations to take legal action against governments with policies that protect the public, but at a cost to corporate profits. In 2012, in 70 percent of cases where corporations took legal action against governments for violating trade agreements, the World Bank's trade court ruled in favor of the corporation, and governments had to pay tens or even hundreds of millions of dollars—money that could otherwise go toward education, health care, and other public investments to improve the lives of the public, and especially the poor (McDonagh 2013). -When corporations claim that their products or services are essential in the fight against poverty, a conflict perspective might reveal a different story. For example, powerful food and biotech corporations such as Monsanto, Cargill, and Archer Daniels Midland have used their economic and political power to impose a system of agriculture based on intensive chemical use and patented and genetically modified seeds (McDonagh 2013). These corporations assert that their model of agriculture, which requires farmers to purchase their chemicals and seeds, yields more and better food, and thus is important in the global fight against hunger and poverty. Yet, this corporate control of agriculture has resulted in farmers' dependence and debt (and an epidemic of suicides among poor farmers), environmental degradation (through the increased use of chemicals), and health risks associated with chemicals and genetically modified foods.

Welfare in the U.S.

-Mitt Romney, candidate in the 2012 presidential election, famously referred to the 47 percent of Americans who, according to Romney, would vote for President Obama because they rely on public assistance. Romney remarked, "[T]here are 47 percent ... who are dependent upon government, who believe that they are victims, who believe the government has a responsibility to care for them, who believe that they are entitled to health care, to food, to housing, to you-name-it" (quoted in Plumer 2012, n.p.). Negative attitudes toward welfare assistance and welfare recipients, such as those conveyed in Romney's comments, are not uncommon (Epstein 2004). But these negative images are grounded in myths and misconceptions about welfare. For example, Romney was right that about half of Americans live in a household that receives some kind of federal benefit, but a big chunk of these benefits go to support the elderly and disabled. Nearly a third of U.S. households in 2011 received Medicare and Social Security—benefits for the elderly and the disabled (Plumer 2012). Medicare and Social Security are provided to older Americans across the economic spectrum; they are not programs designed to target the poor. Indeed, although government assistance programs are often referred to as "entitlement programs," labeling Social Security an "entitlement program" may be misleading because retirees collect the money that they and their employers have contributed over their work history. As we discuss in Chapter 12, Social Security is a form of retirement insurance administered by the government, which is substantially different from public assistance to the poor that is funded by tax dollars. The following discusses other myths about welfare: -Myth 1: People who receive welfare are lazy, have no work ethic, and prefer to have a "free ride" on welfare rather than work. = Reality. Three-quarters of recipients of TANF are children, and nearly half of TANF cases are child-only cases where no adult is involved in the benefit calculation and only children are aided (Office of Family Assistance 2014). Because we do not expect children to work, we can hardly think of children in need of assistance as "lazy." -Adults receiving public assistance are lazy? More than 1 in 10 TANF families have earned income from employment, but with average monthly earnings of only $838 (in 2011), they could not survive on the income from their jobs. Other adult welfare recipients are participating in work activities, including job training or education and job searches. Unemployed adult welfare recipients experience a number of barriers that prevent them from working, including disability and poor health, job scarcity, lack of transportation, and lack of education. Parents with infants or young children may be unable to work because they cannot afford child care. Finally, most adult welfare recipients would rather be able to support themselves and their families than rely on public assistance. The image of a welfare "freeloader" lounging around enjoying life is far from the reality of the day-to-day struggles and challenges of supporting a household on a monthly TANF check of $387, which was the average monthly cash assistance to families receiving TANF assistance in 2011 (Office of Family Assistance 2014). This chapter's Social Problems Research Up Close feature presents research that looks at the challenges that low-income mothers who rely on public assistance face for survival. -Myth 2: Most welfare mothers have large families with many children. = Reality. In 2011, the average number of children in families that receive TANF was only 1.8; half of families receiving TANF had only one child, and less than 8 percent of families had more than three children (Office of Family Assistance 2014). -Myth 3: Welfare benefits are granted to many people who are not really poor or eligible to receive them. = Reality. Although some people obtain welfare benefits through fraudulent means, it is much more common for people who are eligible to receive welfare not to receive benefits. Only about a third of families who are eligible to receive TANF are receiving TANF benefits (Office of Family Assistance 2014) (see Table 6.6). - Any type of assistance - 73.8% - Medicaid - 61.3% - SNAP - 49.5% - Cash assistance - 17.4% - Housing assistance - 14.8% -One reason for not receiving benefits is lack of information; some people do not know about various public assistance programs, or even if they know about a program, they do not know they are eligible. Another reason that many people who are eligible for public assistance do not apply for it is because they desire personal independence and do not want to be stigmatized as lazy people who just want a "free ride" at the taxpayers' expense. Others have difficulty navigating the complex administrative processes involved in applying for assistance. Assistance programs are administered through separate offices at different locations, have various application procedures and renewal deadlines, and require different sets of documentation. -As low-income mothers struggle to meet the intense demands of balancing work and family, they also have to continue the time-intensive task of piecing together in-kind and cash benefits to pad their low wages. Doing so involves traveling from one office to another; repeatedly disclosing intimate and personal information; and documenting, in a detailed paper trail, the legitimacy of one's story.... Although there is little time to spare in this world, each office treats clients as if they have endless time to waste. Furthermore, poor families are often at the mercy of buses that are late, babysitters who do not show up, overworked caseworkers who misplace documents, and other similar barriers to the successful performance of the role of "good client." This situation can lead to extreme levels of personal frustration, which add to the hardship and defeatism experienced while engaging this system. (p. 55) -Navigating through the "system"—getting time off work to meet with caseworkers and finding child care and transportation—can produce so much frustration that some people who are eligible for assistance just give up on the system. -Finally, some individuals who are eligible for public assistance do not receive it because it is not available. In cities across the United States, thousands of eligible low-income households are on waiting lists for public housing assistance because there are not enough public housing units available, and some cities have even stopped accepting housing applications. Even when people receive benefits, using them may be difficult. For example, individuals with Section 8 vouchers for housing may have a hard time finding a landlord who will accept them, even though it is against the law to refuse a Section 8 renter. Individuals who have Medicaid may have difficulty finding a doctor who will take Medicaid patients. Low-income parents who receive child care assistance vouchers are often unable to find an available "voucher slot" and may be on a waiting list at a child care center for more than a year. -Myth 4: There is widespread abuse and fraud in SNAP by beneficiaries, who use their food stamp benefits to purchase beer, wine, liquor, cigarettes, and/or tobacco, or who sell their food stamp benefits for cash. = Reality. First, the SNAP program strictly prohibits beneficiaries from purchasing alcoholic beverages and tobacco products, as well as any nonfood items such as pet food, cosmetics, and paper products, with their benefits card. And due to increased government oversight and the introduction of the Electronic Benefit Transfer (EBT) card system, fraud in the SNAP program has decreased considerably (Blumenthal 2012). -Myth 5: Immigrants place a huge burden on our welfare system. = Reality. Low-income noncitizen immigrants, including adults and children, are less likely to receive public benefits than those who are native born. Moreover, when noncitizen immigrants receive benefits, the value of benefits they receive is lower than the value of benefits received by those born in the United States (Ku and Bruen 2013). Federal rules restrict immigrants' eligibility for public benefit programs, and undocumented immigrants are generally ineligible to receive benefits from Medicaid, SNAP, and TANF, although some benefit programs, such as the National School Lunch Program, the Women, Infants, and Children Nutrition Program (WIC), and Head Start, do not include immigration status as an eligibility factor. And although children born in the United States are considered citizens and are therefore eligible for public assistance, undocumented parents often do not apply for assistance for their children because they either do not know their children can receive benefits, or they fear that applying for benefits for their children will result in their deportation (see also Chapter 9).

Earned Income Tax Credit

-The federal earned income tax credit (EITC), created in 1975, is a refundable tax credit based on a person's income, marital status, and number of children. The EITC is designed to offset Social Security and Medicare payroll taxes on working poor families and to encourage and reward work, and lifts millions of U.S. children and adults out of poverty each year. About half the states have their own EITCs to supplement the federal EITC.

Sex and Poverty in the U.S.

-Women are slightly more likely than men to live below the poverty line—a phenomenon referred to as the feminization of poverty. In 2014, 16.1 percent of women and 13.4 percent of men were living below the poverty line (DeNavas-Walt and Proctor 2015). As discussed in Chapter 10, women are less likely than men to pursue advanced educational degrees and tend to have low-paying jobs, such as service and clerical jobs. However, even with the same level of education and the same occupational role, women still earn significantly less than men. Women who are racial or ethnic minorities and/or who are single mothers are at increased risk of being poor.

Patterns of Poverty in the U.S.

-Although poverty is not as widespread or severe in the United States as it is in many other parts of the world, the United States has the highest rate of poverty among wealthy countries belonging to the Organisation for Economic Cooperation and Development (OECD). In 2014, 46.7 million Americans—14.8 percent of the U.S. population—lived below the poverty line (DeNavas-Walt and Proctor 2015). More than half (58 percent) of Americans between the ages of 20 and 75 will spend at least one year in poverty, and one in three Americans will experience a full year of extreme poverty at some point in adult life (Pugh 2007).

Race and Ethnicity and Poverty in the U.S.

-As displayed in Figure 6.6, poverty rates are higher among racial and ethnic minority groups than among non-Hispanic whites. As discussed in Chapter 9, past and present discrimination has contributed to the persistence of poverty among minorities. Other contributing factors include the loss of manufacturing jobs from the inner city, the movement of whites and middle-class blacks out of the inner city, and the resulting concentration of poverty in predominantly minority inner-city neighborhoods (Massey 1991; Wilson 1987, 1996). Finally, blacks and Hispanics are more likely to live in female-headed households with no spouse present—a family structure that is associated with high rates of poverty. -U.S. Poverty Rates by Race and Hispanic Origin, 2013 = Black/African American - 27.6% = White, non-Hispanic - 11.1% = Hispanic/Latino - 24.8% = Asian - 12.7% = Native Hawaiian or Pacific Islander - 20.1% = American Indian/Alaskan Native - 28.9% = Two or more races - 20.4%

Understanding Economic Inequality, Wealth, and Poverty

-As we have seen in this chapter, the quality of our lives is intricately related to the economic resources we have—resources that buy access to goods and services such as housing, food, education, health care, resources that influence virtually every aspect of our lives. On a positive note, significant gains have been made in improving the standard of living for populations living in absolute poverty. But at the same time, economic inequality has reached unprecedented levels in the world, and in the United States, as the "rich get richer." -A common belief among U.S. adults is that the rich are deserving and the poor are failures. Blaming poverty on the individual rather than on structural and cultural factors implies not only that poor individuals are responsible for their plight but also that they are responsible for improving their condition. If we hold individuals accountable for their poverty, we fail to make society accountable for making investments in human development that are necessary to alleviate poverty, such as providing health care, adequate food and housing, education, child care, job training and job opportunities, and living wages. Lastly, blaming the poor for their condition diverts attention away from the recognition that the wealthy—individuals and corporations—receive far more benefits in the form of wealthfare or corporate welfare, without the stigma of welfare. -Efforts to alleviate poverty and reduce economic inequality are often motivated by a sense of moral responsibility. But alleviating poverty and reducing economic inequality also makes sense from an economic standpoint. According to one study, if economic inequality in Maryland was lowered to the level it was in 1968—the year that economic inequality was at its lowest level in modern U.S. history—the economic benefits would be equivalent to adding 22 percent to Maryland's annual gross state product in the form of personal consumption expenditures, decreased social and environmental costs, increased access to higher education, and additional spending by the poor (Talberth et al. 2013). The cost of poverty in the United States is more than $500 billion (4 percent of the GDP) per year due to increased health care costs, increased crime-related costs, and lowered productivity (vanden Heuvel 2011). Unused labor potential caused by extreme poverty worldwide costs an estimated $3.5 trillion, or 5 percent of global gross domestic product (Davis 2015). According to Oxfam International (2013), the $240 billion net income of the richest 100 billionaires in 2012 is four times the amount of money needed to eradicate extreme poverty worldwide. -Ending or reducing poverty begins with the recognition that doing so is a worthy ideal and an attainable goal. Imagine a world where everyone had comfortable shelter, plentiful food, clean water and sanitation, adequate medical care, and education. If this imaginary world were achieved and if absolute poverty were effectively eliminated, what would be the effects on social problems such as crime, drug abuse, family problems (e.g., domestic violence, child abuse, and divorce), health problems, prejudice and racism, and international conflict? In the current global climate of conflict and terrorism, we might consider that "reducing poverty and the hopelessness that comes with human deprivation is perhaps the most effective way of promoting long-term peace and security" (World Bank 2005). Instead of asking if we can afford to eradicate poverty, we might consider: Can we afford not to?

Political Reform

-Given the unfair advantage the wealthy have in influencing the political process, another key strategy in reducing economic inequality is to reduce the influence of money in politics. Some lawmakers are calling for an amendment to the Constitution to overturn the 2010 Citizens United ruling that gave corporations unlimited political spending power. Reducing the political inequality that perpetuates economic inequality also necessitates enacting limits on the amount of money that wealthy individuals can spend on politics.

Substandard Housing and Homelessness

-Having a roof over one's head is considered a basic necessity. However, for the poor, that roof may be literally caving in. In addition to having leaky roofs, housing units of the poor often have holes in the floor and open cracks in the walls or ceiling. Low-income housing units often lack central heating and air conditioning, sewer or septic systems, and electric outlets in one or more rooms. Housing for the poor is also often located in areas with high crime rates and high levels of pollution. -Concentrated areas of poverty and poor housing in urban areas are called slums. One-third of urban populations in developing regions are living in slums. In sub-Saharan Africa, two-thirds of urban populations are living in slums (UN-Habitat 2010). -Over the course of a lifetime, an estimated 9 percent to 15 percent of the U.S. population becomes homeless (Hoback and Anderson 2007). In January 2014, there were 578,424 homeless people in the United States: Of those, 37 percent were families with children, 9 percent were veterans, and almost 8 percent were unaccompanied youth (National Alliance to End Homelessness 2015). Although the majority of the homeless population stays in shelters or transitional housing, about a third lives on the street, in a car, in an abandoned building, or in places not meant for human habitation, such as storage units or makeshift dwellings made of a variety of discarded materials such as pieces of wood and boards, cardboard, mattresses, fabric, and plastic tarps. -Causes of homelessness include poverty, unemployment, eviction, domestic violence, mental illness and substance abuse, and lack of affordable housing. Housing is considered affordable when a household pays no more than 30 percent of its income on housing expenses. In 2014, 6.4 million renters paid more than half of their income on housing (National Alliance to End Homelessness 2015). -For people living on the street, every day can be a struggle for survival. In recent years, there has been a surge in unprovoked violent, and sometimes fatal, attacks against homeless individuals (National Coalition for the Homeless 2014b). In most cases, the attacks are by teenage and young adult males. Many acts of violence toward the homeless are not reported to the police, so documented cases may be just the tip of the iceberg. During the years he lived homeless on the street, David Pirtle was attacked five times, and he did not report the attacks to police. "I was struck on the back, kicked, urinated on, spray-painted.... A lot of people who are homeless go through it, and it's just the way it is" (quoted in Dvorak 2009, p. DZ01). -There is also a new fascination with "bum bashing" or "bum fight" videos on YouTube— videos shot by young men and boys who are seen beating the homeless or who pay homeless people a few dollars to fight each other or to do dangerous stunts like banging their heads through glass windows and going down stairs in a shopping cart. Individuals who find the idea of bum bashing entertaining can also purchase bum fight DVDs and play web-based bum-bashing games. The National Coalition for the Homeless (2014b) reports that there is a correlation between watching videos that show violence against homeless individuals and committing "copycat" acts of violence against the homeless.

Health Problems, Hunger, and Poverty

-In developing countries, absolute poverty is associated with high rates of maternal and infant deaths, indoor air pollution from heating and cooking fumes, and unsafe water and sanitation (see also Chapter 2). In wealthy countries, such as the United States, we take for granted the availability of bathrooms and toilets, and safe drinking water that is piped into our homes. But more than 1 in 10 people in the world (700 million people) do not have access to safe drinking water, and more than one-third of the world's population—2.5 billion people—do not use improved sanitation facilities—those that ensure hygienic separation of human excreta from human contact (World Health Organization and UNICEF 2014). Lack of access to clean water and sanitation facilities is a major cause of disease and death. Inadequate sanitation and hygiene contributes to the spread of diseases such as Ebola, and poor sanitation causes diarrheal diseases, which are the second leading cause of death among young children in developing countries (Agazzi 2012). -Living in poverty is also linked to hunger and malnourishment. In 2014, more than 1 in 10 people globally were chronically undernourished, with the highest rate of hunger in sub-Saharan Africa, where one in four people are undernourished (Food and Agriculture Organization 2014). Inadequate nutrition hampers the ability to work and generate income, and it can produce irreversible health problems such as blindness (from vitamin A deficiency) and physical stunting (from protein deficiency). -Hunger in the United States is measured by the percentage of households that are "food insecure," which means that the household had difficulty providing enough food for all its members due to a lack of resources. In 2013, about 14 percent of U.S. households were food insecure at some time during the year (Coleman-Jensen et al. 2014). Assess your own degree of food security in this chapter's Self and Society feature. -In the United States, low-wage earners have higher rates of obesity, hypertension, diabetes, arthritis, and premature death (Leigh 2013). Compared with middle- and upper-income adults, U.S. adults living in poverty are more likely to experience extreme or chronic pain, worry and mental distress, sadness, anger, and stress (Graham 2015). Poor U.S. children and adults tend to receive inadequate and inferior health care, which exacerbates their health problems. Minimal income means that people may not have funds to purchase medicine to control their cholesterol, high blood pressure, and other health problems. As discussed in Chapter 2, people with limited incomes may not have access to or be able to afford healthier foods such as fresh produce, which tend to be more expensive than processed convenience foods that are higher in calories, sugar, salt, and fats. Finally, many people partially assess their self-worth based on their income, and long-term feelings of low self-worth also have negative consequences for health (Leigh 2013). -Economic inequality is also linked to health problems. In a comparison of 30 wealthy countries, researchers found an association between greater economic inequality and a higher overall death rate (Kondo et al. 2009). Another study by the U.S. National Research Council and Institute of Medicine (2013) compared health outcomes in the United States with those of 16 other high-income, industrialized countries and found that Americans die sooner and have higher rates of disease or injury. One explanation for this finding is that although the income of Americans is higher on average than in other countries, the United States has higher rates of poverty (especially child poverty), more income inequality, and less social mobility.

Medicaid

-Medicaid is a government program that provides medical services and hospital care for the poor through reimbursements to physicians and hospitals (see also Chapter 2). States vary in rules about who is eligible for Medicaid; many low-income individuals and families do not qualify for Medicaid.

Alleviating and Preventing Homelessness

-Programs to temporarily alleviate homelessness include "homeless shelters" that provide emergency shelter beds, and transitional housing programs, which provide time-limited housing and services designed to help individuals gain employment, increase their income, and resolve substance abuse and other health problems. However, the number of homeless individuals exceeds the number of beds available (National Alliance to End Homelessness 2015). Resolving homelessness also requires strategies to prevent homelessness from occurring in the first place, such as increasing employment and living wages, providing tax benefits to renters (not just to homeowners), providing more affordable housing, protecting homeowners and renters against foreclosures, providing treatment for mental illness and substance abuse, and expanding programs to house victims of domestic violence. -Some clinics offer free veterinary care to companion animals of homeless individuals. One could argue that homeless individuals, who cannot take care of their own needs, should not take on the responsibility of caring for an animal. But as this chapter's Animals and Society feature reveals, companion animals can play an important role in the lives of homeless individuals.

Microcredit Programs

-The old saying "It takes money to make money" explains why many poor people are stuck in poverty: They have no access to financial resources and services. Microcredit programs refer to the provision of loans to people who are generally excluded from traditional credit services because of their low socioeconomic status. Microcredit programs give poor people the financial resources they need to become self-sufficient and to contribute to their local economies. -The Grameen Bank in Bangladesh, started in 1976, has become a model for the more than 3,000 microcredit programs that have served millions of poor clients (Roseland and Soots 2007). To get a loan from the Grameen Bank, borrowers must form small groups of five people "to provide mutual, morally binding group guarantees in lieu of the collateral required by conventional banks" (Roseland and Soots 2007, p. 160). Initially, only two of the five group members are allowed to apply for a loan. When the initial loans are repaid, the other group members may apply for loans.

Defining and Measuring Poverty

-Absolute poverty refers to the lack of resources necessary for well-being—most important, food and water, but also housing, sanitation, education, and health care. In contrast, relative poverty refers to the lack of material and economic resources compared with some other population. If you are a struggling college student living on a limited budget, you may feel as though you are "poor" compared with the middle- or upper-middle-class lifestyle to which you may aspire. However, if you have a roof over your head; access to clean water, toilets, and medical care; and enough to eat, you are not absolutely poor; indeed, you have a level of well-being that millions of people living in absolute poverty may never achieve.

Poverty Thresholds, 2014

-One adult = 12,316 -Two adults = 15,853 -One adult, one child = 16,317 -Two adults, one child = 19,055 -Two adults, two children = 24,088

Supplemental Security Income

-Supplemental Security Income (SSI), administered by the Social Security Administration, provides a minimum income to poor people who are age 65 or older, blind, or disabled. SSI is not the same as Social Security: A millionaire can collect Social Security, but a person must be either elderly or disabled and must have limited income and assets to collect SSI.

Structural-Functionalist Perspective on Wealth

-According to the structural-functionalist perspective, poverty results from institutional breakdown: economic institutions that fail to provide sufficient jobs and pay, educational institutions that fail to equip members of society with the skills they need for employment, family institutions that do not provide two parents, and government institutions that do not provide sufficient public support. Sociologist William Julius Wilson explains: "Where jobs are scarce ... and where there is a disruptive or degraded school life purporting to prepare youngsters for eventual participation in the workforce, many people eventually lose their feeling of connectedness to work in the formal economy; they no longer expect work to be a regular, and regulating, force in their lives. (Wilson 1996, pp. 52-53)" -More than 60 years ago, Davis and Moore (1945) presented a structural-functionalist explanation for economic inequality, arguing that a system of unequal pay motivates people to achieve higher levels of training and education and to take on jobs that are more important and difficult by offering higher rewards for higher achievements. However, this argument is criticized on the grounds that many important occupational roles, such as child care workers and nurse assistants, have low salaries, whereas many individuals in nonessential roles (e.g., professional sports stars and entertainers) earn outrageous sums of money. The structural-functionalist argument that CEO pay is high to reward strong performance is shattered by the fact that CEOs are paid huge salaries and bonuses even when they contribute to the economic failure of their corporation and/or to the problem of unemployment. -In his classic article "The Positive Functions of Poverty," sociologist Herbert Gans (1972) draws on the structural-functionalist perspective to identify ways in which poverty can be viewed as functional for the nonpoor segments of society. For example, having a poor population ensures that society has a pool of low-cost laborers willing to do unpleasant jobs, providing a labor pool for jobs ranging from the military to prostitution. Poor populations also provide labor for the affluent in the form of domestic work, such as maids and gardeners. The poor help keep others employed in jobs such as policing, prison work, and social work. And the poor provide a pool of consumers for used goods and second-rate service providers. However, the structural-functionalist view of poverty also highlights the ways in which poverty and economic inequality are dysfunctional for society. For example, as we discuss later in this chapter, poverty and economic inequality are linked to crime and violence, family instability, and social conflict and war (see also Chapters 4, 5, and 15).

Natural Disasters, Economic Inequality, and Poverty

-Although natural disasters such as hurricanes, tsunamis, floods, and earthquakes strike indiscriminately—rich and poor alike—poverty increases vulnerability to devastation from such disasters. In 2010, both Chile and Haiti experienced major earthquakes, but the damage in Haiti was much more severe, with the death toll magnitudes higher than that in Chile. The reason Haiti suffered more was, in part, due to the fact that Haiti is much poorer than Chile. Chileans had the advantage of having homes and offices with steel skeletons designed to withstand earthquakes—even low-income housing was built to be earthquake resistant. In contrast, there is no building code in Haiti and homes crumbled and collapsed in the earthquake (Bajak 2010). Wealthy countries also have more resources than poor countries for natural disaster relief efforts, such as rebuilding infrastructure, providing medical care for the injured, and offering food and shelter for people who have lost their homes. -But even in wealthy countries, the poor are more vulnerable to natural disasters, while the more affluent have resources that enable them to cope with natural disasters. Columnist David Rohde (2012) wrote about how economic inequality affected people dealing with Hurricane Sandy, which devastated the northeastern United States in 2012: "Divides between the rich and the poor are nothing new in New York, but the storm brought them vividly to the surface. There were residents like me who could invest all of their time and energy into protecting their families. And there were New Yorkers who could not. Those with a car could flee. Those with wealth could move into a hotel. Those with steady jobs could decline to come into work. But the city's cooks, doormen, maintenance men, taxi drivers, and maids left their loved ones at home.... In the Union Square area, New York's privileged—including myself—could have dinner, order a food delivery, and pick up supplies an hour or two before Sandy made landfall. The cooks, cashiers, and hotel workers who stayed at work instead of rushing home made that possible. (n.p.)"

Sociological Theories on Economic Equality, Wealth, and Poverty

-Americans are taught that we live in a meritocracy—a social system in which individuals get ahead and earn rewards based on their individual efforts and abilities (McNamee and Miller 2009). In a meritocracy, everyone has an equal chance to succeed; those who are "$ucce$$ful" are smart and talented and have worked hard and deserve their success, while those who fail to "make it" have only themselves to blame. This individualistic perspective views economic inequality as the result of some people developing their potential and working hard and earning their success, while others don't measure up, make bad choices, don't work hard enough, and have only themselves to blame for their predicament. In contrast to the individualistic perspective, structural functionalism, conflict theory, and symbolic interactionism offer sociological insights into the nature, causes, and consequences of poverty and economic inequality.

Minimum Wage Increase and "Living Wage" Laws

-As of this writing, the federal minimum wage is $7.25. At this hourly rate, a person working full-time with two children earns $14,500 (before taxes)—an income well below the poverty line. The Fair Minimum Wage Act, proposed by Senator Tom Harkin (D-Iowa) and Representative George Miller (D-Calif.) would raise the federal minimum wage to $10.10 and increase the annual income of a full-time worker to $20,200, which is above the poverty line for one adult with two children. If passed, the Fair Minimum Wage Act would lift about 2.4 million people out of poverty (Gould 2014). As of January 1, 2015, 29 states and the District of Columbia have mandated a minimum wage that is higher than the federal $7.25. -Many cities and counties throughout the United States have living wage laws that require state or municipal contractors, recipients of public subsidies or tax breaks, or, in some cases, all businesses to pay employee wages that are significantly above the federal minimum, enabling families to live above the poverty line. Research findings show that businesses that pay their employees a living wage have lower worker turnover and absenteeism, reduced training costs, higher morale and productivity, and a stronger consumer market (Kraut et al. 2000).

Political Inequality and Alienation

-Economic inequality also contributes to political inequality, as expressed in a version of "the golden rule": "He who has the gold makes the rules." Although the United States represents itself as a democracy whose government represents all citizens, research shows that a small group of economic elite has more influence over political outcomes than do ordinary citizens (Gilens and Page 2014). Thus, instead of being a true democracy, the United States can be described as a plutocracy: a country governed by the wealthy. The poor and even middle classes feel that their interests are not represented by their elected politicians. In countries around the world, people at the bottom of the inequality spectrum often feel as though they do not have a say in the policies that govern them. Hence, those in the lower socioeconomic classes are vulnerable to experiencing political alienation—a rejection of or estrangement from the political system accompanied by a sense of powerlessness in influencing government. The poor face obstacles in running for political office, as money and connections are needed to run for office. The poor are less likely than the affluent to vote: In 2012, less than half of eligible voters with family incomes under $20,000 voted, compared with about 80 percent of those with annual incomes of $100,000 or more (Weeks 2014). The poor have a lower voting turnout than the wealthier segments of the population, in part due to political alienation, but also because of obstacles such as difficulty taking time off of work, transportation problems getting to the polls, and lack of a required form of identification.

Education and Poverty in the U.S.

-Education is one of the best insurance policies for protecting an individual against living in poverty. In general, the higher a person's level of educational attainment, the less likely that person is to be poor (see Figure 6.4). The relationship between educational attainment and poverty points to the importance of fixing our educational system so that students from all socioeconomic backgrounds have access to quality education (see also Chapter 8). But we also need to consider the fact that many jobs do not require advanced education. Indeed, the majority of job growth through 2018 will involve jobs that do not require a four-year college degree (Wider Opportunities for Women 2010). Wright and Rogers (2011) suggest that "poverty in a rich society does not simply reflect a failure of equal opportunity to acquire a good education; it reflects a social failure in the creation of sufficient jobs to provide an adequate standard of living for all people regardless of their education or levels of skills" (p. 224). -Relationship between Education and Poverty, 2013 = No HS diploma - 36.8% =HS diploma, no college - 20.7% =Bachelor's degree or higher - 6.5%

Educational Assistance

-Educational assistance includes Head Start and Early Head Start programs and college assistance programs (see also Chapter 8). Head Start and Early Head Start programs provide educational services for disadvantaged infants, toddlers, and preschool-age children and their parents, and are designed to improve children's cognitive, language, and social-emotional development and strengthen parenting skills (Administration for Children and Families 2002). -To help low-income individuals wanting to attend college, the federal government offers grants, loans, and work opportunities. The Pell Grant program aids students from low-income families. The federal college work-study program provides jobs for students with "demonstrated need." The guaranteed student loan program enables college students and their families to obtain low-interest loans with deferred interest payments. However, mounting student debt has reached disturbing levels. The average undergraduate who borrows money to pay for college graduates with nearly $30,000 in debt (Carey 2015).

Consequences of Economic Inequality and Poverty

-From one point of view, economic inequality and poverty are problematic because they contradict the values of fairness, justice, and equality of opportunity, and they constitute a moral violation of basic human rights. Economic inequality and poverty are also viewed as problems because they have economic and social consequences that affect the whole society. For example, when income is concentrated toward the top, less money circulates in the local economy because while money earned by low- and middle-income households is likely to be spent on goods and services that benefit the local economy, money among the rich is often invested in other regions and spent on luxuries (Talberth et al. 2013). The larger the segment of the population that is in the lowest income brackets, the more our society is affected by problems that plague the poor, but that also affect us all—problems discussed in the following sections.

Age and Poverty in the U.S.

-If the poverty statistics for adults are troubling, the statistics for children are even worse (see Figure 6.3). About a third of U.S. children experience poverty for at least part of their childhood, and 10 percent of children are persistently poor, spending at least half their childhood living in poverty (Ratcliffe and McKernan 2010). About one-third of the U.S. poor population are children (DeNavas-Walt and Proctor 2015). Compared with other industrialized countries, the United States has the highest child poverty rate. Childhood poverty is particularly problematic because "[g]rowing up in poverty can cast a shadow over the rest of a person's life" (Golden 2013, n.p.). -U.S. Poverty Rates by Age, 2014 = Younger than 18 - 21.1% = 18-64 - 13.5% = 65+ - 10.0%

U.S. Measures of Poverty

-In 1964, the Social Security Administration devised a poverty index based on data that indicated that families spent about one-third of their income on food. The official poverty level was set by multiplying food costs by three. Since then, the poverty level has been updated annually for inflation; it differs by the number of adults and children in a household and by the age of the head of household, but it is the same across the continental United States (see Table 6.2). Anyone living in a household with pretax income below the official poverty line is considered "poor." Individuals living in households with incomes that are above the poverty line, but not very much above it, are classified as "near-poor," and those living in households with income below 50 percent of the poverty line live in "deep poverty," also referred to as "severe poverty." A common working definition of "low-income" households is households with incomes that are between 100 percent and 200 percent of the federal poverty line or up to twice the poverty level. -The U.S. poverty line has been criticized on several grounds. First, the official poverty line is based on pretax income so tax burdens, as well as tax credits, are disregarded. Family wealth, including savings and property, are also excluded in official poverty calculations, and noncash government benefits that assist low-income families—food assistance, Medicaid, and housing and child care assistance—are not taken into account. In addition, the federal poverty line is a national standard that does not reflect the significant variation in the cost of living from state to state and between urban and rural areas. Finally, the poverty line underestimates the extent of material hardship in the United States because it is based on the assumption that low-income families spend one-third of their household income on food. That was true in the 1950s, but because housing, medical care, child care, and transportation costs have risen more rapidly than food costs, low-income families today spend far less than one-third of their income on food. -The Economic Policy Institute's Family Budget Calculator measures the income families of different sizes need in order to obtain "a secure yet modest living standard" based on estimated costs of housing, food, child care, transportation, health care, other necessities, and taxes in specific geographic locations (Gould et al. 2013). For a two-parent, two-child family, the basic family budget ranges from $48,144 in Marshall County, Mississippi, to $93,502 in New York City. The Family Budget Calculator finds that families need, at minimum, twice the poverty-level income to meet their basic needs.

Temporary Assistance for Needy Families

-In 1996, the U.S. social welfare system was dramatically changed with the passage of the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA), which replaced the cash assistance program Aid to Families with Dependent Children (AFDC) with a new program, Temporary Assistance for Needy Families (TANF). Although the previous AFCD program provided a more reliable safety net to the poorest of Americans, the current TANF program is a cash assistance program for the poor that offers more limited assistance, with time limits and work requirements. Within two years of receiving benefits, adult TANF recipients must be either employed or involved in work-related activities, such as on-the-job training, job search, and vocational education. A federal lifetime limit of five years is set for families receiving benefits, and able-bodied recipients age 18 to 50 without dependents have a two-year lifetime limit. Some exceptions to these rules are made for individuals with disabilities, victims of domestic violence, residents in high unemployment areas, and those caring for young children. The success of the TANF program is measured not by how many low-income families move into careers that provide a living wage, but rather by the number of people leaving the TANF program, regardless of their reason for doing so or their well-being thereafter (Green 2013).

International Responses to Poverty and Economic Inequality

-In 2000, leaders from 191 United Nations member countries pledged to achieve eight Millennium Development Goals—an international agenda for reducing poverty and improving lives. One of the Millennium Development Goals (MDGs) was to halve, between 1990 and 2015, the proportion of people who live in severe poverty and who suffer from hunger. The MDG poverty reduction goal was met in 2010—five years ahead of schedule. The MDGs expired at the end of 2015 and were replaced with a new, expanded set of 17 goals, collectively called the Sustainable Development Goals (SDGs) (see Table 6.5). -In 2014, Oxfam International launched a global campaign called Even It Up, calling for governments, corporations, and institutions to reduce economic inequality. Next we discuss some approaches for reducing poverty and economic inequality throughout the world.

U.S. Income Inequality

-In 2012, the top 1 percent of U.S. taxpayers earned 22.5 percent of all U.S. income (Sommeiller and Price 2015). Wages used to be tied to worker productivity—the amount of goods and services produced per hour worked. From 1948 to 1973, worker productivity increased 97 percent and wages increased nearly as much (91 percent). But from 1973 to 2013, although worker productivity increased by 74 percent, wages rose by only 9 percent (Mishel 2015). The wage stagnation of middle- and low-income earners is in stark contrast to the huge increase in wages of the top earners. From 1973 to 2013, wages of the top 1 percent grew 138 percent, while wages for the bottom 99 percent rose by only 15 percent (Mishel et al. 2015). -One reason why workers' wages have not increased in sync with their productivity is that CEOs are taking a bigger piece of the pie. The most extreme wage inequality is found between the compensation (salaries, bonuses, stock options, and so on) of chief executive officers (CEOs) and the average employee. In 2014, CEOs at the top 350 U.S. corporations received, in salaries and other compensation (such as bonuses and stocks), 303 times the average compensation of U.S. workers (Mishel and Davis 2015). That means that a typical worker would have to work 303 years to earn what a CEO makes in 1 year! Table 6.3 shows the dramatic increase in the ratio of CEO pay to average worker pay since 1965.

The Wealthiest Americans

-In 2014, Bill Gates was ranked as the wealthiest person not only in the United States but in the world (Dolan and Kroll 2014). If Gates cashed in all his wealth and spent $1 million each day, it would take him 218 years to spend it all (Oxfam 2014). -In the 2011 Forbes 400 annual list of the wealthiest Americans, more than 70 percent of the 282 billionaires on the list were described as "self-made," suggesting that these individuals achieved financial success on their own, without assistance from family or society. But the notion that wealthy individuals have created their own financial success ignores the importance of gender, race, and family background as well as the role that tax policies play in creating wealthy individuals. United for a Fair Economy (2012) examined the 2011 Forbes 400 list of wealthiest Americans and found that 17 percent of the Forbes 400 have family members who are also on the list, about 40 percent of the 2011 Forbes 400 list inherited a "sizeable asset" from a spouse or family member, more than one in five of the Forbes 400 inherited enough wealth to make the list, just one African American is on the list, and of the women on the list (who comprise just 10 percent of the list), 88 percent inherited their fortune, and 60 percent of the income owned by those on the Forbes 400 list comes from capital gains (investments) that are taxed at a lower rate than other income -There are, indeed, true "rags to riches" success stories in the United States that exemplify the idea that anyone can achieve the American dream. Approximately one-third of the individuals on the 2011 Forbes 400 list came from a lower- or middle-class background. Oprah Winfrey, for example—the only black person and one of 40 women on the 2011 Forbes 400 list—was born to a poor unwed teenage mother, yet she developed a successful career in television, film, and publishing. However, such stories are the exception rather than the rule.

Educational Problems and Poverty

-In many countries, children from the poorest households have little or no schooling, and enter their adult lives without basic literacy skills (see also Chapter 8). In the United States, children from disadvantaged homes perform less well in school on average than children from more advantaged households (Ladd 2012). Children who grow up in poverty tend to receive lower grades, receive lower scores on standardized tests, are less likely to finish high school, and are less likely to attend or graduate from college than their nonpoor peers. -The poor often attend schools that are characterized by lower-quality facilities, overcrowded classrooms, and a higher teacher turnover rate (see also Chapter 8). Although other rich countries invest more money in education for disadvantaged children, the United States spends more on schools in wealthy districts because public schools are funded largely by local property tax money (Straus 2013). -Children who grow up in poverty suffer more health problems that contribute to their lower academic achievement. Because poor parents have less schooling on average than do nonpoor parents, they may be less able to encourage and help their children succeed in school. Children from poor households have limited access to high-quality preschools, books and computers, and enriching after-school and summer activities including tutoring, travel, lessons (music, dance, sports, etc.), and camps (Ladd 2012; Sobolewski and Amato 2005). With the skyrocketing costs of tuition and other fees, many poor parents cannot afford to send their children to college. Although some students have wealthy parents who write out tuition checks, other students are graduating from college with substantial college debt.

Child Care Assistance

-In the United States, lack of affordable, good child care is a major obstacle to employment for single parents and a tremendous burden on dual-income families and employed single parents. Child Care Aware of America (2014) reported the following: = The cost of full-time center-based care for two children is the highest single household expense for families living in the Northeast, Midwest, and South (Child Care Aware of America 2014). In the West, child care costs for two children are second only to average housing costs. = The annual cost of child care in a day care center for a 4-year-old child ranges from $4,515 in Tennessee to $12,320 in Massachusetts. = Across the country, the annual cost of center-based infant care cost an average of more than 40 percent of the state median income for a single parent, ranging from 23.8 percent in South Dakota to 60.6 percent in Massachusetts. = In 31 states and the District of Columbia, infant care in a day care center costs more than a year's tuition and fees at a four-year public college. -Some public policies provide limited assistance with child care, such as tax relief related to child care expenses and public funding for child care services for the poor (in conjunction with mandatory work requirements). However, child care assistance is inadequate; many states have waiting lists for child care assistance. Only about one in every six eligible children receive federally funded child care assistance (Child Care Aware of America 2014). Finally, many families earn more than the eligibility limit, but not enough to afford child care expenses.

Economic Development

-Increasing the economic output or the gross domestic product of a country can bring needed economic resources into poor countries. However, economic development does not always reduce poverty; in some cases, it increases it. Policies that involve cutting government spending, privatizing basic services, liberalizing trade, and producing goods primarily for export may increase economic growth at the national level, but the wealth ends up in the hands of the political and corporate elite at the expense of the poor. Economic growth does not help poverty reduction when public spending is diverted away from meeting the needs of the poor and instead is used to pay international debt, finance military operations, and support corporations that do not pay workers fair wages. -Another problem with economic development is that the environment and natural resources are often destroyed and depleted in the process of economic growth. The environmental problems caused by economic growth can be minimized if governments and corporations embrace "green growth," which is economic growth that is environmentally sustainable (World Bank Group and International Monetary Fund 2015) (see also Chapter 13). -Economic development also threatens the lives and cultures of the 370 million indigenous people who live in 70 countries around the world. Indigenous people who live on land that is rich in natural resources are displaced by corporations that want access to the land and its natural resources, and by government forces that help the corporations expand their activities (Ramos et al. 2009). As remote areas are "developed," many indigenous people are forced to either leave their land or give up their traditional ways of life and become assimilated into the dominant culture.

The Global Context

-One billion people—14.5 percent of the world's population—are extremely poor, living on less than $1.25 a day (World Bank 2015). Most of the world's poor—80 percent—live in sub-Saharan Africa or South Asia (World Bank Group and International Monetary Fund 2015). The very poor suffer from a myriad of problems including malnutrition, lack of access to clean water and sanitation, inadequate housing, lack of education, and poor health— problems we discuss later in this chapter. -In contrast to the extreme poverty that plagues the approximately one in seven people living on this planet, in 2014, there were 1,645 billionaires in the world, nearly a third (30 percent) of whom are U.S. citizens (Dolan and Kroll 2014). Living opulent, lavish lifestyles that include luxuries most of us can only imagine, billionaires have access to anything money can buy: yachts and private jets, multiple homes around the world, the best education and health care, and, as we discuss later, influence in political affairs. -Economic inequality—the wide gap that divides the rich and the poor—includes inequality in both income and wealth. Wealth refers to the total assets of an individual or household minus liabilities (mortgages, loans, and debts). Wealth includes the value of a home, investment real estate, cars, unincorporated business, life insurance (cash value), stocks, bonds, mutual funds, trusts, checking and savings accounts, individual retirement accounts (IRAs), and valuable collectibles. -The inequality in the world distribution of wealth is reflected in the following data (Credit Suisse Research Institute 2014; Hardoon 2015): = A person needs just $3,650 (in U.S. dollars) of wealth to be among the wealthiest half of the world's population; $77,000 to be in the top 10 percent; and $798,000 to be among the richest 1 percent worldwide. = In 2014, the richest 1 percent of adults (ages 20 and older) in the world owned nearly half (48 percent) of global wealth; the richest 10 percent owned 87 percent of global wealth. = In 2014, the richest 80 people in the world owned as much wealth as the 3.5 billion people at the bottom half of the world's population. = By 2016, the top 1 percent is expected to own more than half of all global wealth, which means that the wealthiest 1 percent will own more than the rest of us combined. = The United States has the highest number of millionaires of any country. In 2014, 41 percent of the world's millionaires lived in the United States. Japan had the second highest number of millionaires (8 percent), followed by France (7 percent), Germany, and the United Kingdom (6 percent). = People with wealth totaling more than $1 million represent just 0.7 percent of the global population, but they own 41 percent of the world's wealth. The more than two-thirds of the world's population (69 percent) who have a net worth of less than $10,000 collectively own only 3 percent of global wealth.

Taxes on the Wealthy

-Oxfam (2014) calculated that adding a 1.5 percent tax on the world's billionaires could raise $74 billion in tax revenue—enough to fill the annual gaps in funding needed to provide education to every child and deliver health care services in the poorest 49 countries. Another way to gain tax revenue that could both alleviate poverty and reduce economic inequality is to close tax loopholes that enable the wealthy to avoid paying taxes on much of their income. In 2013, the world lost an estimated $156 billion in tax revenue due to wealthy individuals hiding their money in offshore tax havens (Oxfam 2014).

Crime, Social Conflict, and War

-Poverty and economic inequality are linked to crime and violence (see also Chapters 4 and 15). For example, homicide rates are nearly four times higher in countries with extreme economic inequality than in more equal countries (Oxfam 2014). The denial of a political voice or influence to masses of people at the bottom of the wealth distribution can cause social tensions, political instability, and violent conflict (United Nations 2013). Economic inequality and poverty are often root causes of conflict and war within and between nations. Poorer countries are more likely than wealthier countries to be involved in civil war, and countries that experience civil war tend to become and/or remain poor. Armed conflict and civil war are generally more likely to occur in countries with extreme and growing inequalities between ethnic groups (United Nations 2005). Conversely, countries with higher levels of equality are more likely to be peaceful (Institute for Economics and Peace 2013). A United Nations (2005) report suggested that "the most effective conflict prevention strategies ... are those aimed at achieving reductions in poverty and inequality, full and decent employment for all, and complete social integration" (p. 94). -Not only does poverty breed conflict and war, but war also contributes to poverty. War devastates infrastructures, homes, businesses, and transportation systems. In the wake of war, populations often experience hunger and homelessness.

Family Structure and Poverty in the U.S.

-Poverty is much more prevalent among female-headed single-parent households than among other types of family structures (see Figure 6.5). In other industrialized countries, poverty rates of female-headed families are lower than those in the United States. Unlike the United States, other developed countries offer a variety of supports for single mothers, such as income supplements, tax breaks, universal child care, national health care, and higher wages for female-dominated occupations. -U.S. Poverty Rates by Family Structure, 2014 = Married-couple family - 6.2% = Female householder, no spouse present - 30.6% = Male householder, no spouse present - 15.7% -In general, same-sex couples are more likely than heterosexual couples to be poor. Children in same-sex couple families are nearly twice as likely to be poor as children of married different-sex couples (Badgett et al. 2013).

Region and Poverty in the U.S.

-Poverty rates vary considerably by region of the United States, with the highest rates being in the South and West, and the lowest rates being in the Northeast. In 2013 the rates of poverty ranged from a low of 8.7 percent in New Hampshire to a high of 24.0 percent in Mississippi (see Table 6.4). -Highest Poverty Rates in the U.S. = Mississippi - 24.0% = New Mexico - 21.9% = Louisiana - 19.8% = Arkansas - 19.7% = Georgia - 19.0% = D.C. - 18.9% = Kentucky - 18.8% = Alabama - 18.7% = South Carolina - 18.6% = Arizona - 18.6% = North Carolina - 17.9% = Tennessee - 17.8% -Lowest Poverty Rates in the U.S. = New Hampshire - 8.7% = Alaska - 9.3% = Maryland - 10.1% = Connecticut - 10.7% = Hawaii - 10.8% = Wyoming - 10.9% = Minnesota - 11.2% = New Jersey - 11.4% = Virginia - 11.7% = Massachusetts - 11.9% = Vermont - 12.3% = Delaware - 12.4% -Poverty is increasingly found in the suburbs. The number of suburban poor surpassed the number of urban poor in the 2000s (Semuels 2015). Compared with poor urban dwellers, the suburban poor have less access to public transit and social safety-net programs.

Intergenerational Poverty

-Problems associated with poverty, such as health and educational problems, create a cycle of poverty from one generation to the next. Nearly half of U.S. children born to low-income parents will become low-income adults (Oxfam 2014). Poverty that is transmitted from one generation to the next is called intergenerational poverty. -Intergenerational poverty creates a persistently poor and socially disadvantaged population, referred to as the underclass. Although the underclass is stereotyped as being composed of minorities living in inner-city areas, the underclass is a heterogeneous population that includes poor whites living in urban and nonurban communities (Alex-Assensoh 1995). Intergenerational poverty and the underclass are linked to a variety of social factors, including the decrease in well-paying jobs and their movement out of urban areas, the resultant decline in the availability of marriageable males able to support a family, dropping marriage rates and an increase in out-of-wedlock births, the migration of the middle class to the suburbs, and the effect of deteriorating neighborhoods on children and youth (Wilson 1987, 1996).

The Safety Net: Public Assistance and Welfare Programs in the United States

-Public assistance, or "welfare" programs in the United States are aimed at providing a safety net for adults and children who are economically disadvantaged. Many assistance programs are means-tested programs that have eligibility requirements based on income and/or assets. Public assistance programs designed to help the poor include the earned income tax credit, Supplemental Security Income, Temporary Assistance for Needy Families, food programs, housing assistance, medical care, educational assistance, and child care assistance.

Reducing U.S. Poverty and Economic Inequality

-Strategies to reduce poverty and economic inequality include those discussed in other chapters, such as improving the quality and equality of health care and education to ensure that these services and resources are not unfairly skewed toward children and young adults from more affluent families (see Chapters 2 and 8). Chapter 7 discusses strategies that also impact poverty and economic inequality, such as job creation and training, and strengthening labor unions. Here, we address issues concerning minimum wage and living wages, tax reform efforts, political reforms, and efforts to reduce wage theft.

Symbolic-Interactionist Perspective on Wealth

-Symbolic interactionism focuses on how meanings, labels, and definitions affect and are affected by social life. This view calls attention to ways in which wealth and poverty are defined and the consequences of being labeled "poor." Individuals who are poor are often viewed as undeserving of help or sympathy; their poverty is viewed as due to laziness, immorality, irresponsibility, lack of motivation, or personal deficiency (Katz 2013). Wealthy individuals, on the other hand, tend to be viewed as capable, motivated, hardworking, and deserving of their wealth. -The language we use to label things can have a profound influence on how we view things. A Canadian study found that the public expressed higher support for government "spending on the poor" than for spending on "welfare" (Harell et al. 2008). If welfare is a "dirty word," as this study suggests, then it makes a difference whether one uses the term welfare versus other terms such as assistance to the poor, public assistance, or safety net. -Meanings and definitions of wealth and poverty vary across societies and across time. Although many Americans think of poverty in terms of income level, for millions of people, poverty is not primarily a function of income. For indigenous women living in the least developed areas of the world, poverty and wealth are determined primarily by access to and control of their natural resources (such as land and water), which are the sources of their livelihoods (Susskind 2005). -Finally, the symbolic interactionist perspective is concerned with how social conditions come to be viewed as social problems. Economic inequality rose to the forefront of world citizens' awareness when Occupy Wall Street (OWS), a decentralized protest movement concerned with economic inequality, greed, corruption, and the influence of corporations on government, gained media attention in 2011. OWS started as a wave of park occupations and spread around the world, branching out into a number of areas, all focused on the concerns of the "99 percent"—that is, the concerns of regular, hardworking folks versus the "1 percent"—the wealthy. The Occupy Wall Street movement helped to frame economic inequality as a national and global social problem. -The publication of French economist Thomas Piketty's (2014) book Capital in the Twenty-first Century has further increased public awareness of economic inequality as a social problem. Piketty's book essentially argues that economic inequality will continue to increase to levels that threaten social stability unless governments take such actions as enforcing a global wealth tax.

Legal Inequality

-The American ideal of "justice for all" may be more accurately described as "justice for those who can afford to pay for it." Many poor defendants are held in pretrial detention because they cannot afford to post bail (Human Rights Watch 2015). Although the Supreme Court ruled in 1963 (Gideon v. Wainwright) that criminal defendants who cannot afford to hire an attorney have the constitutional right to a public defense, public defender offices are overworked and underfunded, and often spend only minutes per case due to their unrealistic caseloads (Giovanni and Patel 2013). Without the resources for effective legal representation, poor defendants often accept unfair plea bargains, and "the systemic result is harsher outcomes for defendants and more people tangled in our costly criminal justice system" (Giovanni and Patel 2013, p. 1). The economic inequality embedded in the U.S. legal system is problematic not only for the poor, but for the entire society, as it contributes to the social and economic costs of mass incarceration in the United States (see also Chapter 4).

Housing Assistance

-The biggest expense for most families is housing. Lack of affordable housing is not just a problem for the poor living in urban areas. "The problem has climbed the income ladder and moved to the suburbs, where service workers cram their families into overcrowded apartments, college graduates have to crash with their parents, and firefighters, police officers, and teachers can't afford to live in the communities they serve" (Grunwald 2006). -Federal housing assistance programs include public housing, Section 8 housing, and other private project-based housing. The public housing program, initiated in 1937, provides federally subsidized housing that is owned and operated by local public housing authorities (PHAs). To save costs and avoid public opposition, high-rise public housing units were built in inner-city projects. These have been plagued by poor construction, managerial neglect, inadequate maintenance, and rampant vandalism. Poor-quality public housing has serious costs for its residents and for society: "Distressed public housing subjects families and children to dangerous and damaging living environments that raise the risks of ill health, school failure, teen parenting, delinquency, and crime—all of which generate long-term costs that taxpayers ultimately bear.... These severely distressed developments are not just old, outmoded, or run down. Rather, many have become virtually uninhabitable for all but the most vulnerable and desperate families. (Turner et al. 2005, pp. 1-2)" -Section 8 housing involves federal rent subsidies provided either to tenants (in the form of certificates and vouchers) or to private landlords. Unlike public housing that confines low-income families to high-poverty neighborhoods, the aim with Section 8 housing is to disperse low-income families throughout the community. However, because of opposition by residents in middle-class neighborhoods, most Section 8 housing units remain in low-income areas. -A major barrier to building affordable housing is zoning regulations that set minimum lot size requirements, density restrictions, and other controls. Such zoning regulations serve the interests of upper-middle-class suburbanites who want to maintain their property values and keep out the "riffraff"—the lower-income segment of society who would presumably hurt the character of the community. Thus, one answer to the housing problem is to change zoning regulations that exclude affordable housing and to require developers to reserve a percentage of units for affordable housing (Grunwald 2006).

Food Assistance

-The largest food assistance program in the United States is the Supplemental Nutrition Assistance Program (SNAP) (formerly known as the Food Stamp Program), followed by school meals and the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC). SNAP issues monthly benefits through coupons or an electronic debit card. The U.S. Census Bureau (2015a) reported that one in five U.S. children receives SNAP benefits. -In 2014, the average benefit for an individual receiving SNAP was equal to $125.35 per month, or about $4.00 per day (USDA Food and Nutrition Service 2015). Unemployed adults aged 18 to 49 who are not physically or mentally disabled or caring for a minor child are allowed to receive only three months of SNAP benefits in a three-year period, although states can allow a temporary waiver of the three-month limit in areas with persistent high unemployment (Bolen 2015). To supplement SNAP, school meals, and WIC, many communities have food pantries (which distribute food to poor households), "soup kitchens" (which provide cooked meals on site), and food assistance programs for the elderly population (such as Meals on Wheels).

Global Measures of Poverty

-The most widely used standard to measure extreme poverty in the developing world is $1.25 or less in income per day. Based on this measure, about a billion people, or one in seven people on this planet, live in extreme poverty (World Bank 2015). -A measure of relative poverty is based on comparing the income of a household to the median household income in a specific country. According to this relative poverty measure, members of a household are considered poor if their household income is less than 50 percent of the median household income in that country. -Low income is only one indicator of impoverishment. The Multidimensional Poverty Index is a measure of serious deprivation in the dimensions of health, education, and living standards that combines the number of deprived and the intensity of their deprivation (see Table 6.1). About 1.5 billion people in the world are multidimensionally poor (United Nations Development Programme [UNDP] 2014). -Three dimensions of multidimensional poverty: health, education, and standard of living

Marriage Opportunity Gap and Family Problems Associated with Poverty and Economic Inequality

-The top one-third of U.S. households are more likely to enjoy the benefits of being a "two-two-two-one household"—having two parents, two college degrees, two incomes, and one stable marriage. -The erosion of legal prohibitions against same-sex marriage in recent years reflect, in part, the cultural value and belief that everyone should have the opportunity to marry and to have children within a stable, socially recognized family household. But poverty and economic inequality create a marriage opportunity gap. The top one-third of U.S. households are more likely to enjoy the benefits of being a "two-two-two-one household"— having two parents, two college degrees, two incomes, and one stable marriage (Blankenhorn et al. 2015). But among lower- and even middle-income households, marriage rates are low, divorce rates are high, and nommarital childbearing rates are high (see also Chapter 5). -The stresses associated with low income contribute to substance abuse, domestic violence, and child abuse and neglect (see also Chapters 3 and 5). Children in poor households are more likely to experience harsh or neglectful parenting (Lanier et al. 2014). Without access to affordable child care and medical care, poor parents may leave their children at home without adult supervision or fail to provide needed medical care. -Poverty is also linked to teenage pregnancy and unintended childbearing. Poor women are more than five times as likely as affluent women to have an unintended birth, because they are less likely to use contraception and are less likely to have an abortion once pregnant (Reeves and Venator 2015). Poor adolescent teenagers are at higher risk of having babies than their nonpoor peers. Early childbearing is associated with increased risk of premature babies or babies with low birth weight, dropping out of school, and lower future earning potential as a result of lack of academic achievement. Luker (1996) noted that "the high rate of early childbearing is a measure of how bleak life is for young people who are living in poor communities and who have no obvious arenas for success" (p. 189). -Having a baby is a lottery ticket for many teenagers: It brings with it at least the dream of something better, and if the dream fails, not much is lost.... In a few cases it leads to marriage or a stable relationship; in many others it motivates a woman to push herself for her baby's sake; and in still other cases it enhances the woman's self-esteem, since it enables her to do something productive, something nurturing and socially responsible. (Luker 1996, p. 182)

Tax Reforms

-The wealthy investor Warren Buffet pointed to the unfairness of the U.S. tax system when he famously remarked that he paid a lower tax rate than his secretary because his capital gains earnings are taxed at a lower rate than ordinary income. While most politicians agree that the tax system needs fixing—that it is currently too complicated and/or unfair—there is ongoing partisan disagreement about how to reform the tax system. -One way to reduce the gap between the top and the bottom of the economic system is to make the tax system more progressive. Progressive taxes are those in which the tax rate increases as income increases, so that those who have higher incomes are taxed at higher rates. A more progressive tax system would increase taxes on the wealthy. Other tax reforms that could help reduce economic inequality include increasing estate taxes (labeled by opponents as "death taxes") and gift taxes, as well as capital gains taxes. Other tax reform proposals include limiting itemized deductions for the wealthy (such as the mortgage interest deduction), increasing the cap on Social Security taxes (in 2015, Social Security taxes applied only to the first $118,500 of earned income), and closing corporate tax loopholes that enable many corporations to pay less than their "fair share" of taxes. Increasing taxes on corporations and the rich does not necessarily result in simple redistribution of income or wealth from the rich to the poor. Rather, revenue from increasing taxes on the rich could be directed to public projects that would provide more equal access to education, health care, public transportation, and other services that would give low-income Americans the resources they need to improve their economic situation (McNamee and Miller 2009).

Human Development

-Unlike the economic development approach to poverty alleviation, the human development approach views people—not money—as the real wealth of a nation: "The central contention of the human development approach ... is that well-being is about much more than money.... Income is critical but so are having access to education and being able to lead a long and healthy life, to influence the decisions of society, and to live in a society that respects and values everyone. (UNDP 2010, p. 114)" -In many poor countries, large segments of the population are illiterate and without job skills and/or are malnourished and in poor health. Investments in human development involve programs and policies that provide adequate nutrition, sanitation, housing, health care (including reproductive health care and family planning), and educational and job training.

Reduce Wage Theft

-Wage theft is the failure to pay what workers are legally entitled to. Wage theft occurs when employers require workers to work off the clock or refuse to pay them for overtime when their weekly work hours exceed 40. Wage theft is widespread: In nearly 9,000 investigations of the restaurant industry, the U.S. Department of Labor found that more than 80 percent of the restaurants investigated had wage and hour violations (Gould 2014). -Because wage theft affects primarily low-wage workers, reducing this illegal practice would help lift the incomes of those at the bottom. Combating wage theft calls for increasing penalties to deter companies and employers from engaging in this practice; denying federal contracts to companies found guilty of wage and hour violations; and increasing the number of investigators working for the Department of Labor's Wage and Hour Division (Meixell and Eisenbrey 2014).

U.S. Wealth Inequality

-Wealth in the United States, like in the rest of the world, is unevenly distributed and concentrated at the top (see Figure 6.1). The wealthiest 1 percent has received much attention as a result of the Occupy Wall Street's "99 percent versus 1 percent" slogan. But inequality exists even among the rich. More than 40 percent of U.S. wealth in 2012 was owned by the top 1 percent, but more than half of that wealth was owned by the top 0.1 percent (Saez and Zucman 2014). -There is a saying: The best way to make a million dollars is to start out with $900,000! Wealth tends to snowball, and the bigger the snowball you start off with, the bigger it grows. Consider that between 1963 and 2013 (Urban Institute 2015), families at the 99th percentile saw their wealth increase six-fold, families at the 90th percentile (those wealthier than 90 percent of families) quadrupled their wealth, families in the middle of the wealth distribution roughly doubled their wealth, and families at the bottom 10 percent of the wealth distribution went from having no wealth, on average, to being about $2,000 in debt. -Disparities in income and wealth show an economic advantage of whites over racial/ethnic minorities. In 2014, median household income for non-Hispanic whites was $60,256 compared with $42,491 for Hispanic households and $35,398 for black households (DeNavas-Walt and Proctor 2015). The median wealth of white households is 13 times the median wealth of black households and more than 10 times the wealth of Hispanic households (Kochhar and Fry 2015) (see Figure 6.2). Whites are more likely than blacks or Hispanics to own homes, which for many Americans, is their most valuable asset. And white families are five times more likely than Hispanics or blacks to receive large gifts or inheritances, which can be used to pay for college, a down payment on a home, and other wealth-building assets (Urban Institute 2014). -Median Household Wealth by Race/Origin, 2013 = White - $141,900 =Hispanic - $13,700 =Black - $11,000