Chapter 6: Poverty and the poor

Welfare Programs: 1996... Welfare Reform

*1996 ... Welfare Reform* -Welfare recipients must work if they are able-bodied -Failure to work within 2 years ... loss of welfare -No welfare benefits for longer than 5 years -AFDC replaced with TANF (Temporary Assistance to Needy Families) The federal government gives individual states "block grants" that states use to shape their own welfare programs. Each state can tailor its own welfare program, providing state-specific requirements for people to qualify and varying levels of benefits

Defining poverty

*Absolute Poverty* -Unable to acquire the basic *necessities* of life... a basic diet, shelter, minimal health care and clothing. Anything less is a state of poverty. Poverty: a socioeconomic conditions in which people are unable to meet their fundamental human needs... there is a fixed minimum income below which physiological efficiency cannot be maintained *Relative Poverty* -What does "necessity" mean? Telephone? Car? Internet? Poverty is relative to the standards and expectations in a particular soccer at a particular time. Basic diet in the US v Bangladesh? ($1 or $2 a day) Poverty is contextual across place and time. We cannot impose our standards on other societies or past standards on current times. *Official Poverty* -We need a *uniform MEASURE* of poverty. 1964 War on Poverty.... SSA... families spent ONE THIRD of $ on food. Poverty line was set at THREE TIMES THE COST OF A NUTRITIONALLY ADEQUATE DIET

US Poverty in Comparative Perspective

*Absolute* numbers ... fewer in poverty in the US % of Americans in poverty less than in many other countries Zambia vs. America *Relative* poverty ... comparing US with other developed (OECD) states ... the US has the most unequal distribution of income and wealth Updated OECD data of international comparisons on the D2L site

The Underclass Debate II

*CULTURAL* ... people are not only economically deprived but also culturally deficient ... their lifestyle and general values do not fit with mainstream society *STRUCTURAL* ... the underclass lack the skills and education to enter the mainstream workforce ... they are victims of a restructured economy not victims of their own culture Christopher Jencks sees 4 different levels of underclass: -An impoverished underclass -A jobless underclass -An educational underclass -An underclass that violates middle class values

Why are the poor poor? II

*Cultural Traits (pages 165-67)* Oscar Lewis' culture of poverty characteristics: -A present orientation, not a future orientation -A fatalistic view of the world -A tendency toward female-headed households -Authoritarianism within the family -A high rate of abandonment of wives and children Use of violence in settling disputes and disciplining children -A high rate of alcoholism -A belief in male superiority -A martyr complex among women Lewis argued that these behaviors are responses to the conditions of poverty and that they become entrenched cultural traits that are passed on from generation to generation *CRITICS say that all this "blames the poor for being poor."*

Why are the poor poor?

*Individual-Focused Explanations* -Stress personal responsibility -Fits well with the dominant American ideology of individualism -People are poor because of their own actions/inactions, as well as their own personal traits -The source of poverty lies with poor people themselves Two major individual-focused theories emphasize: -*Biological Traits* (pages 164-65). Social Darwinism ... Herbert Spenser; Charles Murray. Today there is little support for biological theories -*Cultural Traits* (pages 165-67): Poverty is the result of a set of norms/values (a culture) that are not compatible with society's dominant cultural norms/values

Poverty in America: US Census Bureau?

*Poverty rate in 2016 was 12.7%*, down 0.8 percentage points from 13.5% in 2015. This is the 2nd consecutive annual decline in poverty. Since 2014, poverty rate has fallen 2.1 %points from 14.8% to 12.7% 2016 there were 40.6 million people in poverty, 2.5 million fewer than in 2015 and 6.0 million fewer in 2014. Poverty rate in 2016 (12.7%) not significantly higher than the poverty rate in 2007 (12.5%), *the year before the most recent recession*. For most demographic groups, *the number of people in poverty* decreased from 2015. Adults aged 65 and older were the only population group to experience an increase in *the number* of people in poverty. 2015-2016: -poverty rate for children under age 18 declined from 19.7% to 18% -poverty rate for adults aged 18-64 declines from 12.4% to 11.6% -poverty rate for adults aged 65 and older was 9.3 percent in 2016, not statistically different from the rate in 2015

Welfare Programs

*Social Insurance Programs*: Financed through payroll taxes, benefit everyone regardless of economic status -1) Social Security; 2) Medicare *Public Assistance Programs (aka Welfare):* ... Financed with general government revenues, "means-tested" recipients must demonstrate a need to qualify. -Until 1996: 1) Aid to Families with Dependent Children (ADFC) - For misperceptions & misconceptions read page 173 2) Supplemental Security Income (SSI) 3) Food Stamps; 4) Medicaid 1996 Welfare Reform ...

Why are the poor poor?: The cycle of poverty & "catch 22"

*The Cycle of Poverty (pages 167-168)* -An array of institutions sustains a poverty class through a circular process -A "web" of institutions, primarily economic, envelopes the poor and they can't escape poverty -$, occupation and education of the poor are the lowest possible level -This creates an unbreakable "circuit" that is impossible to break *"Catch 22"* -Start with low education ... fewest skills ...least challenging, no-skill, no opportunity jobs ... low income ... living in poorest neighborhoods ... with very poor schools ... education is not valued ... drop out of school and *the cycle is complete and continuous from generation to generation...* -Low education leads to low occupational level, which leads to low income, which leads in each succeeding generation, back to low education

Why are the Poor Poor?: The Cycle of Poverty

*The Cycle of Poverty (pages 167-168)* -At various points in the cycle other aspects of social life (health care, housing, criminal justice ...etc.) are affected *REINFORCING* the negative cycle of low education, occupation, income, education -Housing/where people live determines the quality of schooling. But poor families cannot afford the price of housing in affluent suburban neighborhoods and attempts to build affordable housing in middle class neighborhoods are resisted strongly by residents of those neighborhoods, and their elected politicians, who assume "social pathologies" (crime, drugs etc.) will follow -Confined to self-contained communities by the economic structure AND by political action/inaction and social discrimination Cost of living is disproportionately higher for the poor ... basic necessities (rent, food, transportation), limited choices & and expensive The poor have limited access to market institutions: Debt, pay day loans, check cashing, car insurance

Why are the Poor Poor?: The Political Economy of Capitalism

*The Political Economy of Capitalism* -A second structural theory ... focusing on uneven economic development that results from capitalism -Businesses maximize profits ... they control the rate of economic development in communities creating jobs and economic activity ... their decisions determine the fate of workers -Firms move their capital around to maximize profits -Deindustrialization (chapter 5) led to capital flight and job flight from industrial heartland ... few jobs for the unskilled, poorly educated -Detroit, Chicago, Philadelphia have lost more than 60% of their manufacturing jobs. Neighborhoods are blighted as businesses, middle-classes, wealth and taxes leave -Those left behind are not economically capable of moving but who now live in communities that are deteriorating -Lack of jobs/income leads to an even lower tax base and further deterioration ... a cycle of decline -Also now affecting rural areas

The Underclass Debate

1. The chronically poor are poor because they are behaviorally flawed & live a degraded, dysfunctional lifestyle -Only by adopting mainstream norms & values can they alter their predicament 2. The poor are poor because of structural forces outside their control A restructured urban economy caused an exodus of jobs and industry from inner cities SO ... The debate sees the underclass are either *CULTURAL* or *STRUCTURAL* in its formation and continuation

Poverty in Michigan

15% of Michiganders live below the poverty line Michigan's official poverty rate in 2016 was 15 percent, with 1.45 million people in poverty. That's 78,000 fewer than in 2015 when the poverty rate was 15.8 percent. The U.S. poverty rate for 2016 was 12.5%. The 2016 poverty rate was the lowest since 2009. The US Census provided county-level data for counties with a population of at least 65,000.

The Persistence of American Poverty

1980s, Homelessness a new category of poor to public awareness: 1980s brought a change in administration... Reagan's neoliberal, free-market oriented political philosophy Many public assistance programs were slashed The poor now either: "Deserving" OR -"Undeserving".... beneficiaries/exploiters of a generous welfare system 1990s... policies revised to adjust some of the inequalities in income and tax burdens imposed in the 1980s Poverty rate in 1999 ... 12% ... a 20-year low 2000s trend reversed ... 15.1% in 2010 Then 13.5% 2015 and 12.7% 2016 ... still higher than in 1999

Current US Poverty Statistics: September 2017 US Census Bureau

Adults not working - 31% Adults with a disability - 27% Single moms - 27% Adults w/o a high school diploma - 25% Black Americans - 22% Hispanic Americans - 19% Foreign born non-citizens - 20% All children - 18% Single dads - 13% Seniors - 9% Married couples - 5% Adults with college degree of higher - 5% Full time working adults - 2%

The Working Poor II

Barbara Ehrenreich's "Nickel and Dimed" (pages 158-9) The working poor are the "invisible poor" ... part of the mainstream labor force and out of the eye of public attention They make our world work (food service, trash collection, nurses aids, hotel maids) by providing services we take for granted. But because their poverty is less severe than that of the chronically poor or the underclass their problems are rarely discussed by government policies Without the human capital (education & job skills) that might protect them, the working poor are the first to suffer unemployment and lower wages when recession strikes.

The Working Poor

Caught in an economic trap: -Live from paycheck to paycheck from temporary work. Can't establish a solid trajectory of economic security (like the classes above them). Wages are too low to save anything. -Although they are under server economics stress, they are not poor enough for public assistance. Their income is low but it is above the official poverty line. They don't qualify for Medicaid, making their situation even more precarious. But they don't work enough hours to qualify for employer-provided medical insurance The working poor occupy the bottom rungs on the occupational ladder... low income, low prestige, and no power (kitchen workers, unskilled factory workers, migrant farm laborers...) Even if they worked a full 40 hours at the minimum wage (around $8 an hour), they would make $16,000 per year...well below official poverty lines

Welfare Programs: Consequences

Consequences: -*SUCCESSES* -Numbers on welfare declined sharply (see graph, p. 175) -2000: numbers on TANF down by 50% and falling fast -Many former recipients were placed in the workforce -Employment of poor single moms increased dramatically -Welfare reform did not significantly increased child poverty -*FAILURES* -Did reforms lead to a decline in poverty (not just a decline in numbers on welfare) -Millions found work ... at wages below the poverty level -Living standard for single moms didn't change -Getting people into the labor force is not the same as keeping them in employment

Why are the Poor Poor?: *Poverty as Functional*

Herbert Gans ... poverty is a social phenomenon that benefits the non-poor ... poverty endures because it serves that purpose ... it is functional The "*undeserving poor*" (appear to be able bodied but are unemployed and receiving benefits) create unintended, unrecognized positive functions for those who are not poor: -They are ideal scapegoats and can be "blamed for virtually any shortcoming of everyday life -They are suppliers of illegal goods to the non-poor (drugs, labor ...etc) -They create jobs for many well-off people ... social workers, criminal justice professionals, social scientists(!) -They reinforce mainstream norms & values ... the undeserving poor, those who lack ambition, are morally weak, are irresponsible etc. help reaffirm the legitimacy of the Protestant work ethic -If undeserving poor single-parent families are publicly condemned, the two-parent family is legitimized as ideal Eliminating poverty becomes dysfunctional for the people who benefit most from it ... the non-poor

The Underclass II

Key dividing line separating the underclass is their very weak connection to the mainstream labor force Underclass depends to some extent on public welfare and/or engage in illegal activities in the underground economy Underground economy ... separate from the mainstream economy where activities are regulated through licensing, regulations, and earned income is taxed Underground economy is a cash economy Underclass is hard to quantify. Resides mostly in "inner cities" Underclass made up disproportionately of racial-ethnic minorities Page 161 ... 2 areas in DC with strikingly different conditions

Public Policy & Poverty

Minimizing poverty is an agreed-upon societal objective Policy makers, the public, and scholars disagree how to do this Poverty is also a political issue -Extreme view ... leave the plight of the poor to the market ... remove government completely from the picture. But even these extremists admit that poverty impedes the smooth functioning of society and the economy -Even extreme "conservatives" admit that it is beneficial to help the poor if only to protect the peace and security of the non-poor -At the other end of the extreme is the view that government must have a major role ... an advanced welfare state offering maximum assistance is the proper objective of government -Even extreme "liberals" admit that public assistance must have limits and the poor must make some effort to help themselves Public policy on poverty try to find a balance between the liberty preference of conservatives and the equity preference of liberals The difference between conservatives and liberals reduces to: *EQUALITY OF OPPORTUNITY* versus *EQUALITY OF CONDITION*

The Poor and Those at Risk

Poverty lines are somewhat arbitrary ... does $24,600 put a family of 4 in 2017 "safely" above the poverty line? Different families have different standards of living Cost of living varies from regions to region Official poverty counts only money income ... doesn't count poor schools, poor health care, poor public transportation etc.. "Official" poverty line is very political -Conservatives: welfare payments (food stamps) not included in the official poverty levels. Official poverty OVERSTATES the size of poverty -Liberals: the number of poverty is UNDERSTATED because poverty is estimated on pre-tax income. After-tax income increase poverty Europe ... half the median family income ... if applied to the US this would increase the number of poor significantly Michigan $51,084; US $55,775

Official Poverty II

Poverty lines are somewhat arbitrary... does $24,600 put a family of 4 in 2017 "safely" above the poverty line? Different families have different standards of living Cost of living varies from region to region Official poverty counts only money income... doesn't count poor schools, poor health care, poor public transportation etc... "Official" poverty line is very political -Conservatives: welfare payments (food stamps) not included in the official poverty levels. Official poverty OVERSTATES the size of poverty -Liberals: the number of poverty is UNDERSTATED bc poverty is estimated on pre-tax income. After tax income increase poverty. Europe... half the median family income... if applied to the US this would increase the number of poor significantly -Michigan $51,084; US $55,775 <-- half that

Who are the poor?

Poverty lines are somewhat arbitrary... does $24,600 put a family of 4 in 2017 "safely" above the poverty line? Different families have different standards of living Cost of living varies from regions to region Official poverty counts only money income ... doesn't count poor schools, poor health care, poor public transportation etc.. "Official" poverty line is very political -Conservatives: welfare payments (food stamps) not included in the official poverty levels. Official poverty OVERSTATES the size of poverty -Liberals: the number of poverty is UNDERSTATED because poverty is estimated on pre-tax income. After-tax income increase poverty Europe ... half the median family income ... if applied to the US this would increase the number of poor significantly Michigan $51,084; US $59,039 (2016) .

The Underclass

The majority of Americans have the idea that the poor are a population that are more or less permanently impoverished The majority of the poor are not permanently impoverished ... rather they are working but don't earn enough to boost them over the poverty threshold ... they drift in and out of poverty because of change in jobs, personal, or societal circumstances BUT ... There is a segment of the poverty population that does fit the popular view of a permanent impoverished class with: -Few occupational skills; Low/no education; Rarely employed -Dependent on some form of public assistance *THE UNDERCLASS:* *-Poverty is PERMANENT, CHRONIC, and ISOLATING*

The Persistence of American Poverty II

The poor are not a homogeneous category in terms of either economic class or lifestyle The most important division among the poor is b/w: -The Working Poor -The Underclass

Official Poverty

Today families spend about ONE EIGHTH of their $ on food but they send more on housing, childcare, and healthcare. How the US Census Bureau measures *POVERTY* 2010 official poverty line -$17,658 for a family of 3 -$22,113 for a family of 4 -$26,675 for a family of 5 2017 official poverty line.... -$12,060 for a family of 1 -$16,240 for a family of 2 -$20,420 for a family of 3 -$24,600 for a family of 4

US Census Bureau CPS 2017: Poverty and Poverty Rate

pg. 115