Poverty vs.

the Economy

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

Fitchen,Janet M.(1981). Poverty and Rural America, New York,York: Random house Publishing
Company.
Jansson, Bruce S. (1988). The Reluctant Welfare State, A History of Amercians Social Welfare
Policies. Belmont, California: Wadsworth Publishing Company.
Katz, Michael B. (1990) The Undeserving Poor the War on Poverty to the war on Welfare, New
York, New York.
Levitan, Sar A. And Shapiro, Issac. (1987), Working But Poor. New York, New York: The free
Press.