Outline

Comparative Poverty Distribution of Income and Wealth The “Fluidity” of Poverty Intra-Generational Mobility Intergenerational Mobility Poverty and Individual Attributes

Human Capital and the Culture of Poverty Fundraising/Campus Visit

Lots and lots and lots of data…don’t have a stroke. Be attentive to the bigger picture, the conclusions we draw, the general trends…

Review Question Problems

Despite size of nation and size of population, public policy reduced poverty

Key difference between US and other advanced industrial capitalist nations: Social Safety net…low wages

Politics and Poverty

Not because other nations have lower standard of Standard of Living Or that our poor as not as

poor (See chart 2.2)

Social Welfare Spending, (as pct. of gross national product)

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Sweden Neth Den Fran Germ Italy UK US

Anti-Poverty Programs constitute about 14% of the budget…Could change that to 25% OR simply increase the budget…both would result in large political fights

Funding the Welfare State: Household Tax Wedge, 2003

Tax Policy

Poverty and Inequality

Wealth and Income are distributed differently in different capitalist societies

If some have more…others have less…lets explore

This American life…

Income-money, wages, and payments that are periodically received from investments For most people a paycheck

10 Volunteers Up Front…

America’s Middle Class…

What does the data show about the distribution of income in America?

All Capitalist…But Inequality Varies Ratio of Top 10% to Bottom 10%

This American life…

Wealth-assets, particularly those that are income producing. For most people (60%) their home…for

many, no wealth

10 Volunteers Up Front…

14

Fewer People Own More Wealth

Source: Edward N. Wolff, “Recent Trends in Wealth Ownership”

2001: richest 10% of the U.S. population owned 70% of all wealth.

1976: richest 10% of the U.S. population owned 50% of all wealth.

Try this with a pizza tonight…

US has highest rate of inequality in Wealth Distribution (Gini Index: closer to 100 the > inequality)

Japan 24.9

Sweden 25

Germany 30

UK 36

US 40

The Fluid Nature of Poverty

More musical chairs shortly…but for now, “fluidity”

3. Rank suggests that we need to recognize the “fluid” nature of poverty. Please explain what he means by this, being sure to cite the text as evidence in your answer.

Weaving in and out…

3. Rank suggests that we need to recognize the “fluid” nature of poverty. Please explain what he means by this, being sure to cite the text as evidence in your answer.

“Individuals ands households tend to weave their way in and out of poverty depending on the occurrence or nonoccurrence of detrimental events (e.g. job loss, family disruption, ill health). Of course, the amount by which individuals find themselves above the poverty line is often quite modest, so the future detrimental events can throw them back below the poverty line”(Rank 2005: 30).

Weaving in and out of poverty… Social Mobility

The movement between different positions within a society.

Occupations, income brackets, social classes

Social Mobility

Sociologists Study Two Forms of Social Mobility

Intergenerational- compares the position of parents to that of their children If Parents were middle class, how likely are you be very

wealthy

Intra-generational- comparing the position of a person over an extended period of time. Start out as a mail clerk and end up CEO

Both concepts tell us something useful about society…

Intra-generational Poverty

“…newer longitudinal data show that a majority of poor individuals actually remain poor for only short periods of time and a relatively high proportion of people have experienced poverty at one point or another.” (Iceland, p.48)

Spells of poverty 45 percent end within 1 year 70 percent end within 3 years Only 12 percent last 10 years or more

But what is the rest of the story…

The Poverty Yo-Yo

But… “despite the shortness of many poverty spells, it is quite common for people who leave poverty to fall back into it a short time later.”

“…about ½ of those who end poverty spells fall back into it a short time later.” (Iceland, p.49)

“50% of Blacks and 30% of whites who fall into poverty in some year will be poor in 5 or more of the next ten years.” (Iceland, p.49)

Intergenerational Poverty

About 1 in 4 who were consistently poor before age 17 were still poor at ages 25-27 (Iceland, p.50)

African Americans, 1 in 3…Whites, 1 in 12

Forces us to consider why the difference? Geography, culture, discrimination?

So 75% of kids born in poor families will not poor in their late 20s, BUT

These kids are more likely to be poor than kids born to the non-poor,

Most will remain at the bottom of the class structure…near poor…see next slide

Comparative Mobility…US Lags

By international standards, the United States has an unusually low level of intergenerational mobility: our parents’ income is highly predictive of our incomes as adults.

“Recent research surveyed by the Organization for Economic Cooperation and Development, a governmental think tank for the rich nations, found that mobility in the United States is lower than in other industrial countries. One study found that mobility between generations — people doing better or worse than their parents — is weaker in America than in Denmark, Austria, Norway, Finland, Canada, Sweden, Germany, Spain and France. In America, there is more than a 40 percent chance that if a father is in the bottom fifth of the earnings’ distribution, his son will end up there, too. In Denmark, the equivalent odds are under 25 percent, and they are less than 30 percent in Britain (NYT 7/13/07).”

Explanations as to why?

So…At this point…

You should know have a better idea of how we measure poverty

You should have a better idea of the facts…how much poverty, how persistent is it, how US compares…

You have been introduced to the ideas that the labor market and government programs impact poverty rates

Now lets consider explanations for poverty…

1. Rank suggests that most social scientists and commentators “have in effect focused on who loses out at the economic game, rather than addressing the fact that the game producers losers in the first place”(Rank 2005: 50). Please explain what Rank means by this statement. In might help to read the whole chapter before you answer this question.

More volunteers please

Most social scientists (sociologists, economists, etc.) focus on individual attributes of the poor

That’s fine…but Rank thinks that is inadequate…it focuses on who loses the game rather than noting that the game produces losers.

Individual Attributes Often Pointed To

Human Capital: Education, training, experience and other qualities that increase worth in the labor market

College degree allows more job opportunities than a HS degree

Increases in human capital usually decreases labor market competition, and thus boost pay (Brain surgeons vs. janitor)

Lack of human capital decreases job opportunities

If there is a correlation between lack of human capital and poverty…if the more human capital you have, the less likely you are to be poor…what is the obvious public policy strategy…what should we try to do?

Individual Attributes Sometimes Pointed To

Beyond human capital, some focus on culture

Culture of poverty a theory that explains poverty as the result of a set

of norms and values- a culture- that is uniquely characteristic of the poor

Poor are governed by own code of values and behavior Eroded work ethic, dependency on government programs Lack of educational aspirations and achievement Increased acceptance of single parenthood Criminal activity Alcohol and drub abuse

Some problems with Culture of Poverty…Not Much Evidence

“Overall, studies examining cultural differences do not provide overwhelming evidence that most of the poor people adhere to very different value systems than non-poor people” (Iceland 2006: 97)

Segments of the poor might possess cultural differences, but they are small percentage of the overall population of poor people

Underclass

the element of the poor who are chronically unemployed, largely dependent on social welfare, and socially isolated from the mainstream society.

Little Connection to Labor Market Geographic Concentration & Isolation

Blue Vertical Lines are Economic Recessions…

What happens to poverty when the economy stops growing...how does this pose a problems to culture based explanations?

Structural Explanations

That’s fine…but Rank thinks that is inadequate…it focuses on who loses the game rather than noting that the game produces losers.

Next…

We’ll further explore the causes of poverty

Outline

Structure of Poverty The Labor Market and Poverty The Safety Net and Poverty The Likelihood of Poverty Structural Vulnerability Explanation

TAP program: 3-5 M,T,W Mandatory Reflection question due next Tuesday Review questions…so, so. This is 40% of your grade…

I’m not going to just give these points away…take these seriously…work at them…

2. You are at party with a guy named Rush who tells you that in the United States there are plenty of good jobs for all who want them and therefore there is no reason anyone should be poor. Another guy named Mark is at the party and he tells Rush that he is wrong, the American labor market has demonstrated an inability to support all families. After reading chapter 3, please explain what Mark means, being sure to incorporate at least two pieces of evidence from the text into your answer.

Inability of the Labor Market to Support All Families To reduce poverty, many focus on labor supply

Improve human capital Work for welfare to change attitudes of poor

Rank suggests we need to focus on labor demand Increasing the number of quality jobs

Rainwater and Burtless report that 25% of all full time workers are low wage workers…far more than in other nations Note next slide

                                                                                        

                                  

Full Time, Year Round Poverty Wages (family of four)

Inability of the Labor Market to Support All Families “Beyond low wages, there is also a mismatch

between the number of available jobs and the number of those who need them”(Rank 2005: 54)

Even when economy is booming…there is unemployment Rank notes that in 2001, that meant 7 million people

Inability of the Labor Market to Support All Families

Are the jobs that household head are working at capable of getting a family out of poverty?

Let’s just consider all households working full time?

Inability of the Labor Market to Support All Families

Are the jobs that household head are working at capable of getting a family out of poverty?

9.4% of households were working at jobs in which their earnings could not pull a family out of poverty

3. You are at party with a guy named Bill who tells you that there are “vast amounts of tax dollars being spent on public assistance” and that America does more than any other nation to reduce poverty. Another guy named Mark is at the party and he tells Bill that’s just not true and suggests that US efforts to reduce poverty are actually minimal. After reading chapter 3, please explain what Mark means, being sure to incorporate at least two pieces of evidence from the text into your answer

Ineffectiveness of Social Safety Net US allocates smaller proportion of Gross

Domestic Product to social welfare

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Sweden Neth Den Fran Germ Italy UK US

Less Generous Safety Net

Means tested health care for poorest (medicaid) vs. healthcare for all citizens

Less generous unemployment

How would this relate to the number of low wage jobs available in an economy?

Ineffectiveness of Social Safety Net

4. You are at party with a guy named Cant Happentome. He tells you that poverty only affects a small number of Americans so we need not worry about it. Another guy named Mark is at the party and he tells Cant recent research suggests he is wrong about the risk of poverty, and that more people will experience poverty than he thinks. After reading chapter 3, please explain what Mark means, being sure to incorporate at least one piece of evidence from the text into your answer.

Widespread Life Course Risk of Poverty Someone interpret…

Table 3.5: Cumulative Percent of Americans Experiencing Poverty (Ranke 2005:63)

Level of Poverty

Age Below 1.0 of

poverty

Below 1.25

Below 1.5

20 10.6 15 19.1

35 31.4 39 46.9

55 45.0 52.8 61

75 58.5 68 76

Widespread Life Course Risk of Poverty Life Course analysis of poverty shows

that by old age, 58.5% of us will experience poverty at some point in our lives

Table 3.5: Cumulative Percent of Americans Experiencing Poverty (Ranke 2005:63)

Level of Poverty

Age Below 1.0 of

poverty

Below 1.25

Below 1.5

20 10.6 15 19.1

35 31.4 39 46.9

55 45.0 52.8 61

75 58.5 68 76

Widespread Life Course Risk of Poverty “…a clear majority of Americans will

experience poverty at some point during their lifetime. Rather than an isolated event that occurs only among what has been labeled the “underclass,” poverty is an experience that the majority of American will encounter firsthand during adulthood”(Rank 2005: 65)

 5. Rank develops a “structural vulnerability explanation” of poverty that consists of three components. In your own words, summarize his explanations. Be sure to touch on all three components. 

Structural Vulnerability Explanation: AKA…who is most likely to lose at musical chairs…

Certain characteristics make some people more vulnerable to poverty if they lose a job, have a health crisis or experience a family crisis

Lack of human capital

Structural Vulnerability Explanation: AKA…who is most likely to lose at musical chairs…

Acquisition of Human Capital is strongly influenced by social class

Monopoly game:

I start with 5000 and 3 good properties; Bernard gets $1,500 and no properties; Melissa gets $250

If we play hundreds of games…who is most likely to win and lose?

Structural Vulnerability Explanation: AKA…who is most likely to lose at musical chairs…

Acquisition of Human Capital is strongly influenced by social class

Life:

Good pre-natal care, normal brain development, educated parents = strong vocabulary (2000), baby ivy pre-school @ $24,000 a year, excellent K-12 school, private tutors, SAT courses, college

Bad pre-natal care, abnormal brain development, limited vocabulary (600), cruddy pre-school, lousy schools, you guys, no SAT courses…College?...Note the next chart

Interpret

Structural Vulnerability Explanation: AKA…who is most likely to lose at musical chairs…

Certain characteristics make some people more vulnerable to poverty if they lose a job, have a health crisis or experience a family crisis: Lack of Human Capital

Acquisition of Human Capital is strongly influenced by social class

Individual Characteristics help explain who loses, but structural forces ensure that there will be losers in the first place Note Rank’s Chart

Structural Vulnerability Model

We will explore both…

Rank provides us with a structural account of the “game”

Rank, Wilson, Massey and others that we will read help us understand why some (inner city African Americans; women) are more likely to lose game

Fundraising and a Trip to Campus A moderator to facilitate discussion Fundraising Ideas

Assignment of tasks Trip to Campus

Ideas? Assignment of tasks