Psychology SOCASsignment6

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Chapter 6 Outline - Mooney-2 LECTURE OUTLINE I. THE GLOBAL CONTEXT: ECONOMIC INEQUALITY, WEALTH, AND POVERTY AROUND THE WORLD A. The extent of global poverty and economic inequality 1. Poverty a. 1 in 5 people live in extreme poverty. 2. Global wealth is also distributed unequally. a. Wealth refers to the total assets of an individual or household minus liabilities (e.g. mortgage, loans, and debts). b. The wealthiest 1% of households own 41% of all household wealth

II. DEFINING AND MEASURING POVERTY A. Absolute poverty: lack of resources necessary for material well-being B. Relative poverty: a deficiency in material and economic resources compared with some other population. C. Global Measures of Poverty 1. The standard to measure extreme poverty is $1.25 per day 2. Those living on less than $1.25 per day live in extreme poverty. 3. According to a relative poverty measure, members of a household are considered poor if their income is less than 50% of median household income in that country. 4. Poverty is multidimensional, and includes health care, education, and living standards. a. To capture the multidimensional nature of poverty, the Multidimensional Poverty Index (MPI) is based on health, education and living standards. b. The index takes into account the total number of deprived people and the intensity of their deprivation c. 1/3 of the world’s population lives in multidimensional poverty. D. U.S. Measures of Poverty

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1. In 1964, the Social Security Administration devised a poverty index based on data that indicated families spent about one-third of their income on food. a. The official poverty level was set by multiplying food costs by three. b. Since then, the poverty level has been updated annually for inflation but has otherwise remained unchanged. c. Poverty thresholds vary by the number of adults and children in the family and by age of the family head of household. d. Those living with a pre-tax income below the official poverty line are considered “poor;” those slightly above the poverty line are classified as “near poor;” those living below 50% of the poverty line live in “deep poverty” or “severe poverty.” e. Criticisms of U.S. poverty line i. The poverty measure is a national standard that does not reflect variations in the cost of living from state to state and between urban and rural areas. ii. Underestimates current poverty because other living costs (e.g., housing, medical care, child care, and transportation) have risen more rapidly than food costs; lowincome families today spend far less than a third of their income on food. iii. Both academic research and popular opinion confirm that much more is needed to get by than the official poverty thresholds allow for.

II. SOCIOLOGICAL THEORIES OF ECONOMIC INEQUALITY, WEALTH, AND POVERTY A. Structural-Functionalist Perspective 1. Poverty results from institutional breakdown: economic institutions that fail to provide sufficient jobs and pay; educational institutions that fail to provide adequate education in lowincome school districts; family institutions that do not provide two parents; government institutions that do not provide sufficient public support. 2. Economic inequality can be beneficial to society. a. Unequal pay motivates people to achieve educationally and to take jobs that are more important and difficult by offering higher rewards for higher achievements. b. This argument is criticized because many important occupational roles are poorly paid,

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whereas some nonessential jobs are highly paid. B. Conflict Perspective 1. Karl Marx proposed that economic inequality results from domination of the bourgeoisie (owners of the means of production) over the proletariat (workers): the bourgeoisie accumulate wealth as they profit from the labor of the proletariat, who earn low wages. 2. Modern conflict theorists recognize that power also comes from management positions, interlocking board memberships, control of media, and financial contributions to politicians. a. Laws and policies that favor the rich (e.g., tax breaks for the wealthy) are called wealthfare. b. Laws and policies that benefit corporations (e.g., low-interest government loans to failing businesses; subsidies and tax breaks to corporations) are known as corporate welfare. 3. Free-market reform policies hailed as a solution to poverty have benefited wealthy corporations and investors and increased global poverty. a. Companies relocate to countries with cheap labor, wages decline as a result. b. Low wages lead to decreased consumer spending, which leads to more industries closing plants, going bankrupt, or laying off workers (downsizing). c. This results in higher unemployment rates and a surplus of workers, enabling employers to lower wages even more. C. Symbolic-Interactionist Perspective 1. Examine the definitions of wealth and poverty and consequences of being labeled “poor.” a. Individuals labeled “poor” are stigmatized as lazy, irresponsible and lacking in abilities, motivation, and moral values, whereas wealthy persons are viewed as capable, hard working, motivated, and deserving of wealth. b. Research on the meanings of being poor found the experience of poverty involves psychological dimensions such as powerlessness, dependency, shame, and humiliation. 2. Meanings and definitions of wealth and poverty vary across societies and across time.

III. ECONOMIC INEQUALITY, WEALTH, AND POVERTY IN THE UNITED STATES A. U.S. Income Inequality 1. In 2012, 46.5 million Americans—15% of the U.S. population—lived below the poverty

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line. 2. More than half (58%) of Americans age 20-75 will spend at least 1 year in poverty; 1 in 3 will experience a full year of extreme poverty at some point in his or her adult life. B. U.S. Wealth Inequality C. The Wealthiest Americans D. Patterns of Poverty in the United States 1. Age and poverty a. Children are more likely than adults to live in poverty. b. More than one-third (35.5%) of the U.S. poor population are children. Chapter 6 c. Compared with other industrialized nations, the U.S. has the highest child poverty rate. 2. Sex and poverty a. Women are more likely than men to live in poverty, known as the “feminization of poverty.” b. The 2014 poverty rate for U.S. females was 16.1%, compared to 13.4% for males. 3. Education and poverty a. Education is one of the best insurance policies for protecting an individual against living in poverty: the higher a person’s level of education, the less likely that person is to be poor. 4. Family structure and poverty a. Poverty is more prevalent among female-headed single-parent households than other family structures. b. Other industrialized countries have lower poverty rates of female-headed families than the U.S.; other developed countries offer supports for single mothers, such as income supplements, tax breaks, universal child care, national health care, and higher wages for female-dominated occupations. c. Children in same-sex couple families are twice as likely to be poor as children of married heterosexual couples. 5. Race or ethnicity and poverty a. Poverty rates are higher among blacks, Hispanics, and Native American/Alaska Natives

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than non-Hispanic whites. b. Causes of poverty among minorities include past and present discrimination; loss of manufacturing jobs from inner city; movement of whites and middle-class blacks out of the inner city and the resulting concentration of poverty in predominantly minority innercity neighborhoods; and higher proportion of female-headed households. 6. Labor force participation and poverty a. Many U.S. poor are classified as working poor—individuals who spend at least 27 weeks per year in the labor force, but whose income falls below the poverty level. 7. Region and poverty a. Highest poverty rates in are in the south and the lowest rates are in the Northeast

IV. CONSEQUENCES OF ECONOMIC INEQUALITY AND POVERTY A. Health Problems, Hunger, and Poverty 1. In developing countries, absolute poverty is associated with hunger and malnutrition, high rates of maternal and infant deaths, indoor air pollution, and unsafe water and sanitation. a. In 2012 870 million people globally were undernourished. 2. In the U.S. low socioeconomic status is associated with higher incidence and prevalence of health problems, disease, and death. a. Living on limited means can be stressful and stress adversely affects health b. Poor children and adults also receive inadequate and inferior health care, which exacerbates health problems. c. Poverty is linked to higher levels of mental health problems, including stress, depression, and anxiety. B. Substandard Housing and Homelessness 1. Poor are more likely to live in substandard housing. a. Many live without heating, air conditioning, sewer or septic systems, electrical outlets, phones; housing units of the poor are more likely to have holes in the floor, a leaky roof, open cracks in the walls or ceiling. b. The poor are more likely than non-poor to live in high-crime neighborhoods. c. Concentrated areas of poverty and poor housing in urban areas are called slums. 2. Homelessness: over the course of a lifetime, an estimated 9 to 15% of the U.S. population

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becomes homeless. a. Homeless individuals live on the street or in the outdoors; in homeless shelters makeshift dwellings. b. Lack of affordable housing is the primary cause of homelessness. c. Causes of homelessness include mental illness and lack of mental health services, substance abuse and lack of substance abuse services, low-paying jobs, unemployment, domestic violence, poverty and prison release. d. In recent years there has been a surge in unprovoked violent attacks against homeless individuals. i. In most cases the attacks are by teenage and young adult males. 3. The housing crisis in recent years has caused financial ruin for millions of U.S. citizens and exacerbated poverty worldwide. a. Inflated housing values in the 1990s and early 2000s has enabled middle-class homeowners with maxed out credit cards to keep spending by refinancing their mortgages. b. There was an increase in subprime mortgages—high interest or adjustable rate mortgages that require little money down and are issued to borrowers with poor credit ratings or limited credit history. c. When the housing bubble burst and house values fell in 2007/08, millions of people were stuck with “upside down mortgages” in which they owed more than the value of the property. d. Many homeowners could not afford their payments, and foreclosures skyrocketed. C. Legal Inequality 1. Economic inequality of the U.S. justice system is problematic for the poor D. Political Inequality and Alienation 1. The wealthy have a political advantage over the poor. 2. Those in who are in the lower SES are vulnerable to experiencing political alienation. E. Crime, Social Conflict, and War 1. Poverty is often the root cause of conflict and war within and between countries. a. Poorer countries are more likely to engage in civil war, and countries that experience civil

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war tend to become and/or remain poor 2. War contributes to poverty by infrastructures, homes, and businesses, and transportation systems. F. Natural Disasters, Economic Inequality, and Poverty 1. The poor are more vulnerable to devastation from natural disasters. 2. The poor have few to no resources to help them avoid or cope with natural disasters. 3. Poverty also affects natural disaster relief efforts. G. Educational Problems and Poverty 1. Poverty negatively impacts the education of children. 2. In the U.S. children in poverty are more likely to suffer academically than non-poor children. a. Overall, poor children 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 are non-poor youth. b. Poor children often attend schools with lower quality facilities, overcrowded classrooms, and a higher teacher turnover rate. c. Health problems associated with childhood poverty contribute to poor academic performance. d. Because poor parents have less schooling on average than do non-poor parents, they may be less able to help their children succeed in school. e. Poor parents have fewer resources for books, computers, travel, and other goods and experiences that promote educational achievement. f. Many poor parents cannot afford to send their children to college. H. Marriage Opportunity Gap and Family Problems Associated with Poverty and Economic Inequality 1. Stresses associated with poverty contribute to substance abuse, domestic violence, child abuse and neglect, divorce, and questionable parenting practices. 2. Teenage pregnancy is also associated with poverty; poor adolescent girls are at higher risk of having babies than non-poor teenagers. a. Early childbearing is associated with increased risk of premature or low-birth weight babies; dropping out of school; lower future earning potential as a result of lack of

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academic achievement. I. Intergenerational Poverty: poverty that is transmitted from one generation to the next. 1. Nearly half of U.S. children born to low-income parents become low-income adults. 2. Intergenerational poverty creates a persistently poor and socially disadvantaged population, referred to as the underclass. a. The underclass is stereotyped as being composed of minorities living in inner-city or ghetto communities. b. However, the underclass is a heterogeneous population that includes poor whites living in urban and nonurban communities.

V. STRATEGIES FOR ACTION: REDUCING POVERTY AND ECONOMIC INEQUALITY A. International Responses to Poverty and Economic Inequality 1. 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. a. One of the MDGs is to reduce by half the proportion of people who live on $1 a day and who suffer from hunger. b. Other MDGs involve alleviating problems related to poverty, such as disease, child and maternal mortality, and lack of access to education. 2. Economic Development a. One approach to alleviating poverty involves increasing the economic output. b. Economic growth does not always reduce poverty; in some cases, it increases it. i. 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. ii. Growth does not help poverty reduction when public spending is diverted away from meeting 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. c. Economic development also threatens the lives and cultures of the 370 million indigenous

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people who live in 70 countries around the world; they live on land rich in natural resources and are often displaced by corporations and are forced to give up their traditional ways of life and assimilate into the dominant culture. 3. Human Development a. A key feature of this approach to poverty alleviation is to view people not money as the real wealth of the nation. b. Human capital investment includes programs and policies that provide adequate nutrition, sanitation, housing, health care, and education and job training. 4. Microcredit Programs a. Microcredit programs refer to the provision of loans to people who are generally excluded from traditional credit services due to their low socioeconomic status. b. Microcredit programs give poor people the financial resources they need to become selfsufficient and to contribute to their local economies. B. Reducing U.S. Poverty and Economic Inequality 1. Tax reforms 2. Political reform 3. Minimum wage increase and “living wage” laws 4. Reduce wage theft

VI. THE SAFETY NET: PUBLIC ASSISTANCE AND WELFARE PROGRAMS IN THE UNITED STATES A. Earned income tax credit (EITC) 1. Created in 1975, it is a refundable tax credit based on a working family’s income and number of children. B. Supplemental security income (federal SSI) 1. Provides minimum income to poor people who are 65 or older, blind, or disabled. C. Temporary assistance to needy families (TANF) 1. In 1996, Congress passed the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA), referred to as welfare reform, which replaced AFDC with Temporary Assistance to Needy Families (TANF). 2. TANF eligibility requirements

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a. Within 2 years of receiving benefits, adult TANF recipients must be either employed or involved in work-related activities (e.g., job search, vocational education). b. A lifetime limit of 5 years is set for families receiving benefits, and able-bodied recipients ages 18 to 50 without dependents have a 2-year lifetime limit. D. Food Assistance 1. The largest food assistance program in the U.S. is the Supplemental Nutrition Assistance Program (SNAP) (formerly known as food stamps), followed by school meals and the Special Supplemental Food Program for Women, Infants, and Children (WIC). 2. Many communities also have food pantries (which distribute food to poor households), soup kitchens (which provide cooked meals on site), and food assistance programs for the elderly (e.g., Meals on Wheels). E. Housing Assistance 1. Half of the working poor spend at least 50% of their income on housing. 2. Public housing (initiated in 1937) provides federally subsidized housing owned and operated by local public housing authorities (PHAs). 3. Section 8 Housing involves federal rent subsidies provided either to tenants or private landlords; Section 8 housing disperses low-income families throughout the community. F. Alleviating and preventing homelessness 1. Programs to alleviate homelessness include “homeless shelters” providing emergency shelter beds and transitional housing programs, which provide time-limited housing and services to help individuals gain employment, increase income, and resolve other problems. 2. Prevention strategies need to be implemented. G. Medicaid 1. The largest U.S. public medical assistance program is Medicaid, which provides medical services and hospital care for the poor through reimbursements to physicians and hospitals H. Educational assistance 1. Educational assistance includes Head Start and Early Head Start programs and college assistance programs. 2. Head Start and Early Head Start provide educational services for disadvantaged infants,

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toddlers, and preschool age children and their parents. 3. To alleviate economic barriers for low-income individuals wanting to attend college, the federal government offers grants, loans, and work opportunities. I. Child care assistance 1. In the U.S., lack of affordable quality child care is a major obstacle to employment for single parents and a burden on dual-income and employed single parents. a. The cost of child care for a 4-year-old ranges from $4,000 to $16,000 per year. 2. Some public and private sector programs and policies provide limited assistance with child care. 3. Child care assistance is inadequate: many states have waiting lists for child care assistance, and many families earn more than the eligibility limit, but not enough to afford child care expenses. J. Welfare in the United States: Myths and Realities 1. Myth 1: People who receive welfare are lazy, have no work ethic, and prefer to have a “free ride” on welfare rather than work. a. Reality: i. Most welfare recipients are children and therefore not expected to work. ii. Many adults receiving public assistance are participating in work activities, including job training/education, job search, and employment. iii. Unemployed adult welfare recipients experience barriers that prevent them from working, including poor health, job scarcity, lack of transportation, lack of education, or desire to stay home and care for their children (which often stems from the inability to pay for child care or the lack of trust in child-care providers). iv. Welfare recipients who stay home to care for children are doing very important work: parenting. v. Most adult welfare recipients would rather be able to support themselves and their families than rely on public assistance; average monthly assistance to families in 2006 was $372. 2. Myth 2: Most welfare mothers have large families with many children. a. Reality:

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i. The average number of children in TANF families is 108. 3. Myth 3: Welfare benefits are granted to many people who are not really eligible to receive them. a. Reality: i. Although some people obtain welfare through fraudulent means, it is much more common for people who are eligible to receive welfare do not receive benefits. ii. A main reason for not receiving benefits is lack of information (people do not know they are eligible); other reasons are pride and lack of availability of benefits. 4. 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. a. Reality: i. 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. ii. Fraud in the SNAP program in recent years has decreased considerably. 5. Myth 5: Immigrants place a huge burden on our welfare system. a. Reality: i. Poor immigrants are less likely to receive benefits than native born.

VII. UNDERSTANDING ECONOMIC INEQUALITY, WEALTH, AND POVERTY A. The rich become richer and the poor become poorer, but individual factors are not the appropriate explanation for societal level poverty. 1. Wealthy benefit most from government policies 2. Governments have a responsibility to their citizens B. Alleviating poverty is not only morally expedient, but it makes economic sense as well. 1. The cost of sustained childhood poverty is more than $500 billion per year in the U.S. 2. The cost of eradicating poverty worldwide would be only about one percent of global income.