Trends in Inequality

Lecture 3September 12, 2012

The Government Definition

• 1964 Definition. Based on 1955 data.• Families spend 1/3 income on food.

Thresholds set at 3 times the cost of the cheapest nutritionally sound food plan for a family of four.

• In 1969, the thresholds stay the same, but increases tied to the CPI (Includes goods other than food.)

Persons infamily/household Poverty guideline

1 $11,1702 15,1303 19,0904 23,0505 27,0106 30,9707 34,9308 38,890

For families/households with more than 8 persons,add $3,960 for each additional person.

2012 Poverty Guidelines for the48 Contiguous States and the District of Columbia

Alternative Definitions

• Medical Costs• Costs Associated with Working• After tax, not before tax, income• Include noncash benefits (food stamps,

housing subsidies)• Take into account costs of clothing, shelter

and utilities.• Geographic variation.

Current Poverty

• Figures released today, predicted to show that it is highest in fifty years.

• All alternative measures of poverty show higher percentages of the population in poverty.

Europe vs. United States

• Europe: Poverty is measured at 50% of the median income.

• In the US median income in 2006-2010 was $51,914. Poverty line would be $25, 957.

• The official US poverty line in US in 2000 was 32% of median income. In 1960 the poverty line was 48% of median income.

POOR PEOPLE IN RICH NATIONS: United States Compared to European Nations

• Luxembourg Income Study, directed by Timothy Smeeding, University of Wisconsin – the best, longest running comparative research

• “Poor People in Rich Nations: The United States in Comparative Perspective.” (will post a link on course website)

Data are from 2007-2009

Child Poverty RateUNICEF

Why does US have such high poverty?

• Low wage work. “The working poor”• Cash transfers and benefits in the US are

lower than in most other advanced countries.

• Cash transfers and benefits in the US are targeted at the elderly far more than at families and children.

Incarceration

Growth of incarceration

• Not related to probability of arrest, which has been more or less constant for 30 years.

• Related to harsher sentencing, and mandatory sentencing, especially for drug offenses.

Source: Western and Pettit

Scope of the Problem• There are currently 16.1 million current or

former felons, 7.5% of the population.• (There were 15.7 million unemployed

people in 2009).• 1/3 of all African American adult males are

current or former felons.• 1% of all Americans are in prison at any

one time, another 2% are on parole or probation.

Scope of the Problem• Lifetime likelihood of going to prison is

60% for African American male without at high school degree.

• Twice as many African American men under age 40 have a prison record as have a college degree.

• 1 in 40 adults, (5.4 million people) are ineligible to vote because of a felony conviction.

How we measure race and ethnicity

What is the race and ethnic distribution in the US?

• White• Black• Hispanic• Asian• American Indian

Race and Ethnicity of USGSS Actual

White 57.7 69

Black 28.4 13

Hispanic 21.4 13

Asian 15.0 4

Amind 11.5 1

2010 Census Race Question

2010 Hispanic Origin Question