POVERTY & WEALTH INEQUALITYCSI – UNIT 5 - 2015

WEALTH DISTRIBUTION

Wealth = sum of assets minus liabilities Assets = Real estate, savings, investments, retirement accounts Liability = car loan, credit card balance, mortgage, student loans, etc.

If we had 100 dollars, and 100 people, how much money would each person have if everyone had the same amount of wealth?

Answer = $1.00 each Society is NOT this equal! The upper classes have a DISPROPORTIONATE amount of wealth

WEALTH INEQUALITY SIMULATION

20 student simulation 1 student gets half the candy (represents top 3% of population) 2 students get 1/5 candy (represents next 7%) Rest get the remaining candy (represents bottom 90%)

IMPLICATIONS OF RISING WEALTH INEQUALITY If income inequality stays high, wealth disparity will keep increasing Rich would be extremely rich Ordinary families would own next to nothing

Debts almost as high as assets Suggested remedies:

Policies to reduce concentration of wealth Prevent transformation of wealth into inherited fortunes (estate taxes) Encourage savings among middle class

POVERTYDEFINITION – CAUSES – EFFECTS

POVERTY Definition= state of being extremely poor Poverty line in US

1 person = $11,670 2 people = $15,730 3 people = $19,790 4 people = $23,850 5 people = $27,910 6 people = $31,970

Poverty Statistics (2013) 14.5%, down from 15% 45.3 million people

Soup lines today & Great Depression

WHAT DOES POVERTY LOOK LIKE?

Lack of security When will we eat? How will we pay bills?

Health Impacts Malnutrition Lower life expectancy

Minimum wage or unemployed Homelessness

CAUSES OF POVERTY Economy

Wage Stagnation – inflation makes prices increase, but not how much you earn Layoffs & Unemployment

Family Composition Single, female-headed households 4-5x greater than poverty in married/couple families High divorce rates Rising non-marital birthrates Estimated that if marriage rate was same today as in 1970, child poverty rate would fall more than

25% Government Spending

Spending increases almost every year since the 1960s, yet poverty is higher now than then Healthcare costs have risen Programs= Social Security, Medicare, Unemployment Compensation

How can the

poverty cycle be broken?

EFFECTS OF POVERTY

Crime – higher in impoverished areas Unemployment spurs property-related

crimes (burglary) Less education or time in school Distinctions based on area (think city vs.

Appalachia) Increased alcohol & substance abusePoor housing & living conditions >>>

disease

CHILD POVERTY

Adults become prone to violence Lose sensitivity vital to child

development Physical & Mental abuse

Child labor – more protections in US than in developing world

MalnutritionDrug & alcohol abuseHomelessness

DECLINING, YET PROBLEMATIC Poverty rates are DECLINING, but: Household incomes are still catching up

since the 2007 recession Rising wealth inequality Unemployment rates still recovering $74.7 billion spent on Supplemental

Nutrition Assistance Program (Food Stamps)

Wages & salaries aren’t increasing alongside growth in GDP