Distribution of Income in U.S. (2000)

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Distribution of Income in U.S. (2000)

• Group Annual Family Income
• Bottom 5th Under 24,000
• Second 5th 24,001 - 41,000
• Third 5th 41,001 - 61,378
• Fourth 5th 61,379 - 91,700
• Top 5th 91,701 and over
• (Top 5 160,250 and over)

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More inequality Rich get richer and poor get
poorer?
Income cut off for each group over time
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What SHOULD the distribution of income look like?
Three theories

• Utilitarianism
• Maximize overall happiness
• Diminishing marginal utility of money
• Liberalism
• Veil of Ignorance
• Libertarianism
• No redistribution at al

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The Definition of Poverty

• Threshold developed in 1963-64
• Calculated money necessary for nutritionally
  adequate diet designed for temporary or
  emergency use when funds are low
• Multiplied this amount by three
• Adjusted by the size of the family, number of
  children, and if householder is over age 65
• Changes Over time
• Adjusted for the rate of inflation (CPI)

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Poverty Threshold in 2003

• Under Age 65 Over Age 65
• One Person 9,573 8,825
• One Adult Two Adults
• Two People 12,682 12,321
• Four People 18,725 18,660
• Six People 24,126 24,586
• Eight People 30,019 30,275
• Source http//www.census.gov/hhes/poverty/thresh
  ld/thresh03.html

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Problems with the Threshold

• May Understate Poverty
• Work expenses
• Child care expenses
• High cost of living areas
• Food now less than 1/5th of Americans budgets
• Does not consider health status
• Does not consider taxes, particularly Payroll
  Taxes

• May Overstate Poverty
• Does not include in-kind transfers
• Low cost of living areas
• Ignores assets

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Additional Words of Caution

• Poverty is an absolute measure, but we may also
  care about relative well-being
• It is not just in or out of poverty that
  matters, but socioeconomic well being depends on
  how far below or above the poverty line a family
  is

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Who Are The Poor?

• We will examine who are the poor by
• Age
• Race
• Family Structure
• Region
• Urbanization
• of poor population vs. group poverty rate

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Poverty by Age
Percent of Poor
Poverty Rate
Source U.S. Census Bureau http//www.census.gov/
hhes/www/poverty.html
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Poverty by Race
Percent of Poor
Poverty Rate
Source U.S. Census Bureau http//www.census.gov/
hhes/www/poverty.html
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Poverty by Family Structure
Percent of Poor Families
Poverty Rate
Source U.S. Census Bureau http//www.census.gov/
hhes/www/poverty.html
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Poverty by Region
Poverty Rate
Percent of Poor
Source U.S. Census Bureau http//www.census.gov/
hhes/www/poverty.html
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Poverty by Urbanization
Percent of Poor
Poverty Rate
Source U.S. Census Bureau http//www.census.gov/
hhes/www/poverty.html
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Trends in Poverty Over Time
Source U.S. Census Bureau http//www.census.gov/
hhes/www/poverty.html
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The Labor Market Impacts Poverty

• The Ability To Find A Job
• Unemployment
• Discouraged Workers
• The Quality of Jobs
• Full-Time vs. Part-Time Work
• Wage Rate

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Ohios Labor Market

• Ohio Was Hit Hard by the 2001 Recession
• Lost 234,000 jobs (3.9) between 2000 and 2003
• In July 2004, Ohio still had 217,000 fewer jobs
  than when the recession began March, 2001
• Only two other state (MI and MA) had as big or
  bigger job loss as Ohio
• The manufacturing sector has been declining since
  1990
• from 21.7 of states jobs in 1990 to 15.4 in
  2004

Source Policy Matters Ohio The State of
Working Ohio
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Poverty by Work Status All Families
Percent of Poor
Poverty Rate
Source U.S. Census Bureau http//www.census.gov/
hhes/www/poverty.html
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Poverty by Work Status Families with Children
Percent of Poor
Poverty Rate
Source U.S. Census Bureau http//www.census.gov/
hhes/www/poverty.html
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Wages in The U.S.

• Median Income has fallen since 1999 from 44,922
  to 43,318 in 2003
• 20.4 of jobs in the U.S. pay below the poverty
  threshold for a family of four

Source Working Hard, Falling Short
http//www.aecf.org/initiatives/jobsinitiative/wor
kingpoor.htm
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Wages in Ohio

• Ohios median wage fell in 2003 to 13.14, below
  the national median
• 19.5 of jobs in Ohio pay below the poverty
  threshold for a family of four

Source Working Hard, Falling Short
http//www.aecf.org/initiatives/jobsinitiative/wor
kingpoor.htm
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Distribution of Government Transfers
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Cash Assistance Programs (2000)
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In-Kind Welfare Programs (1998)
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Major Social Insurance Programs (1999)
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Medicaid Spending