Poverty

1. Poverty Janava M. Benton

2. overview • The official poverty data overstates the poverty problem • More accurate measures show that we are closer to eliminating poverty than what is acknowledged

3. Scope of the problem • Poor person- one who lives in a family with income below the poverty threshold • Poverty threshold- annual cost of a nutritionally adequate diet multiplied by three • Gross money income- all earnings including interest dividends, cash transfers, alimony child support payments, social security, unemployment and TANF • Poverty rate- the number of poor people divided by the U.S. population

4. Official poverty rate

5. Anti- poverty effectiveness • After receiving Social Security benefits only 11.9% of 47.65 of the elderly remained poor. • Pre transfer poverty rate- estimate of what the poverty rate would be without government transfers • Government transfers reduce poverty average poverty rate by 7.6 percent

6. Means tested Transfers • Transfers that decrease as a recipient income increases (food stamps, TANF, and EITC) • Basic benefit- benefit paid by MTT when gross income is zero • Break- even gross income (BEGI) the gross income at which benefits become zero in a MTT program B=BB-BRR(GI-D) • B= benefit GI=Gross Income BRR= benefit reduction rate D= deduction • Target efficiency- degree to which transfer program benefits are confined to the poor

7. unemployment • Since the birth of TANF 25% of single mothers are working. • 20% of mothers who leave the TANF program returns within 2 years because of the cost of childcare and loss of Medicaid benefits

8. Minimum Wage • The current minimum wage is $5.15 • Full time work at this wage is cannot eliminate poverty • Economist argue that an increase in minimum wage raises the unemployment level • Wage Subsidy are more effectively targeted at the poor

9. Food for thought • What can we do to eliminate poverty?