Distribution of Income in U.S. (2000)

2. 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)

3. 1996 1976 nominal 1976 real 1956 nom 1956 real bottom 20% 19680 7505 19824 2438 12923 second 20% 34315 12499 33015 4103 21749 third 20% 51086 17386 45924 5443 28852 fourth 20% 75316 24012 63426 7380 39119 More inequality: Rich get richer and poor get poorer? Income cut off for each group over time

4. 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

5. 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)

6. 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/threshld/thresh03.html

7. May Understate Poverty Work expenses Child care expenses High cost of living areas Food now less than 1/5th of American’s 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 Problems with the Threshold

8. 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

9. 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

10. Poverty by Age Percent of Poor Poverty Rate Source: U.S. Census Bureau; http://www.census.gov/hhes/www/poverty.html

11. Poverty by Race Percent of Poor Poverty Rate Source: U.S. Census Bureau; http://www.census.gov/hhes/www/poverty.html

12. Poverty by Family Structure Percent of Poor Families Poverty Rate Source: U.S. Census Bureau; http://www.census.gov/hhes/www/poverty.html

13. Poverty by Region Poverty Rate Percent of Poor Source: U.S. Census Bureau; http://www.census.gov/hhes/www/poverty.html

14. Poverty by Urbanization Percent of Poor Poverty Rate Source: U.S. Census Bureau; http://www.census.gov/hhes/www/poverty.html

15. Trends in Poverty Over Time Source: U.S. Census Bureau; http://www.census.gov/hhes/www/poverty.html

16. 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

17. Ohio’s 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 state’s jobs in 1990 to 15.4% in 2004 Source: Policy Matters Ohio: The State of Working Ohio

18. Poverty by Work Status All Families Percent of Poor Poverty Rate Source: U.S. Census Bureau; http://www.census.gov/hhes/www/poverty.html

19. 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

20. 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/workingpoor.htm

21. Wages in Ohio • Ohio’s 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/workingpoor.htm

22. Distribution of Government Transfers

23. Program Name Target Group Number of Current Recipients Average Benefit per Recipient ($ per month) Total Annual Payments ($ billions) % of Federal Spending (Approx.) SSI: Supplemental Security Income Aged and disabled poor 7 $355 $29 1.45% TANF: Temporary Aid to Needy Families Poor families with children 6.9 $160 $22 1.10% EITC: Earned Income Tax Credit Working Poor 18.6 $120 $27 1.35% GA: General Assistance poor people not covered elsewhere 1.4 $190 $3 0.15% Total 33.9 $81 4.05% Cash Assistance Programs (2000)

24. Program Name Number of Current Recipients Average Benefit per Recipient ($ per month) Total Annual Payments ($ billions) % of Federal Spending (Approx.) Food Stamps 20 $92 $22 1.1% Medicaid 42 $367 $185 9.3% Housing Assistance 11 $159 $21 1.1% School lunch program 26 $26 $6 0.3% Women, Infants, and Children (WIC) 8 $31 $4 0.2% Total 107 $238 12.0% In-Kind Welfare Programs (1998)

25. Program Name Benefits Paid (billions) % of Federal Spending (Approx.) Social Security Old Age 334 16.7% Social Security Disability 51 2.6% Medicare 223 11.2% Unemployment Insurance 23 1.2% Workers' Compensation 52 2.6% Veterans' Benefits 42 2.1% Total 725 36.3% Major Social Insurance Programs (1999)

26. Medicaid Spending