Chapter 6: Economic Inequality, Wealth, and Poverty

economic inequality exists

on a massive scale worldwide

wealth

the total assets of an individual or household minus liability

absolute poverty

the lack of resources necessary for material wellbeing, not only food and water but also housing, sanitation, education, and health care

relative poverty

the lack of materials and economic resources compared with some other population

• ex. a college student living on a tight budget may feel “poor” compared with wealthier peers, but if they have housing, food, and medical care, they are not experiencing absolute poverty

absolute poverty

living on less than $2.15 or less income per day (measure is usually based on purchasing power parity (PPP)

purchasing power parity (PPP)

an economic metric used to standardize differences in currency values and standards of living in order to make international comparisons in levels of wealth and poverty

using PPP ensures that the value of money

is comparable across countries

relative poverty

measures compare income to the national median

• households are considered poor if their home is less than 50% of the median household income in their country

multidimensional poverty index (MPI)

measures deprivation in 3 major areas

1. health

2. education

3. standard of living

that combines the # of the deprived and the intensity of their deprivation

US measures of poverty

govt uses poverty threshold in

• # of adults in the household

• # of children

• age of the head of household

anyone whose pretax household income falls below the poverty line is classifies as poor

the family budget calculator finds that families need, at a minimum,

three times the poverty level income to meet basic needs

structural functionalist perspective

argues that poverty results from institutional breakdowns

ex.

• economic institutions failing to provide sufficient jobs

• educational institution failing to provide necessary job skills

• family institutions failing to provide adequate support

• govt institutions failing to provide sufficient public assistance

functionalists also examine functions and

dysfunctions of poverty

• possible functions include: providing low wage labor, sustaining certain industries

• however, poverty also creates serious dysfunctions, such as social instability

davis and moore’s functionalist perspective

explanation: for economic inequality, arguing that a system of unequal pay motives people to achieve higher levels of training and education and to take on jobs that are more important and difficult by offering higher rewards for higher achievement

herbert gans’ positive function of poverty

draws on the structural-functionalist perspective to identify ways in which poverty can be viewed as functional for the nonpoor segments of society

• the poor provides a pool low-income labor

conflict perspective

focuses on power, capitalism, and inequality

• capitalism contributes to economic inequality and poverty

• wealthy individuals and corporations use their economic power to influence political decisions

• trade and investments policies often benefits wealthy groups while disadvantages poorer population

conflict perspective karl marx

proposed that economic inequality results from the domination of the bourgeoisie (owners of the factors, or “means of production” over the proletariat (workers)

laws and policies that favor the rich, such as tax breaks that benefit the wealthy are sometimes referred to as

welfare

corporate welfare

refers to government subsidies to corporations, including direct payments and tax break

ex. corporate tax loop is the practice known as corporate tax inversion, in which a company lowers its taxes by meagering with a foreign company and changing to an offshore address

symbolic interactionalist perspective

• focuses on meanings, levels, and definitions affect and are affected by social life

• perspective is concerned with how social conditions come to be viewed as social problems

symbolic interactionalist perspective: wealthy vs poor people

• wealth individuals tend to be viewed as capable, motivated, hardworking, and deserving of their wealth

• individuals who are labeled as "poor” are often viewed as undeserving of help or sympathy; their poverty is viewed as due to laziness, immorality, irresponsibility, lack of motivation, personal deficiency

Educational and poverty

• in general, the higher a person’s level of educational attainment is, the less likely that person is to experience poverty

Labor force participation and poverty

The lack of jobs that provide an adequate standard of living contributes to the number of Americans who are classified as working poor

Family structure and poverty

Poverty is more prevalent among female headed single parent households than among other types of family structures

Race or ethnicity and poverty

Poverty rates are higher among racial and ethnicity minority groups that among non Hispanic white people

Region and poverty

Poverty rates vary by region of the us, with the highest rates being in the south and west, and the lowest rates being in the northeast

Health problems, hunger, and poverty

• lack of access to clean water and sanitation facilities is a major cause of disease and death

• Huger in the us is measured by the % of households that are “Food insecure’, which means that the household has difficulty providing enough food for all its members due to a lack of resources

In the us, low wage earners have higher rates of

• obesity

• Hypertension

• Diabetes

• Arthritis

• Premature death

Children and adults living in poverty in the us tend to receive

Inadequate and inferior health care, which exacerbates their health problems

homeless people

Describes a wide variety in individual experiences that include al those who lack a stable, fixed place to sleep at night

Chronic homelessness

Experienced homelessness for at least a year or repeatedly while also struggling w a serious physical disability, mental illness, or substance use disorder

Unsheltered or unhoused

individual whose primary nighttime residence Is not suitable for human habitation