Poverty Vs. The Economy Essay

1365 words - 5 pages

Poverty vs. The Economy

Poverty is a lack of goods and services necessary to maintain a
minimal adequate standard of living. The definition of the term adequate varies,
however, with the general standard of living in a society and with public
attitudes toward deprivation. No university accepted definition of basic needs
exists because poverty is a relative concept. In poorer countries it means
living at the brink of subsistence, while in our country few improvised families
confront starvation, although many suffer from undernourishment.

A key issue in the area of poverty is inequality. Inequality has been
a problem in all societies. No society distributes income evenly. Despite all
the conceptual and technical problems of measurement, the government has
devised a widely cited poverty index that reflects the different consumption
requirements of families depending on their size and composition, on the sex and
age of the family head, and on weather they live in rural or urban areas. Based
on past surveys, the designers of the poverty index determined that families of
three or more person spend approximately one-third of their income on food.
Thus, the poverty level for these families was, therefore, set at three times
the cost of the economy food plan. For smaller families and persons living
alone, the cost of the economy food plan was multiplied by higher factors in
order to compensate for the larger fixed expenses of smaller households. The
poverty thresholds are updated every year to reflect changes in the consumer
price index but overall rises in standard of living. (levington, page 147)
Another issue is that the poverty index has several flaws. First, it
does not allow for regional variations in the cost of living or for higher costs
in the central city areas, where many of the poor are concentrated. Second, the
flood costs for the budget were designed for temporary or emergence use and are
thus inadequate for a perment diet because they provide only the barest
subsistence. Finally, the government statistics fall to take into consideration
nonmonetary benefits and assets in determining the number of poor. If these
were counted, the numbers in the official poverty ranks would be reduced.
The growing gap between the poverty level and median family income
demonstrates the inaccuracy of adjusting a poverty level for price increase but
not for rising living standard and productivity gains. Alternative definitions
and concepts also have a major impact on the poverty estimates that if transfer
payments or income support programs such as social security are not counted,
then about twenty percent of all American families lived in poverty during 1988,
Government income transfers are, however, included in the official poverty index,
and this fact reduced the relative number of destitute Americans. If in-kind
programs such as Medicaid, subsidized housing, and food stamps were also
included, then the percentage...

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