The word poverty” mans different chimp to . different people. Hearty poverty Is a condition in whit :, people have Inadequate incomes. but it is h~rd to draw an exact line between the poor an.J the non-poor. Economists have therefore devised certain techniques which provide the official definition of poverty.

Poverty was official defined in the 19605 In the United States as an income insufficient to buy basic food. clothing.shelter. and other necessities. This was calculated from Emily budgets and double-checked by examining the fraction of incomes that was spent on food. Since that time. the poverty bucket has been updated by the endowment’s consumer price index to reflect changes In’the Cost of living. According to the scan dared definition. the subsistence cost 01 living for a bmily of four was $16.800 in 1998.This failure represents the “poverty line” or demarcation between poor and non-poor milieus. The poverty line also varies by family size.

While an exact figure for measuring poverty is helpful.scholar recognize that “poverty” is a relative term.The notion of a subsistence bud&« includes subjective questions of caste and social convention. Housing that is today considered substandard often includes household appliances and plumbing that were unavailable to the millionaires and robber barons of an earlier age.

Because of shortcomings in the current definition. a panel of experts of the National Academy of Sciences recommended in 1995 that the definition of poverty be changed to reflect in Come status. The pane recommended that a family be considered poor if its consumption is less than 50 percent of the median family’s consumption of food, clothing. and housing. Poverty in the relative-
Income sense would decline when inequality. d.creased; poverty would be unchanged if the economy prospered with no ~ in the ~ 01 income

and consumption. In this new world a rising tide would lift all boats but not champ the fruition 01 the population considered poor. This radical new approach Is, be-Ina waged carwfuIIy by the government.

Who Are the Poor?

Poverty hits some groups harder than others. Table 19-4 shows the incidence of poverty in different groups for 1998.While 12.7 percent of the total population was-counted as falling below the 1998 poverty line, the rate among black and Hispanic families was 2!12 times that of whites.

Perhaps the most ominous trend is that single parent families headed by women are an increasingly large share of the poor population. In 1959, about 18 percent of poor families were headed by women raising children alone. By 1998, the poverty rate of that group was 30 percent. Social scientists worry that the children in these families will receive inadequate nutrition and education and will find it difficult to escape from poverty when they are adults.

No discussion of poverty would be accurate without an analysis of the position of minorities. Almost one-third of African-American, Hispanic, and Native American families have below-standard incomes.

Why are so many female-headed and minority families poor? What is the role of discrimination! Experienced observers insist that blatant racial or gender discrimination in which firms simply pay minorities or women less is vanishing today.Yet the relative poverty of women and blacks is increasing. How can we reconcile these two apparently contradictory trends? The major factor at work is the increasing gap between earnings of highly educated and skilled workers and those of unskilled and less-educated workers. Over the last 25 years, the wage differential between these two groups has grown sharply, as we will see in the next section. The growing wage gap has hit minority groups particularly hard.

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