Income Inequality, Poverty, and Discrimination

The top 1% of families in the United States made more than 25 times what families in the bottom 99% did. This is merely just a fact of income inequality but what we should examine is the way the income is distributed amongst a household. Income inequality is the unequal distribution of the economy’s total income within a household. Some factors that contribute to income inequality is ability, education, training, discrimination, and unequal distribution of wealth. We can measure this by observing the total number of individuals, households, or families into five numerically equal groups or quintiles to examine the percentage of total personal income received by each quantile. Economist then use the data received from the quintiles to display the distribution of personal income using the Lorenz Curve. This curve was developed to show how and if income could be perfectly equal and able to coincide on the graph diagonally. After using the Lorenz Curve, data is then used in the numerical measure of the overall dispersion of income called the Gini Ratio. Economist can take the information provided through the Lorenz Curve and the Gini Ratio to determine income mobility as well.

Income mobility is a household’s ability to move from one part of the income distribution to another over a period of time. An income that starts low during youth, then reaches peak in middle age, and then declines is an example of income mobility. This is attainable by anyone who earns an income because “low income” and “high income” are not permanent conditions. There are factors that can increase or decrease your income mobility. Certain governmental programs such as unemployment, SSI, and welfare can increase your income mobility because it benefits the income by adding to it. Ideally, these programs were developed to help individuals of different groups but because discrimination still exist, we see more of a specific group that uses these programs as assistance to make ends meet for their household.

Discrimination is the unjust treatment of different categories of people or things, especially on the grounds of the race, age or sex. Discrimination can occur in places such as education, training, hiring and promotion where specific groups are targeted against. People within these groups are subjected to lower paying jobs, often having to make ends meet by obtaining two jobs or more. There are two types of discrimination one being statistical discrimination and occupational segregation. Statistical discrimination is an economic theory that attempts to explain racial inequality. The bases of this theory is racial profiling and gender discrimination within the labor market. Unlike other theories of discrimination, statistical discrimination does not assume any sort of hatred towards a particular race or gender on the part of the decision-maker. In fact, the economist in a statistical discrimination theory is considered to be a rational, information-seeking profit maximizer. Statistical discrimination occurs when discrimination is believed to be within the decision maker’s resourceful response to unequal beliefs and stereotypes.

First-moment statistical discrimination may be suggested when a woman is offered lower wages than a male counterpart because women are perceived to be less productive on average. Whereas second-moment statistical discrimination deals with individuals from the discriminated group that may be less likely to obtain the skills and education to equally compete with other candidates because of their average. This then leads into poverty. Poverty is defined as a condition in which a person or a family does not have the means to satisfy basic needs for food clothing and shelter. Individuals in lower paying jobs tend to fall below the poverty threshold which is federally established by the government. Offspring from someone living in poverty tends to live in poverty as well. Children are the high poverty rate, poor children are at a greater risk for long term problems that can raise issues such as inadequate education, drug abuse, and pregnancy.

As stated previously, poverty is a huge issue within the United States. Poverty assumed to most is not being able to buy a bigger house or the newest cars but in reality it is defined as the percentage of the population with incomes below the threshold. In result of poverty, problems such as poor education can arise. Failure in school results for people living in poverty because the individual may stop attending school so they can work. Possible literacy and numeracy skills learned at an institute that can help you further their career would be forgone because of poverty. According to the NCCP, 15 million children in the US; 21% of the children live with families below the threshold. Most children in poverty have parents who decided to work instead of attending school in order to make ends meet especially if they conceived at a younger age.

Education is an essential, it teaches you the social, emotional, and behavioral aspect of the human life. No access to education can interrupt or delay the functions of an individual. Around 31% of young adults without a high school diploma live in poverty compared to the 24% of young people who finished school. In order to decline the poverty rate, entitlement programs were developed to assist low income families with aid. Welfare started in its current shape in 1935 under President Franklin D. Roosevelt’s Social Security Act to help sponsor families that had lost a pay creating father. Evidently, President Bill Clinton marked a law for bringing welfare beneficiaries into the workforce. Clinton stated that the law would ‘end welfare as we have come to know it.’

The U.S. has a wide variety of anti-poverty programs which includes subsidized employment, education and training programs, and nondiscrimination policies. These programs are referred to as entitlement programs because all eligible people have the rights to their benefits. Social insurance programs such as Social Security and Unemployment Compensation are designed to partly replace earnings that have been lost due to retirement, disability, or temporary unemployment. They are financed primarily by Federal payroll taxes, and the benefits is viewed as earned rights. The recipients must have worked in order to be eligible to receive them. Public assistance programs or welfare known to most provide benefits to people who are unable to earn an income because of permanent disabling conditions, or to those who have no or very low income with dependent children. These programs are financed out of general tax revenues and are regarded as public charity.

There are a wide variety of public assistance programs. The SSI program provides a uniform nationwide minimum income for the aged, blind, and disabled who are unable to work and who do not qualify for Social Security aid. TANF assists families with children and has work requirements and a limit on the time a family can receive benefits. SNAP, formerly known as the food-stamp program, permits low-income persons to obtain vouchers with which to buy food. Its goal is to ensure all low-income Americans have a nutritionally adequate diet. Medicaid is a Federal program to provide basic medical care to people covered by the SSI and TANF programs. The Earned Income Tax Credit is a refundable Federal tax credit provided to low-income wage earners. It is designed to supplement families’ income while encouraging them to work. These are just a few of the many programs administered by the government to assist those families faced with the challenges of poverty.

There is a wide assortment of public assistance programs. The SSI program gives a uniformed national income for the matured, visually impaired, and debilitated who can’t work and who don’t meet all requirements for Social Security help. TANF helps families with young children and has work prerequisites and a cutoff on the time a family can obtain benefits. SNAP, in the past known as the food stamp program, allows low-wage individuals to receive vouchers which are used to purchase nutritious foods. Guaranteed to all low-wage people to have a healthful sufficient eating routine. Medicaid is a Federal program that gives essential medicinal consideration to individuals secured by the SSI and TANF programs. The Earned Income Tax Credit is a refundable Federal expense credit given to low-salary workers. It is intended to enhance families’ pay while urging them to work. These are only a couple of the numerous projects controlled by the administration to help those families looked with the difficulties of neediness.

Half of the people in poverty are poor for only one or two before being able to adequately climb out of poverty. In the case of my grandparents and my mother this statement is said to be true. My grandparents are from St. Vincent and the Grenadines, they came to America in order to obtain a better life for their children. My grandmother made the decision to stay at home with kids while my grandfather worked to provide income for the household. My grandmother sacrificed her opportunity at a higher education to provide care for her children. I believe this is why my grandmother enforced education on my mother and her siblings because she wanted them to be smarter and better than she was. My grandparents tried to live of their income but failure to do so resulted in the use of welfare. Welfare helped my grandparents make ends meet and kept their children nourished. Even though my grandparents tried to keep their children away from the negatives of poverty, their children began to perform the determinants of poverty such as young pregnancy. My mother had children at a young age and this affected her life drastically. My mother had to complete high school while pregnant, hence relating to grandmother by her chances of higher education forgone due to her kids.

Growing up in a household of four was a learning experience. We had a single mother who worked multiple jobs to make ends meet. We were not poor nor rich, but we managed to survive and avoid falling into poverty. My mother made sure to put all her kids through catholic school and enforced the importance of education on us. Education is a be foundation within in my family, my grandmother was hard on her kids about school and my mother is same way for the best reasons. We grew up on section 8, which helps provide reduced housing and food stamps in order to keep meals on the table. My mother wanted different for her kids, she didn’t want us to rely on the government to make an income for ourselves. Education and a well-paying job is the foundation for my mother. She herself returned to school to obtain certification to become a medical assistant at a well-paying medical center. This to me is a perfect example of someone’s income mobility. My mother showed us that in order to make a living in the world we must be educated and knowledgeable in a certain field of practice.

People never knew when my mother was struggling because she was so good it. We dealt with our living conditions as a family. My mother made sure we never let the negatives of our condition affect us , she always said if we do not approve of how we are living to do better in every aspect whether it was a job interview, school work or even just us living our life. We were taught to look at it in a positive way that we had food in our fridge and a roof over our head. This life lesson taught a young age was molded into the individual I am today. My mother is a perfect example someone escaping the poverty threshold.

We are still an income earing family and with six children now my mother is even more empowered to making sure her children stay on a clear path. I am my mother’s first child to graduate from an higher education institute. The foundations she has given to me has helped me overcome so many challenges. I perfectly understand the reason of higher education. I aspire to be well established and knowledgeable in a particular field. I am determined to be the best that I can even though there are obstacles that may get in my way. I will prevail and become what my grandparents wanted their children to be and what my mother wants her children to be and that is educated. I cannot express the need for education enough. Education helps keep you out of poverty and advances you to the next step within your chosen career path. My mother is the rock for my choices in life without her I would have learned the necessities to surviving in society. Overall, I believe a person can make it out of poverty and become something. Public assistance programs are here to aid us in living and I think everyone should be entitled to at least one. This can provide an incentive to obtaining a better standard of life. Things like education and motivation is tools people need in order to be consider equal with society. Everyone should have the advantage of education, so they can have a chance at being an income earning individual.