Poverty Memo Analysis

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Since the 1970s, the official poverty measure (OPM) has remained relatively constant at around 15 percent. In this same time frame, real GDP growth per person, which is used as a measure of the standard of living, has nearly double. This growth should suggest a decrease in the poverty rates over the decades, but since they have remained relatively constant suggests that there are other factors that have an ascendant stress on the poverty rate. Factors that can put pressure on the poverty rate include, but are not limited to changes in: family structure, economic growth, median wages and benefits provided by safety-net programs. In this memo, I will explain why these factors have caused fluctuations in the poverty rate, but why it has remained …show more content…
When we compare families, with kids and with-out kids, with 2003 statistics, we get a rate of 12.8 percent. To understand what would happen to the poverty rate if only the distribution of household types changed, and not the poverty rate for each type; we used the counterfactual poverty rate, which gives us 17 percent. This increase suggests that the changes in only family structure would have increased poverty rates, therefore other factors have to be pushing poverty …show more content…
We know that income inequality has been rising since the 1970s. This suggests that the gap is getting wider, which would increase poverty.

4. Percentage of Female workers
There has been an increase of single families led by women, which would suggest that more women have had to enter the workforce to provide for their family. This increase, in single mothers being the only earner in the house, tends to push poverty up. However, since more women are working, this decreases the unemployment rate, therefore should decrease poverty.

With strong economic growth and a decreasing unemployment rate, somewhat because more women entered the workforce, should have shown a decrease in poverty. However, the widening income gap, slow changing minimum wage and the percentage increase of single family homes is counteracting the benefits, resulting in a lack of change in poverty.

Safety-Net programs effect on Poverty
During the War on Poverty in the 1960s, many policies aimed toward helping needy families were implemented. These policies provided benefits to poor families, which should help move people out of poverty. The two types of programs that we can view poverty trends in are; cash welfare and in-kind

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