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Poverty & Public Policy

Instructor: Martin Gibbs

Martin has 16 years experience in Human Resources Information Systems and has a PhD in Information Technology Management. He is an adjunct professor of computer science and computer programming.

Poverty is an unfortunate part of our world. This lesson will discuss current public policies and approaches geared toward reducing poverty as well as proposed policies for poverty reduction.

Poverty

Poverty is a condition where basic needs are not met. Not being able to eat every day, not being able to access health care, or schools; living only to survive. While absolute poverty means that people cannot get even the basics for survival, most public policies are geared toward relative poverty, where people do not have the same quality of living as the rest of society.

The government's definition of poverty is based on income. This is the poverty level. Depending on your family size and income, this level sets your eligibility for some of the programs we'll discuss later in this lesson. For 2017, the level is $12,060 of annual salary for a single person; $16,240 for a family of two.

Reducing Poverty: Existing Programs

There are a few means by which governments can attempt to reduce poverty. These include government food and housing. Tax credits are also available for those who qualify. Finally, a popular poverty-reducing strategy is the minimum wage, although we'll see it is not a cure.

Food and Housing

The US has programs available for food and housing. SNAP (supplemental nutrition assistance program; it used to be called the food stamp program) and Child Nutrition provide access to food or free/reduced-price meals for families and children. WIC (women, infants, and children) is another program that is targeted to pregnant women and mothers of young children; providing access to healthy foods.

The Department of Housing and Urban Development has a housing assistance program that provides some money for assistance with rent. There are grants and public housing options also available.

Education and Job Training

The Department of Labor offers job training programs. Pell grants are also available to low-income earners so they can attend college. Not everyone who seeks a grant will obtain one, but these are a small step towards reducing overall poverty.

Earned Income Tax Credit and Child Tax Credit

The earned income tax credit is a tax subsidy, or payment, on top of earnings. Low-income workers benefit from the subsidy. It's a incentive that's intended to encourage individuals to enter the workforce.

Minimum Wage

Economists will claim that the minimum wage creates a deadweight loss, meaning that it's an artificially set price that doesn't match demand. Pure supply and demand would more than likely create varying wage ranges, based on the job demands and skills. But minimum wage laws are still in place.

Some people argue that the economic consequences of a higher minimum wage might be worse than leaving it alone. Because the minimum wage is a price floor (the lowest price allowed), it doesn't match the market's equilibrium price. Price floors often result in surplus; in this case, a surplus of unskilled laborers. There will be more workers than jobs, most likely because employers will not hire as many workers at the higher rate.

However, with an earned income tax credit AND a higher minimum wage, it is possible more people can dig out from poverty. While the minimum wage offers a guaranteed earning base, the tax credit can be used to offset other costs, such as child care.

Reducing Poverty: Proposed Programs

The previous programs have been in existence, at some point or another. Various political and economic groups have proposed variations of these programs as a means to reduce poverty.

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