Economics Of Poverty

3 Pages 677 Words

The Economics of Poverty in American Society
Living in the United States, many of us do not think about poverty too much. Most people in the United States are above poverty level. They do not think about the less fortunate of America. Economics is the main factor of poverty in American Society, and more specifically, macroeconomics since it deals with the aggregate economy. To understand poverty and the poverty level, we need to see how the United States determines the poverty level each year.
The United States Department of Agriculture in 1955 determined that one third of the income level for a family of three or more was spent on food. Thus, multiply the amount of income spent on food for the year by three and you approximately have the poverty level. If a family’s income falls below the poverty level, then they are considered to be living in poverty. Poverty thresholds do vary geographically. Alaska and Hawaii are the only two states to have a different poverty threshold since they have a higher price of living. Since then, there have been some modifications to this standard, but it has essentially stayed the same. The poverty level is then increased each year by the same percentage increase as the average Consumer Price Index.
The most current figures on poverty are from the year 2000. In 2000, approximately 11.3 percent of the U.S. population was below the poverty level. The official poverty line in 2000 was as determined by the Department of Health and Human Services was $17,050 for a family of four. Blacks and Hispanics had the highest amount in poverty with 22.1 and 21.2 percent under the poverty level, respectively. By age, 16.2 percent were under the age of eighteen, 9.4 percent were between 18 and 64, and 10.2 percent were 65 and over. Location of the family is also a determinant of poverty with the inner cities holding 16.1 percent of the poverty-stricken while only 7.8 percent lived in the suburbs. To b...