Nov 18, 2020 in Informative
Poverty

There has been an extensive research in the changes of the poverty levels in the United States and other parts of the world over centuries. In this memo, I will discuss the factors that have led to a change in the rate of poverty level since the 1970s.

Background

The 1960s saw the development of the official United States poverty measure. The determination of the poverty status of an individual is done through the use of money income by the Census Bureau. Every family in the population is given a money income threshold on the basis of the size of their family and the age of their family. One is said to be living in poverty if they family income is below the threshold of the size and composition for that family. For example, the poverty threshold for a family of four was approximately $19,000 in 2004 and $ 10,000 for a single person. In 2015, the threshold was $ 24,036 for a family of 4. There is an annual adjustment of the poverty threshold as a reflection of the changes in the consumer price index. The official poverty statics indicate a drastic poverty rate reduction between 1959 and 1969. However, since 1969, there has been little change.

 

Labor Market Opportunities

Labor market opportunities have been cited as one of the factors affecting rates of poverty. Whether employed, self-employed or entrepreneurs, people derive most of their earnings from work. This means that the employment level, job quality and the access that people have to decent revenue opportunities are important determinants of reduction of poverty. The observation of the trends in unemployment rates and poverty rates from 1967 to 2003 show a strong recurring component in the rate of poverty. There is a relatively higher rate of poverty in high periods of unemployment like 1971, 1983 and 1993. Periods of reduction of poverty rates appears to correspond to periods when there is an increment in the median wages.

Families that have adult males have less likelihood of being poor as compared to those with only adult females. This is because averagely, men work more hours hence earn more. Since 1970, however, there has been an increment of participation of women in the labor force. Therefore, there has to be the inclusion of a discussion of the growth of participation of women labor force in relation to poverty reduction trends. The Increment of the women participation in labor force is expected to help in the reduction of the rates of poverty. This is because incomes rise with more women working. In 1970, approximately 50% of all women aged 30-34 were working and 80% worked in 1990 straight on. These changes impact the level and distribution of salary among families headed by single females. They are also reflective of the changes in gender roles and modern expectations in regards to caretaking and work responsibilities of mothers and fathers. The change in the relationship between family structure and work has led to the change in the relationship between poverty and family structure.

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Economic Growth

Economic growth is stated to be one of the effective ways of reducing poverty. The relationship between poverty reduction and economic growth is positive. The higher the rate of economic growth, the higher the poverty reduction rate. Additionally, the growth in all sectors and not just in the economic sector is helpful in the reduction of poverty. However, the growth in a particular sector may contribute to reduction of poverty though this does not mean that the whole economic growth is of essence in poverty reduction. Therefore, the growth in overall GDP may not be helpful in poverty reduction but growth in some sectors like the informal sector may be effective in reducing the rate of poverty level.

Since 1960, the poverty rate has rarely revealed the changes in economic performance, increasing with the occurrence of recessions. For example, during the 1960s, the rate of poverty reduced with the expansion of the economy. GDP increased by approximately 50% and the poverty rate reduced in 1969. The early 1970s saw the erosion of the relationship between economic growth and poverty. With the actual GDP growing by around 35% in the 1970s, the rate of poverty reduced from 12.6 % to 11.7.the 1980s saw the connection between poverty rate and economic growth becoming less apparent. Regardless of the 1980s recession, actual GDP increased by around 30% over the whole decade. The rate of poverty increased sharply during the recession and the recovery period but slowly regressed in 1989.

Family Structure Changes

There is close relationship between family structure changes and poverty changes. Poverty patterns changes are dependent on the relationships among employment status, family living arrangements, marriage and poverty, among others. In the contemporary policy framework, with restricted public cash revenue supports available for the reduction of poverty, the status of poverty is largely dependent on the number of adults, wage rates and working hours and the number of children they are supporting in a particular household. Households with two adults have more opportunities of avoiding poverty, as the second adult on average increases the potential income rather than increasing needs. Therefore, reduction in marriages and increment in the rates of divorces both lead to the increment of poverty. Couples who are cohabiting may have the same benefits as those who are married, but the implications of cohabitation for formal poverty measures, and for real economic well-being, are complicated.

Marriage rates have reduced over time, leading to the increment of the percentage of people living in households that are dependent on one adult for incomes and caretaking. The sharpest reduction in age-specific marriage percentages took place between 1970 and 1980, 980 and 1990 and more drastic declines took place after 1990. For instance, among women aged 40-44, the share married declined form 82% to 70% then to 64%. Cohabitation rates have increased particularly during the 1980s and1990s.many cohabiting unions do not last long and there is less certainty of sharing of resources in such unions.

Childbearing

Marriage pattern changes are related to child-bearing changes and both have an effect on poverty. To the point that reduction in marriage corresponds with women bearing fewer children, reductions in the family size lead to the reduction of the resources required to avoid poverty. There has been a decline in the average number of children in a household, particularly in the 1970s and 1980s. There was an average of 2. Children for women aged 35-39 in the 1970s but the average reduced to 1.3 by 1990. Since larger families require more income to escape poverty, and since greater parenting responsibilities confine womens working hours in the paid labor market, the reducing numbers of children per woman can be projected to decrease poverty.

Though reduction in family size decreases poverty, increase in the percentage of children born outside marriage has the reverse effects. In 1950, unmarried mothers had 5% of all births. In 2006, the percentage increased to 39%.

Family Living Arrangements

The effects of changes in marriage and fertility for the living arrangements of children and poverty rates can be complicated. This is particularly when there is the consideration of the existence of partners who are not married or other adults. 86% of all children in 1970 lived in a family with married couples, but in 2006, the percentage went down to 69.

Conclusion

There are various factors that have affected poverty rates since 970s. They include economic growth, employment opportunities and changes in family structures. All these factors have had significant effects on poverty rates.

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