15.4. Who are the Poor?
Over 14 percent, or about one person in seven, were living in poverty in the United States in 1991. Although the largest number of these people were white, there was a far higher percentage of poverty among blacks and those of Hispanic origin (see Table 15-3). One ethnic group not shown in the table is Native Americans, but in 1989 Native Americans living below the poverty level totaled 620,000, or over 30 percent of the Native American population.
Programs to Reduce Poverty. Most economists agree that the best and most effective ways to reduce poverty are to increase the output of goods and services and to improve education and training. Increasing the availability of goods and services would improve living standards for low-income Americans without reducing anyone's living standards. Education and training would make it easier for people to earn their way out of poverty.
Other efforts specifically aimed at reducing poverty fall into two categories: programs to eliminate the causes of poverty, and programs that redistribute income from people with higher to those with lower incomes.
• Programs to eliminate the causes of poverty.
Both government and industry have sponsored programs designed to teach poor people the skills required for high-payingjobs. For example, the Job Training Partnership Act of 1982 (JTPA) provides states with funds to establish job-training programs in cooperation with private sector employers.
Other programs are designed to improve the education of the children of poor families. Head Start, for example, provides educational experiences for pre-school and primary grade children and their parents. And even public television shows such as Sesame Street and The Electric Company were developed with federal funds to help young children begin school ready to learn.
Federal and state laws have been enacted to remove discrimination as a cause of poverty. It is now unlawful for an employer, labor union, or employment agency to discriminate against a worker because of race, religion, sex, age, or national origin.
• Programs to redistribute income. As you have learned, the progressive income tax can be used to redistribute income, but Social Security is actually the nation's largest income redistribution program. It provides retirement benefits for the elderly and the families of dead or disabled workers. Under Social Security's Medicare program, retired workers receive health and hospital care. Unemployment insurance pays benefits to workers who lose their jobs through no fault of their own. The cost of the program is shared by federal and state governments and employers, who are required to pay a tax on their payrolls.
Public assistance or "welfare" programs, as they are more commonly called, help the needy who are ineligible for assistance under other Social Security or unemployment programs. The most important of these are Aid to Families with Dependent Children (AFDC), Medicaid, Food Stamps, and Supplemental Security Income (SSI).
-Aid to Families with Dependent Children gives cash to families in need. The federal government pays most of the cost, but states administer the program.
-Medicaid pays health and hospital benefits for persons Medicare does not cover. Federal and state governments share the program's costs.
-Food Stamps are coupons that can be exchanged for food at local markets.
-SSI provides financial assistance to elderly, disabled, and blind persons who are ineligible for benefits under other Social Security provisions.
Experts Disagree About How to Administer Poverty Programs. On one side of the disagreement, some would like to see local governments participate more to ensure that poor people everywhere receive equitable benefits. They say that since conditions differ, what is needed in rural Arizona might be quite different from what is needed in urban Connecticut.
On the other side are those who want the private sector to participate more in anti-poverty programs and government to participate less. They argue that the private sector has a better understanding than government of the kinds of job skills that are needed today. As a result, business is better equipped to provide the needed training programs.