SOCIOL 2RR3 Lecture 3: poverty and inequality lecture

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14 Oct 2015
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Chapter 5
SOC 2RR3- Poverty and Inequality
How do we measure poverty?
What groups are at risk?
Structural explanations of poverty
Precarious labour market
Changing family structures
Changing social policies
What does it mean to be in poverty?
2 approaches
1. Absolute definition- "characterization by severe deprivation of basic human needs including
food, safe drinking water, sanitation facilities, health, shelter, education, and information-
depends not only on income, but also on access to social services
- Universal measure
- E.g. World Bank extreme poverty line- $1/day minimum
- Fraser Institute- no one is poor if they can make the bare minimum
2. Relative definition- people are living in poverty if their resources are so seriously below those
commanded by the average individual or family that they are, in effect, excluded from
ordinary living patterns, customs, and activities
- Adam Smith- used this def.- to be poor was to have to go without what was needed to be a part
of a community
How do we measure poverty in Canada?
- 3 kinds of measures:
1. Market Basket Measure (MBM)- absolute measure- based on cost of a specific basket of
goods and services representing a modest, basic standard of living
- Criticism- necessities don't change- basket doesn't ever change over time
- nutritious diet, clothing, footwear, shelter, transportation (public), other necessary goods and
2. Low Income Measure (LIM)- purely relative measure- low income is defined as 50% of the
median income of an equivalent household
- some LIM have used 40% or 60%
- most commonly used measure
3. Low Income Cut-Off (LICO)- a mixed approach- low income households are those which
spend a high % of its income than an average equivalent household on the necessities of life-
food, shelter, clothing
- less discretionary income
LICO adjusts for fam size and location, LIM adjusts for fam size
Poverty line adjusts over time as cost of living increases- all measures have increased
over time
Conservatives would use MBM- low cut off
Before tax- poverty rate much higher- after tax- lower poverty rate because of gov't
Child poverty rates
- Child poverty rates are going down over time
Chapter 5
- Recent immigrants= highest child poverty rates
Persistence of low income:
How long have these people lived in poverty?
How many people were once in poverty, but have now come out of it- % of Canadians
leaving low income has declined- they aren't coming out of poverty
Once you fall into low income, it's difficult to leave
Explanations for persistence of poverty:
1. Changing labour market
- segmented labour market- historical process whereby political-economic forces encourage the
division of the labour market into separate segments, distinguished by different labour market
characteristics and behavioural rules
- Differences on demand side of market
- hard to move between labour markets- can't move from higher ones to secondary ones
- segmentation helps reproduce interests of capitalists- keeps workers divided, limits workers
aspirations for mobility- legitimizes inequality in control and authority between managers
and workers
- Primary labour market- permanent jobs with higher wages and benefits, greater autonomy-
large firms, very little competition- dominate the market, control suppliers and manipulate
marker in their favour
- Secondary labour market- lower wage jobs with no/few benefits- temporary with poor working
conditions- firms competing with each other with low profit margins- discourage
unionization, divide work into lower and lower skilled jobs
Markets are divided by class, gender, age- lower class in secondary, more men in primary,
younger people in secondary
What is a "bad" job?- low wages, few or no benefits, temporary or part time, moderate to
high risk of physical injury or stress- more likely to not make enough money to meet
needs, insecure, less likely to be unionized, not enough to save money for future
Benefits to having these jobs- more time to balance work/life- women do these jobs to
have time to raise children at home, stepping stones to enter the market (students' first
job, then move up to primary), retired people take them to have some attachment to
market, self fulfillment
Hotel housekeepers in Toronto:
- hotels competitive- hire/fire quickly, seasonal
- hire immigrant women for housekeepers- 93% are immigrants, 82% are minorities, 80%
- low salary $26 000
- higher risk for injury and stress than typical service sector jobs- hotel workers are a gendered
and racialized work force
- hotel workers strike 2010- workers rejected new contract that was cutting salary and benefits-
wanted more job security
Growth in contingent jobs:
- growing instability of work in labour market
- more temporary jobs than permanent
Who is likely to have temporary employment?
- Women- casual workers
Chapter 5
- Young people aged under 24
- High school or less educational attainment
- Growth in foreign temporary workers- not eligible to stay in Canada permanently- come
on contract and leave after- critics of this: these workers are vulnerable, they have rights
but aren't aware of them – they'll do work for less- class of vulnerable workers to take
advantage of
2. Changing family structures:
Family structure is both a consequence of income inequality and a source of future
Low income families- children have less opportunity- poverty reproduces itself
Income affects structure- marriage- lower income don’t marry, don’t reach the bar- men
are less desirable as marriage partners if they don’t make much
Black families- so many fatherless families- black males don't make much so aren't
desirable marriage partners
Earnings of people working full time, with or without children- older age, increased
salary- middle aged men with children earn more, women with children earn less until
age 45 (their kids grow up), women earn less than men at every age- motherhood penalty
that doesn't exist for fathers, in fact some fathers advantage from having children while
mothers suffer
Single mothers lost more earnings than married mothers, highest earning are married or
single childless- women financially do better when they don't have kids
When they have kids- married mothers earn more than single- single mothers don’t have
time for career because caregiving is solely their responsibility- married mothers share
responsibility with husbands
3. Changing social and economic policies:
Role of government transfers:
- Social spending does reduce income inequality and poverty
- However, contribution of transfers has been declining
- Redistribution is going towards the middle-upper class
- Effective old age policies has greatly reduced poverty
Poverty, inequality, redistribution- Great Britain, Canada, France have highest poverty
rates, BUT after government transfers and cuts, it is cut in half- gov't helps a lot with
their social spending- poverty is reduced significantly by government- Brazil- gov't
makes no difference, poverty level stays the same
Social spending makes a significant difference in Canada and European countries
Gini- measure of income inequality- 0= perfect equality, 1= perfect inequality
Social assistance has decreased in meeting needs for families in Canada
Pensions and Old age support- a success story:
- Senior poverty rates have dropped significantly after old age security kicked in- it is
continuing to drop
- Canada has one of the lowest elderly poverty rates in the OECD- despite the fact that the
old age population is growing