SOCL 1101 Lecture Notes - Lecture 12: Earned Income Tax Credit, Mollie Orshansky
6 Jun 2018
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Poverty Amid Plenty
● Official poverty line in US calculated using formula from Mollie Orshansky
○ Estimates food costs for minimum food requirements to determine whether a
family can ‘afford’ to survive
○ Can be problematic, as cost of food has declined, but cost of living increased
● Supplemental poverty measure accounts for expenditures on food, clothing, shelter,
utilities and then makes adjustments for differences
● Impoverished households spend more than half of their income on rent
● Can’t find a 2 bedroom apartment anywhere in the country if working 40 hrs a week on
minimum wage
Matthew Desmond’s Research on Evictions (Milwaukee, 2009-2011)
● Sat and watched eviction proceedings
● Black and hispanic residents much more likely to be evicted in Milwaukee
● No president wants poverty line to be redefined in case percentage goes up
● Reason why method of poverty line hasn’t been changed
● Poverty rates higher among women than men
● Black most likely, than hispanic, then asian/white, than non-hispanic white
● Families more impoverished than married parent families and less that single mothers
which is about twice as likely as single fathers
Anti-Poverty Measures: The Earned Income Tax Credit
● Refundable tax credit for low- and moderate- income individuals and families, especially
those with children
● Passed by Nixon but expanded during Clinton
● Encourages work by tying benefits to wages
● Increase the mean of a single parent’s income
● Want to promote marriage so married couples get more benefits than singles
● Want to give aid to families and especially families with kids
● Want to get people back to work
● Supplemental poverty rate does much better job of determining who (particularly elderly
people is in poverty)
Under Participation in the EITC
● Research suggests that 15-25% of households that are eligible for the EITC do not claim
it
○ Nonprofits launched educational programs
○ CA: required
Growing Attention to Income Inequality
● How much inequality is there in the US?
● How has income inequality in the USA changed over time?
● Why has income inequality expanded?
find more resources at oneclass.com
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Document Summary
Official poverty line in us calculated using formula from mollie orshansky. Estimates food costs for minimum food requirements to determine whether a family can afford" to survive. Can be problematic, as cost of food has declined, but cost of living increased. Supplemental poverty measure accounts for expenditures on food, clothing, shelter, utilities and then makes adjustments for differences. Impoverished households spend more than half of their income on rent. Can"t find a 2 bedroom apartment anywhere in the country if working 40 hrs a week on minimum wage. Black and hispanic residents much more likely to be evicted in milwaukee. No president wants poverty line to be redefined in case percentage goes up. Reason why method of poverty line hasn"t been changed. Poverty rates higher among women than men. Black most likely, than hispanic, then asian/white, than non-hispanic white. Families more impoverished than married parent families and less that single mothers which is about twice as likely as single fathers.
