Wealth, The Economy & You

Income Inequality What is Income Inequality? Gap between the Rich & Poor Three Major Influences: -Education -Family Wealth -Discrimination https://www.youtube.com/wat ch?v=QPKKQnijnsM

Education Major impact on a person’s income Average income of a college graduate is nearly twice the average income of a high school graduate More advanced degrees increase income even more Better position to get the higher-paying jobs that require a higher level of skills Federal government tries to encourage people to improve their education (free/subsidized lunches, college grants, low- interest loans)

Family Wealth Being born into wealth provides access to excellent colleges Wealthy parents may set up their children in a business or pass on their own business

Discrimination One reason people do not receive higher incomes Women and members of minority groups may not be hired into jobs that pay well, or they may not receive promotions for which they are eligible Salaries for men are normally higher than those for women Federal Gov’t passed several laws to reduce discrimination

Discrimination Equal Pay Act (1963)-equal pay for jobs that require equivalent skills and responsibilities Civil Rights Act (1964)-bans discrimination on the basis of gender, race, color, religion and national origin Equal Employment Opportunity Act (1972)-strengthened earlier laws Americans with Disabilities Act (1990)-extended these protections to people with physical and mental disabilities (ramps on campus) People who suffer discrimination may use the courts to enforce the laws

Women v. Men

Poverty Those who are at the bottom of the income scale Receive special attention from the government Most effective government programs are those that have incentives that encourage people to go back to work

Poverty Current Poverty Guidelines-https://aspe.hhs.gov/poverty-guidelines Government uses these guidelines to determine whether someone is eligible for certain programs Revised annually and are based on conservative estimates of how much it costs to buy enough food, clothing and shelter to survive Current Poverty Rate-14.5%, or roughly 45 MILLION Americans

Welfare Federal Food Stamp Program-Supplemental Nutrition Assistance Program (SNAP) Goal-alleviate hunger and malnutrition by allowing low-income households to obtain a more healthful diet (EBT Cards) 46 Million+ receive Food Stamps http://www.benefits.gov/benefits/benefit-details/1389 Women, Infants and Children (WIC)-provides help with nutrition and health care to low-income women, infants and children up to age 5 http://www.welfareinfo.org/ http://www.statisticbrain.com/welfare-statistics/

SNAP Benefits by Household Size TABLE 1 SNAP Benefits by Household Size Household Size Maximum Monthly Benefit, Fiscal Year 2016 Estimated Average Monthly Benefit, Fiscal Year 20151 1 $194 $143 2 $357 $255 3 $511 $374 4 $649 $459 5 $771 $540 6 $925 $641 7 $1,022 $728 8 $1,169 $755 Each additional person $146

Income Assistance Programs that pay cash to certain people Supplemental Security Income (SSI), gives payments to blind or disabled people and to persons age 65 and older Temporary Assistance to Needy Families (TANF) makes payments to families who need help because a parent is dead, disabled or absent 2012-25 families received TANF benefits for every 100 poor families 1996-68 families receiving TANF for every 100 in poverty Number of months that a recipient can receive benefits is limited, to make sure people do not rely on the program TANF in NC- http://www.tanf.us/north_carolina.html

Workfare Programs that require welfare recipients to exchange some of their labor in exchange for benefits Most run at the state level, and most are designed to teach people the skills they need to succeed in a job Many states require workfare if families want to receive TANF benefits Often assist law enforcement officials, sanitation and highway crews, or perform other community service work Minimum 20 hours/week in 12 approved activities

NC’s Welfare-to-Work System Work First NC’s Welfare-to-Work System 1. Diversion : Keeping families off welfare by helping them cope with unexpected emergencies or setbacks. Under Work First, qualifying families can get a one-time payment equivalent to up to three months worth of cash Work First benefits, based on a needs assessment by the county worker, Medicaid, child care and Food and Nutrition Services, if eligible, and other supportive services. 2. Work: Shortening the length of time that families are on Work First Family Assistance by making work mandatory and by limiting how long a family can receive cash assistance. To receive Work First Family Assistance benefits, parents must register with the First Stop Employment Assistance Program, sign a Mutual Responsibility Agreement (MRA) and, once they move into the work components of the program, they can continue to receive benefits for up to 24 months. In most cases, families who have reached the 24-month limit cannot receive Work First Family Assistance for three years. 3. Retention: Helping families to stay off public assistance by encouraging them to save and by helping to make sure they really are better off working than on welfare. Work First increased limits on savings and vehicles, and the state legislature raised income eligibility limits for subsidized child care to ease the burden on low-income, working families. To help families stay employed, counties are also providing services, such as transportation, to families whose income is at or below 200 percent of poverty.

Tax Policies Progressive Income Tax- Tax rate is lower at lower incomes and higher for higher incomes Assists lower-income people by taking a smaller proportion of their income in taxes Should everyone be taxed at the same rate (Flat Tax)? Do the rich deserve to be taxed more, or is that punishment? Earned Income Tax Credit (EITC)-provides tax credits and cash payments to qualified workers, benefitting about 20 million working families each year

Review What is Income Inequality? What three factors influence Income Inequality? How many Americans are living in Poverty? # or % What are some examples of Welfare programs in the U.S.? # of Americans that receive Food Stamps? Welfare? Unemployment? What is workfare, and how does it work? What is a Progressive Income Tax? Is it fair?