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Key Topics
Requirement
Choose the summary statements and explain in detail the significance and possible causes of each item.
Solution
Summary
The paper identifies significance and possible causes of the various situations related to poverty. Mentioned below are the few points that draw the whole paper in brief:
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i) The major cause of the increased poverty in 2010 compared to the past decade is the recessionary period that resulted from subprime crisis and the 1999 dot com boom and bust
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ii) The minority community were found to be affected more in comparison to the whites, and the likely reason is the supply of loan at higher interest rates. The high interest rates resulted into hefty monthly instalments that were almost impossible for the minorities to pay in the changing economy and they failed.
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iii) The comparative data of the poverty rate from the 1959 and 2010 states that the lifestyle level of the people has increased by almost 7% and this can be credited to the good economic conditions that resulted from industrialisations.
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iv) The children were impacted heavily from the poverty. The major impact was on the education where they dropped out more from the schools and colleges which in turn impacted the gross domestic production by 1.3%
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Statement #1
The official poverty rate in 2010 was 15.1% – up from 14.3% in 2009. This was the third consecutive annual increase in the poverty rate. Since 2007, the poverty rate has increased by 2.6 percentage points, from 12.5% to 15.1%.
As per the data, the poverty reached record rate in 2010 in comparison from the previous years (Eckholm, 2010). It has found that the poverty has continued to increase due to various factors. The credit for such situation goes to the economic downturn that took place in 2008. Almost four million new people came under the range of poverty in the year 2009 that totalled to 44, thus bringing one in every seven people under poverty. The survival of most others who have not been included in this range is being facilitated through unemployment insurance or with the help of something else. The income level fell more than estimated by researchers during the recession period of 2007-08. Whatever profit that were acquired in the past decade, found to be not in existence after the failing period. According to Lawrence Katz of Harvard University, the whole decade’s production equalled zero due to the economic fall.
Moreover, such impact has resulted into lack of health insurance. The 2010 statistical data shows that almost 16.3% of the residents found to be aloof from the insurance. Another impact is in the reduction of household expenses. People are spending less resulting into less flow of money in the market. A survey conducted by Michael Hurd and Susann Rohwedder (2010) found out that almost 70% household has reduced the household expenses since the fall in the economic situation. The major change that took place was in food section where the decline in food matched the decline in the overall household expenses. On one hand, where the recession ended on official level in June 2009, on the other hand, as per the data collected by both the researchers, the Great Recession has yet not left its impact and can be seen in households around the America.
Statement #2
Between 2009 and 2010, the poverty rate increased for non-Hispanic Whites (from 9.4 % to 9.9%), for Blacks (From 25.8% to 27.4%), for Blacks (from 25.8% to 27.4%), and for Hispanics (from 25.3% to 26.6%). For Asians, the 2010 poverty rate (12.1%) was not statistically different from the 2009 poverty rate.
The minority community such as other races and ethnic groups were hit substantially in comparison to the white majority group. African-American community seen large fall in their income level after the recessionary period (Kochhar et al, 2011). The minorities lost their home faster in comparison to white borrowers. The minorities disproportionately took the burden of the crisis. The major factors that have been found for such conditions are the lack of employment and less financial resources. However, it was found that those minorities who were high earners were affected more in comparison to whites. The research has found out that during the distribution of subprime loans, the minorities received the loans at higher rates in comparison to counterpart whites who were at the same level in terms of financial condition and ability to return the amount. This resulted into the situation where the minorities end paying more monthly instalments and defaulted more quickly.
The research conducted by Pew Research (2009) found out that from 2009 the wealth of whites reached twenty times more than the black and Hispanics (Merle, 2010). This disparity in the wealth distribution can be credited to the way the loans were distributed. The net worth of Hispanic reduced from $18,259 (2005) per household to $6,325 (2009). The fall of 66% were mostly seen in the areas where the housing melt was more in concentration in comparison to other areas.
However, the fall in the wealth of the whites was minor when compared with the other racial groups. The percentage fall was only 16% from 2005 to 2009.
Statement #3
The poverty rate in 2010 (15.1%) was the highest poverty rate since 1993 but was 7.3 percentage points lower than the poverty rate in 1959, the first year for which poverty estimates are available.
The poverty has changed a lot from beyond 22% in 1959 it reduced to 15.1% in 2010. Therefore, consideration of the overall picture states that the condition of the people has only improved during the whole period. After the permanent decline during 1960s, the major variation can be stated as cyclical that went up or down during recessionary or post-recessionary period (DeSilver, 2014). The similar pattern can be found during the decades prior to 1990 and in the late 1990. The recession of 2008 influenced the cycle again.
The data states that the poverty is evenly distributed throughout the country but inclined more heavily in the South. 45.9% of the poor can be found to be poor in the south. The total contribution of the population of this area is 31% (Matthews, 2016).
The credit to the comparatively better poverty level in comparison to the year 1959 goes to the overall increase in the production level of the country during the time of industrialization. Moreover, the increase in the foreign investment during the period of growth in the American economy also contributed to the increased gross domestic production. However, the change in the face of the industrialization, where most of the businesses started to leave the country in search of cheaper countries, resulted into the lack of jobs and thus sources of income.
The employment condition was still in the existence, and then came the economic crisis such as dot com busts and the subprime crisis. The lack of source of income and assets pushed the people to take free loans from the banks to improve their lifestyle. However, the same resulted into different scenario and all fell flat impacting the lives of the millions of American citizens.
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Place Your OrderStatement #4
Between 2009 and 2010, the poverty rate increased for children under age 18 (from 20.7% to 22.0%) and people aged 18 to 64 (from 12.9% to 13.7%), but was not statistically different for people aged 65 and older (9.0%).
The economic crisis impacted the millions of residents in America and the children were impacted the worst. The child poverty is connected with the poor conditions related to housing and food that are not enough for supply of proper nutrition. The children’s academic lives impact the most (Apa, 2016).
Moreover, they are involved in abuse and neglect from the parents and society. They involve in the activities that impacts their emotional level and health on physical and mental level. Such issues go rampant when the children and their family face problems when taking effort to access the health care facilities.
Economists have estimated that the poverty related to children contributes to loss of almost $500 billion every year to the economy of United States. It also contributes in the reduction of gross domestic product by 1.3%. Moreover, such neglect and lack of education leads to the increase in criminal activities and more expenses on solving health problems.
The major impact that poverty has on the children is their academic results, particularly when they are in their childhood stage. Children lose concentration and ability to memorise anything effectively. The dropout rate in the year 2008 was 8.7% for the low income family in comparison to the only 2% of the higher income family.
References
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Apa,. N.p., 2016. Web. 8 Feb. 2016.
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DeSilver, Drew. "Who’S Poor In America? 50 Years Into The ‘War On Poverty,’ A Data Portrait". Pew Research Center. N.p., 2014. Web. 8 Feb. 2016.
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Eckholm, Erik. "Recession Raises Poverty Rate To A 15-Year High". Nytimes.com. N.p., 2010. Web. 8 Feb. 2016.
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Hurd, Michael D., and Susann Rohwedder. "Effects Of The Financial Crisis And Great Recession On American Households". National Bureau Of Economic Research (2010): n. pag. Print.
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Kochhar, Rakesh, Richard Fry, and Paul Taylor. "Wealth Gaps Rise To Record Highs Between Whites, Blacks, Hispanics". Pew Research Center’s Social & Demographic Trends Project. N.p., 2011. Web. 8 Feb. 2016.
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Matthews, Dylan. "Poverty In The 50 Years Since ‘The Other America,’ In Five Charts". Washington Post. N.p., 2012. Web. 8 Feb. 2016.
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Merle, Renae. "Minorities Hit Harder By Foreclosure Crisis". WashingtonPost. N.p., 2010. Web. 8 Feb. 2016.
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