Income (chp 15)

Functional distribution of income is the way in which income is divided by economic functions.

Factor of Production	Earnings	Economic function	Distribution of Income
Labor	Wages	Compensation	82%
Entrepreneurship	Profit	Corporate profits	9%
Capital	Interest	Net interest	9%
Land	Rent	Rental income	0.2%

Per capita income is the average income per person. In 2000, per capita income in the USA was $36,200. Thus if all income were evenly divided by every person in the USA, each person would receive $36,200. Personal distribution of income is how income is share among people in a society. While the per capita income is high, there are some inequities in this figure. About 30% of Americans earn less than the per capita amount. 40% are counted among the middle class which earned from $35,000 – 75,000. 14% earned more than $75,000.

The Lorenz Curve is a graph that show the amount of income inequality that exists in society.

Each segment of the pie chart represents 20% of the population. The largest portion represents 41.9% of all income and the smallest represents 4.7%. If everything were equal, each quintile (20%) of the population would have 20% of the income, which is represented by the green line in the Lorenz Curve above.

Poverty is the condition in which people do not have enough income to provide for their basic needs: food, clothing and shelter.

2001 HHS Poverty Guidelines

Size of Family Unit	48 Contiguous States and D.C.	Alaska	Hawaii
1	$ 8,590	$10,730	$ 9,890
2	11,610	14,510	13,360
3	14,630	18,290	16,830
4	17,650	22,070	20,300
5	20,670	25,850	23,770
6	23,690	29,630	27,240
7	26,710	33,410	30,710
8	29,730	37,190	34,180
For each additional person, add	3,020	3,780	3,470

Those in poverty tend to 1. belong to a minority group, 2. have a female single parent, 3. not have high school diploma, 4. have a handicap, 5. live in a rural area, 6. have a family of 7 or more.

The causes of poverty include unemployment, low productivity and restrictions on job entries such as job discrimination or lack of skills.

Government Poverty Programs include (1) creation of jobs, (2) educational and re-training programs, and (3) income support programs (welfare).