Why Poverty Matters to the Economy

Poverty and inequality are not the same
thing, but they intersect in important ways.

Families in poverty lack the income to meet basic human needs, such as food, clothing, and shelter.

Income Inequality is how evenly or unevenly income is distributed across households.

1 https://www.cia.gov/library/publications/the-world-factbook/rankorder/2172rank.html#us

How poor are we? 2

2 How the U.S Census calculates poverty: http://www.census.gov/library/publications/2016/demo/p60-256.html

What does poverty
cost the U.S.? 3


Foregone earnings: $170B

Cost of increased crime: $170B

Health Care costs: $149B

3 Harry J. Holzer et al., The Economic Costs of Poverty in the U.S.: Subsequent Effects of Children Growing Up Poor, Center for American Progress, 2007.

How unequal are we? 4

How unequal are we
4 Map courtesy of Pew Charitable Trusts

Income inequality reduces
economic growth

Research shows that inequality affects GDP growth. When an additional 1% of income goes to the top 20% of income earners, GDP falls. But when the same gains are made by the bottom 20%, GDP rises.

Income inquality reduces economic growth

5 Era Dabla-Norris et al., Causes and Consequences of Income Inequality: A Global Perspective, International Monetary Fund, 2015.