Economic Issue 2 – Income and poverty rate inequalities in the USA
There are huge income and poverty inequalities in the US. Poverty affects a greater percentage of Black and Hispanic Americans than White and Asian Americans.
White and Asian Americans are more likely to be wealthy and have lower poverty rates than Black and Hispanic Americans.
Median household White Americans income was around $81,060 in 2022 compared to just $62,800 for Hispanic Americans and $52,860 for Black Americans. Asian American median household income was the highest in 2022 at $108,700.
Average household income ($) levels by racial group, 2022
| Racial Group | White | Hispanic | Black | Asian |
| Average household income ($) | $81,060 | $62,800 | $52,860 | $108,700 |
| Racial Group | Average household income ($) |
|---|---|
| White | $81,060 |
| Hispanic | $62,800 |
| Black | $52,860 |
| Asian | $108,700 |
Poverty rates, on the other hand, are higher, on average for Black and Hispanic Americans compared to White and Asian Americans.
Poverty rates (%) by racial group, 2022
| Racial Group | White | Hispanic | Black | Asian |
| Poverty rate (%) | 8.6 | 16.9 | 17.1 | 8.6 |
| Racial Group | Poverty rate (%) |
|---|---|
| White | 8.6 |
| Hispanic | 16.9 |
| Black | 17.1 |
| Asian | 8.6 |
Explaining income and poverty inequalities between different racial groups
Income is closely linked to education levels. In 2022, the median weekly income for those aged over 25 years with the highest educational qualification, a doctoral degree, was $2,083. This compares starkly with the median weekly income for those over the age of 25 years with the lowest educational qualifications, less than high school diploma, which was only $682. As White and Asian Americans more often achieve better educational qualifications than Black and Hispanic Americans, this partly explains the income differences between racial groups. (Source: U.S. Bureau of Labor Statistics)
Conversely, a lack of education is linked to greater poverty rates. As Black and Hispanic Americans tend to have lower educational qualifications than White and Asian Americans, the poverty rates for these groups are higher.
How is the US government tackling poverty and low income?
There are many ways in which the US government looks to support those on a low income. About 19% of US federal government spending ($1.215 trillion) goes on welfare programmes.
Temporary Assistance for Needy Families (TANF)
This is a benefit that helps families when the parents or carers cannot provide for the family’s basic needs. The federal government gives money to individual states for this, and they can then decide the amount of payments. TANF cost the US taxpayer $15 billion in 2022.
States have used the money to provide extra cash to families, childcare, education and job training and transport to and from job interview for parents.
Supplemental Nutrition Assistance Program (SNAP)
This is another benefit for needy families. It is given so that families can buy healthy food. It is given in the form of a debit card for families to use in shops that have signed up.
Most food can be bought using SNAP, except food that is bought hot. In addition, you cannot buy alcohol, cigarettes, medicine, or hygiene items.
In 2022, the SNAP cost the US taxpayer $148 billion in 2022.
Earned Income Tax Credit (EITC)
EITC is a federal government benefit for low income working people. It is like tax credits in the UK. EITC reduces the amount of tax paid and it may also give a refund. Along with child tax credits, another benefit to support families who requires support, tax credits cost the US taxpayer around $196 billion in 2022.