ECONOMIC

In conclusion, it appears that the different occupational distributionsof white men, compared to black men and white women, explain at mostabout one-fourth of the existing earnings differentials between them. Becauseoccupational differences can also be explained by other factors thatdiffer between the races and the sexes, such as labor market experience(post-school training), and region, the true effect of occupation may be muchsmaller.THE LOW-INCOME POPULATIONThe Government has assumed an ever larger role in helping to see thatthose in need reach an adequate standard of living; and a considerableshare of the Federal budget is now devoted directly and indirectly to thatend.THE DEFINITION OF POVERTYThere is not, and probably never will be, a consensus on any one definitionof poverty. Many programs require, however, that we distinguish those whofall below a minimum income standard; and, accordingly, the concept of thelow-income or poverty threshold has been developed. The Governmentconcept is defined essentially as an amount about three times theestimated cost of a nutritionally adequate diet. The standard is adjustedfor differences in family size, sex of family head, number of children, andfarm-nonfarm residence; and different schedules are set for each group.The standard for each group is adjusted each year for changes in the overallconsumer price index. Thus, the average threshold for a nonfarm family offour increased from $2,973 in 1959 to $4,275 in 1972.Because the poverty threshold is, in real dollars, an absolute standard, itcannot be used to measure changes in the relative inequality of income. Indeed,as the average real income level of the population increases, the povertystandard lags farther behind the average. Thus the poverty thresholdfor a family of four declined from about 55 percent of median family incomein 1959 to 38 percent in 1972.Only cash income is used in determining low-income status, although acrude implicit adjustment is made for food grown at home by farm families.It has not been feasible to take account of the tremendous growth in thenumber and size of transfers in kind, such as public housing, food stamps,child care, and medical care. For example, in 1972, Federal and State governmentexpenditures per poor person on the food subsidy and medicaid programsalone, valued at cost, were equal to about 50 percent of the moneyincome of the average person in the low-income category.It would be extremely difficult to determine the exact incidence or valueof all the benefits. The programs for the low-income population are administeredby different agencies and jurisdictions, they also have differentaims and are distributed to somewhat different target populations. Moreover,the income in kind cannot be considered a perfect substitute, dollar fordollar, for cash income. For example, a public expenditure of $100 a month161