Poverty In America
I have lost track of the number of times I have heard people claiming how much poverty exists in the good ol U.S. of A. The numbers vary from 10% to 25%, but my response is generally the same. "By what standard of poverty are you referring to?" The notion that the U.S., one of the most successful countries in the world has between 20 and 50 million people living in poverty seems, well, stupid, absurd, ludicrous. It always has seemed that way to me. Considering my previous knowledge of how the UN defines poverty in a socialistic manner as lack of equality of income, I decided to research on 'Poverty in America" and this is what I found.

Firstly, Heritage (A conservative group) has a report on the topic. They note that "the Census Bureau released its annual report on poverty in the United States declaring that there were nearly 35 million poor persons living in this country in 2002". So for a start the figure is more like 12%, even without looking at the definition of poverty.

What is clear, is that there is much confusion and misinformation on the topic. From the above report the people polled seem to have little idea of how to scrape by on less, and so felt that the poverty line was too low, yet according to the "Poverty Pulse" poll taken by the Catholic Campaign for Human Development in 2002 asked the general public the question: "How would you describe being poor in the U.S.?" The overwhelming majority of responses focused on homelessness, hunger or not being able to eat properly, and not being able to meet basic needs.

So what is the definition of poverty being used by the Census Bureau? It isn't the simple socialistic model of relative income as originally suspected, instead it is a hodge-podge of costs such as food and rent which is used to calculate the poverty line. This method, first proposed by Mollie Orschansky in the sixties created a baseline pre-tax income poverty line and this value has been updated every 12 months by the census bureau to take into consideration inflation.

Some people such as John Cassidy however, are pushing for the U.S. to adopt the socialistic, relative income definition of the UN. In doing so, John points to the problem of 'social exclusion' in poverty, which is an interesting way of saying that poverty in the U.S. is not with starving, malnourished people, but instead with social status. Very much a socialistic type argument which later in the piece John makes clear saying "If incomes were distributed more equally, fewer families would earn less than half the median income. Therefore, the way to reduce relative poverty is to reduce income inequality—perhaps by increasing the minimum wage and raising taxes on the rich." Interestingly, John also points out many of the problems of the current poverty level calculation. He comments

In 1995, a panel of experts assembled by the National Academy of Science concluded that the Census Bureau measure “no longer provides an accurate picture of the differences in the extent of economic poverty among population groups or geographic areas of the country, nor an accurate picture of trends over time.”

John also mentions the problems of using nation-wide averages and pre-tax income

To begin with, the poverty thresholds are based on pre-tax income, which means that they don’t take into account tax payments and income from anti-poverty programs, such as food stamps, housing subsidies, the Earned Income Tax Credit, and Medicaid, which cost taxpayers hundreds of billions of dollars a year. In addition, families’ financial burdens have changed considerably since Orshansky conducted her research. In the late fifties, most mothers didn’t have jobs outside the home, and they cooked their families’ meals. Now that most mothers work full time and pay people to help them take care of their kids, child care and commuting consume more of a typical family budget.

Another problem is that the poverty thresholds are set at the same level all across the country. Last year, the pre-tax-income cutoff for a couple with two children was $19,806. This might be enough to support a family of four in rural Arkansas or Tennessee, but not in San Francisco, Boston, or New York, where the real-estate boom has created a shortage of affordable housing.

Notice John overstates his case, as using averages and pre-tax income would imply that those living in the cheapest areas (such as rural Arkansas) would be doing reasonably well (as opposed to 'might be enough' at the national poverty line.

So what does the current poverty level really mean in America? Well according to the Heritage report it means that

• Forty-six percent of all poor households actually own their own homes. The average home owned by persons classified as poor by the Census Bureau is a three-bedroom house with one-and-a-half baths, a garage, and a porch or patio.
  
• Seventy-six percent of poor households have air conditioning. By contrast, 30 years ago, only 36 percent of the entire U.S. population enjoyed air conditioning.
  
• Only 6 percent of poor households are overcrowded. More than two-thirds have more than two rooms per person.
  
• The average poor American has more living space than the average individual living in Paris, London, Vienna, Athens, and other cities throughout Europe. (These comparisons are to the average citizens in foreign countries, not to those classified as poor.)
  
• Nearly three-quarters of poor households own a car; 30 percent own two or more cars.
  
• Ninety-seven percent of poor households have a color television; over half own two or more color televisions.
  
• Seventy-eight percent have a VCR or DVD player; 62 percent have cable or satellite TV reception.
  
• Seventy-three percent own microwave ovens, more than half have a stereo, and a third have an automatic dishwasher.

In terms of having enough to eat however, those in poverty seems to be getting by pretty well.

While the poor are generally well-nourished, some poor families do experience hunger, meaning a temporary discomfort due to food shortages. According to the U.S. Department of Agriculture (USDA), 13 percent of poor families and 2.6 percent of poor children experience hunger at some point during the year. In most cases, their hunger is short-term. Eighty-nine percent of the poor report their families have "enough" food to eat, while only 2 percent say they "often" do not have enough to eat.

Of course, if we note that in the 35 million Americans under the poverty line, there are about 12 million children, then we get around 300,000 children who experience hunger at 'some point during the year'. Compare this to the UN's widely inaccurate claim that "12 million children in America suffer from poverty. 9 million American children go hungry each day." (Emphasis added) and you can see why people are sceptical of UN claims.

Ultimately, 'poverty' in America is mostly an fairly misleading term which should be revisited in order to more accurately allow the country to identify those in real need. As the heritage report concludes

The living conditions of persons defined as poor by the government bear little resemblance to notions of "poverty" held by the general public. If poverty is defined as lacking adequate nutritious food for one's family, a reasonably warm and dry apartment to live in, or a car with which to get to work when one is needed, then there are relatively few poor persons remaining in the United States. Real material hardship does occur, but it is limited in scope and severity.

The typical American defined as "poor" by the government has a car, air conditioning, a refrigerator, a stove, a clothes washer and dryer, and a microwave. He has two color televisions, cable or satellite TV reception, a VCR or DVD player, and a stereo. He is able to obtain medical care. His home is in good repair and is not overcrowded. By his own report, his family is not hungry and he had sufficient funds in the past year to meet his family's essential needs. While this individual's life is not opulent, it is equally far from the popular images of dire poverty conveyed by the press, liberal activists, and politicians.

But the living conditions of the average poor person should not be taken to mean that all poor Americans live without hardship. There is a wide range of living conditions among the poor. Roughly a third of poor households do face material hardships such as overcrowding, intermittent food shortages, or difficulty obtaining medical care. However, even these households would be judged to have high living standards in comparison to most other people in the world.

Perhaps the best news is that the United States can readily reduce its remaining poverty, especially among children. The main causes of child poverty in the United States are low levels of parental work and high numbers of single-parent families. By increasing work and marriage, our nation can virtually eliminate remaining child poverty.

I'll try to remember this next time someone tells me how bad the poverty is in America.
- posted by Alan Grey @ Tuesday, May 16, 2006