Do Government Poverty Numbers Reflect True Poverty?
Happy Short Week.
Some of the candidates have made poverty a central issue to their campaign. I was reading this article on the train which talked about the non-cash contributions that are excluded from last weeks poverty numbers. First, I've included a few key points about the numbers and where they come from:
The federal poverty measurement was first developed in 1964. Except for minor adjustments, the definition has stayed the same and has always focused solely on income as its basic barometer.
By that measure, the poverty line for a family of four is now an income of about $20,000. A single mother of three - a typical configuration - receiving $17,017 is considered poor.
The key sticking point here is the "solely on income." Why is this troubling? Well, most of those who tout the poverty numbers generally do so to demonstrate a need to flatten/close the income disparity or to necessitate the need for more spending on social safety-net programs. In fact, most Americans will have no problem with some safety-net measures. The troubling point, to me at least, is the fact that the current spending on said programs is not included in these calculations:
Taking all federal, state and local means-tested programs together, national anti-poverty spending is nearly $600 billion a year....
New York's social-safety net is especially generous. Here, the above-mentioned single-parent city household is eligible for means-tested assistance in approximately the following amounts:
* Medicaid - $10,080
* Child-care aid - $9,516
* Earned income tax credit - $6,065 (combining federal, state and city sources)
* Food stamps - $4,626
* Child tax credit - $741
* Heating aid - $ 360
* Phone aid - $60That is a total package of well over $30,000 in aid available to this family - again, none of it factored into the Census Bureau's definition of poverty.
In addition, many of the working poor are eligible for federally subsidized, locally distributed Section 8 housing vouchers - an additional value of some $9,200.
To be fair, NY (and NYS) has one of the highest tax burden in the country, but I'm sure there is similar spending across the country relative to cost-of-living. My questions to the group is the following:
1. Should we include these non-cash contributions towards the poverty number? After all, if we increase spending on social programs, it won't impact the poverty number at all if we don't include it, and it will seem as if the poor (working or otherwise) will never ever make it.
2. How Do these type of subsidies affect people? Some have floated the idea that "poverty" is a psychological weakness (rather than financial) and giving money would only serve in a short-term solution. Others say that the subsidies are quite helpful and don't go far enough, and some fall in the mushy middle.
3. Any suggestions for improving the system? Should we decrease/increases/keep the same the subsidies given out?
- Charles J's diary
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Comments :
Subsidies I'd like to see increased
Support for education or retraining to help people land higher-paying jobs. If successful it might even be revenue-neutral once you figure the extra taxes they pay and the decrease in other aid for which they qualify!
I take your point about resources but it seems cleaner to me to tie poverty to income and then assess our response to it (aid) as a separate issue.
Come, my friends. 'Tis not too late to seek a newer world -- Tennyson
I think that's how we do it now.
The way we currently do it is to list income as the only way to measure poverty. It may be "clean" but I think it does mislead the masses to think that folks are living off of 20,000/yr and have nothing else to their name, which could easily lead into the argument for more aid.
My only issue is that I think it would be more fair if we were to include the non-cash contributions as well. It's kinda like saying that an on-campus college kid who has a full scholarship and gets a 10,000/yr stipend that they are "living in poverty," when their housing and food are covered. Most don't report scholarship money as income since most don't see it as realized income anyway--in a sense though, it's a non-cash contribution.
Point being, we should probably tie it in because there's money being spent and most media articles won't bother going into the details of what a report conveys, opting only to report a headline-grabbing "Poverty at 12.3% in Richest Nation on Earth" while pointing Scandinavian Nations' low-poverty rates, which do include their non-cash government funded services and thus have a lower poverty number to report.
http://wealthweekly.blogspot.com
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My wife and I
discussed this very topic the other day.
First off, I am an advocate for the poor, and I think most often the conditions that lead to poverty are a complex process of cyclical psychological and environmental/social factors that go beyond a simple 'pull yourself up by the bootstrap'-type simplicity. That said, i think we need these safety nets in our society just out of a necessary humaneness to our fellow countrymen.
Interestingly, the lower middle-class (those that make about $25,000 to $35,000 in a household of about 4) have it very hard. Often times they do not qualify for these assistance programs but cannot afford to purchase health insurance and some of the other benefits on your list. That puts them in quite a bind. They face the risk of increasing debt or going without some of the things we consider basic quality of life measures, such as food, prescription drugs, insurance, etc.
I'm not saying it pays to be poor, but we are definitely cheating those with barely their heads above water.
I Agree (but have a follow-up)
Spec,
I agree that those above the poverty line will always have it tough because they make too much to receive these services. The health care issue is a toughie, so I'll put it to the side for a moment.
Do you think that charitable organizations can help those in this sector of the lower middle class (meaning United Way, Salvation Army, Goodwill, Churches, etc.) These organizations are generally well-funded, but I think many people consider themselves "too proud" to ask for help because they don't want to seem like a "charity case," so to speak.
However, people give double takes when they find that people higher up on the scale often go to these places to leverage the options these organizations provide. I'm not saying that Charities can take the entire load, but do you think they can play a large part in helping those who are not eligiblee for government programs before expanding the government programs? After all, there's a school of thought that says that the more local a government or organization is, the easier they can identify a neutralize a problem, something our government has forgotten how to do.
http://wealthweekly.blogspot.com
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How Poor Are America's Poor?
Funny you should ask. On Rush Limbaugh recently he mentioned a report out of the Heritage Foundation that is related to your topic. The entire article is a good read but I will provide a few excerpts below:
How Poor Are America's Poor? Examining the "Plague" of Poverty in America
I have also included a couple of the charts below. As I always expected, poverty in the US is luxury living to the truly poor of the world.
Republican Maverick at Large
-4:Strongly Disagree; 0:Meh; +4:Strongly Agree
You should share these facts and figures with Madscientist.
He was just complaining about how poor he is
.
Obviously, the ingrate doesn't know how well he has it, according to you, Rush Limbaugh and the Heritage Foundation.
Frankly, I'm getting sick of these rightwing whiners complaining about how tough they have it, as you must be, as well.
Whatever happened to pulling oneself up by one's bootstraps as Ayn Rand wrote about and Ender crows about all the time?
Why do we have to hear from sad sacks like Madscientist who fail to realize just how lucky they are?
Hell, I bet he has air conditioning!
If you really believe this is the "fight of our lives," how come you're not in Iraq?
and......
you think conditions are improving in the US?
Citizens have more or less opportunity to graduate from college without a considerable amount of debt.
Is it easier or harder to 'get by' here in the US as we lower our standard of living to compete on a global scale.
Compared to very poor third world countries, yes the poor in the US are much better off, but that has nothing to do with the fact, the middle class is now lower middle class, and the lower middle class is now bordering on poor.
Generally people in this country are stretching their dollars further and they are not going as far, and people get by cause the owe money on their credit cards.
All the graphs in the wolrd won't make a whit of difference, when you go to the grocery and see how your $20 bill now buys you a third of a bag of groceries.
Compared to S. American pygmies, the poorest folks in the US look rich.
Compared to the CEO of United Health, some rich Americans look poor.
So what is your point?
It is the economy, stupid.
RE: and......
Actually yes, I do, and we have stats (h/t Tlolac) to prove it!
RE: Rockin economy
Actually, this is a baseless statement as far as I can tell. This issue has been discussed at length here at SC. The bottom line that contradicts this assertion can be summarized as:
So we see evidence of upward mobility across the entire spectrum of incomes. This is evidence of a rising tide floating all boats, NOT evidence of the middle class sinking as you choose to believe.
I worked my way through college and never took a single student loan.
This is due to inflation (a.k.a. rising prices). Note that one of the primary conributor to the rising prices is the rising wages demanded by labor.
The reality is that, taken as a percentage of income as opposed to a static $20 bill, most things actually cost significantly less today than they did 20 or 30 years ago.
Want proof? Just look at the state of the (so called) poor in the US (in the graphs provided above) and compare that to what was considered middle income just 20 or 30 years ago. They are basically on par in terms of nutrition, shelter, and even many luxury items (micro wave ovens, color TVs, automobiles).
That is the state of the standard of living for the poor in this country. They clearly have more today than they did just 20 or 30 years ago, so in terms of real living standards they are clearly improving.
That your doom and gloom view of the US and its treatment of the poor is bogus.
Republican Maverick at Large
-4:Strongly Disagree; 0:Meh; +4:Strongly Agree
...and
I'll add that the Census Bureau only surveys based on income. The DOL shows a steady increase in real compensation.
Do you have any kind of link for this?
Republican Maverick at Large
-4:Strongly Disagree; 0:Meh; +4:Strongly Agree
What percentage of your income
do you pay for transportation today vs what you paid 30 years ago.
Considering the price of gas has gone up 100% in the last six years and the price of heating your home has through the roof.
No doubt the cheap appliances from China allow more folks to have these conveniences. My toaster was seven dollars and shockingly it still works even though it is several years old.
Also you didn't account for what percentage of goods, food, gas, these lower income/ lower middle class/ poor folks put on their credit cards, and what the average debt of the lower income bracket is.
You can compare and say we are wildly better off..... okay, yes compared to pygmies in So. America (extreme example)...... I wonder if you accounted for the amount of debt that people owe. Are the real living standards a result of easy credit.
We are talking lower income levels here. Folks that work for 7-9 dollars an hour. Figure out how much money per week that is, and then try and figure out a way to pay rent, make a car payment, plus insurance, gas food. Do you have disposable income, or are these people just maxed out on credit?
I want things to get better not worse..... ! I don't trust statistics (especially from you) because they are easily manipulated and can become a strawman for arguments for a hundred years.
Most of the folks I know, that are lower income are feeling more squeezed in the last few years!
It is the economy, stupid.
RE: What percentage of your income
Credit card debt cannot possibly account for these gains. No one has unlimited credit card debt, as such it is a limited resource and cannot be used to sustain purchasing power on an on-going basis.
Let us look at an example. Let's assume a working wage of $7.50. Working 40 hours a week for 50 weeks a year we find an annual income of:
$7.50 x 40 x 50 = $15,000
Now $15,000 in credit card debt is quite a bit. Most people won't have that much but certainly some people could have more. So even if I accept an average of on the order of $15,000 in credit card debt among the poor, this amounts to only a single year's income.
So, the best that they can do by living off the credit cards is about one year. After that they have to be paying for things some other way because the cash tap will get shut off.
The only thing that the cedit cards can do for them is to allow them to weather a cash flow problem or to buy something they need/want before they have the cash on hand to do so. It is still their incomes that must be sustaining them on an on-going basis.
Republican Maverick at Large
-4:Strongly Disagree; 0:Meh; +4:Strongly Agree
Yes credit is
a limited resource..... kind of, but you can always get another one and another one, until you dig a big hole. Folks you see on the street.... ask yourself, I wonder what their credit debt is?
Easy credit has in a sense been substituted for raising wages, for those who want what Charles describes as 'luxury' items that seem like a necessity. I would bet most poorer Americans would go into hock before they shut off their Cable TV.
And you forget to address how the sprialing cost of gas ( basically a privatized tax ) has affected the price of everything. A loaf of good bread is now $3.49 at the local grocery. Why because it cost more to heat the building they make it in, and more to transport it. Nobody's wages have gone up. The cost of transporting it has.
Weathering a cash flow with easy credit becomes a habit, then a necessity, then an emergency. (See the current economic model of the US)
A lot of the reason our economy has done okay is because folks have a net zero savings rate, and are spending money they haven't made yet on credit cards, unfortunately sometimes on items like food.
So while the poor may have cable TV, or other 'luxury' items, they really don't own them. They credit lenders do.
My neighbor owes $65,000 on credt, refinanced her home, and then bought a boat! She makes 50 thousand a year. What is her net income? Minus 15 thou a year, plus interest on the debt. But she has Cable TV.
It is the economy, stupid.
"Luxury" Items
I think another point to add here is that the definition of a "luxury" and a necessity has changed. I've seen people justify the need for cell phones "to survive in today's world" but I doubt it. The same with televisions, considering the growing number of people who brag about not having cable of the idiot box itself. (I'm not included here).
What happens is that advertisers do an excellent job telling people of the things they "need" and the price they need to pay. Both of those can be in control of the hands of the consumer.
Basic goods are still available pretty cheaply--especally food. In fact, most states exempt non-prepared food items from taxation (or tax it at a very low rate). I'm often confused when I see people talk about the average cost of items like bread/eggs/milk/veggies when I still see these items keep a fairly consistent price even as other items increase in cost. Just like I did in Atlanta, I can still buy bread for 1.50 and cage-free eggs for even less, and I'm in New York. I think the idea is finding the right price and simply shopping smarter, even if it means buying private-labels.
Truth is, people are looking for convenience--they want the same items in their house that the Joneses do, but many of them don't want to have to pay for it. (Unfortunately, the Joneses most likely charged everything to a credit card because they were keep up with the Jacksons, and so on). Life in America will always be a comparison of what you have versus what others do, and not necessarily what you need.
http://wealthweekly.blogspot.com
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Brawl: 2277-7051-2186