America: Land Of The Free, Home Of The Poor

Poverty in America is a subject that has been the subject of a fair amount of discussion since the latest statistics were released.  To many, the word poverty suggests images of people living in dilapidated housing, struggling to make ends meet. However, the new face of poverty may surprise you.  According to the 2010 census, the nation’s poverty rate has risen to 15.1%, or roughly 46 million people, its highest level since 1993. What is surprising is the amount of “working poor” represented in the new data.  Approximately 3 out of every 5 poor persons in America are employed.

The number of Americans who fell below the official poverty line last year was up 2.6 million since 2009. By the Census Bureau’s latest measure, the poverty threshold reflected an income of just $11,139 for one person and $22,314 for a family of four.  Unfortunately, many experts believe unemployment will lead to even greater numbers of working poor for the foreseeable future.  What’s worse, median income has changed very little compared to the increases in consumer prices we’ve seen over the last 30 years. Adjusted for inflation, a middle-income family earns only 11% more than they did in 1980, while consumer prices have risen roughly 155% during the same time period.

Here’s some more discouraging news: Of America’s 46 million poor, 56.7% are between the ages of 18 and 64, while 35.5% are children and 7.9% are 65 or older. The working-age share surpasses a previous high of 55.5% that was first reached in 2004. Lower-skilled adults, aged 18 to 34, have experienced the largest jump in poverty, as employers retain or hire older, more qualified workers.  One of the most obvious ways to escape poverty is to find a good job, but the effects of our recent recession have been hard to shake – in fact, the administration has acknowledged that the unemployment rate will probably stay close to 9% through the end of 2012.  With good wages harder to find, many working Americans have sought help for the first time.  How do we know? Since the downturn began in 2007, the country’s food banks have witnessed a 46% increase in demand. Of those families receiving assistance, more than 33% included one or more working adults.

Is the latest census report a fair assessment of the poverty problem in America?  The answer isn’t as easy as you might think. For example, the official poverty rate doesn’t count food stamp benefits and low-income tax credits as income. If those programs, which totaled about $150 billion last year, were included, millions more people would have been above the poverty line. Conversely, other factors understate the extent to which people are struggling. Experts agree that the government’s poverty thresholds, first calculated in the early 1960s, don’t reflect the true cost of living in America today, and unemployment benefits actually helped lift about 3 million people above the poverty line.

In its recent report, the Heritage Foundation contends that the poverty statistics are grossly exaggerated, citing the fact that many poor Americans have air conditioning, cable TV, stoves, refrigerators, and a host of other modern amenities. They’re well housed, have an adequate and reasonably steady supply of food, and have met their other basic needs, including medical care. The Foundation concludes that today’s poorest Americans live a better life than all but the richest people a hundred years ago. As the Foundation puts it, “Poor families certainly struggle to make ends meet, but in most cases, they are struggling to pay for air conditioning and the cable TV bill, as well as to put food on the table. Their living standards are far different from the images of dire deprivation promoted by activists and the mainstream media.”

Though the report concedes that most families who’ve lost some or all of their income during the recession wouldn’t be expected to immediately give up their amenities, the Foundation’s suggestion that the poor are doing comparatively well is insulting.  Having once earned just $7,800 a year while periodically living on cat food, I can say with authority that a stove, a refrigerator and a cordless phone don’t elevate you beyond the poverty line if you don’t have nutritious food, nothing to put in that fridge, and the phone seldom rings with good news.  When you’re without a good paying job in today’s America, air conditioning is really just cold comfort, nothing more.  Until next time, I’m Thomas Fox for Cambridge Credit Counseling.

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