US Poverty Rises to 11 Year High - But Still Vastly Understated

Very little to add to this story, other than the official definition of poverty by government statisticians borders on criminal. Either this figure has never been indexed to inflation or government workers have never lived life in the real world paying for basics such as shelter or food. Obviously the true numbers (and percent) of Americans living in poverty is much higher than below - but whatever the actual number, this economy is not working for a great many.

While obviously people in the strata of income discussed in this piece won't be coming to visit the website for investing tips or as potential mutual fund investors, anyone talking about the American economy should not be dismissing (or ignoring) what is happening in a great (and growing) part of the population.

• The U.S. poverty rate rose to the highest level in 11 years in 2008 and household incomes declined as the first full year of the recession took its toll, government data showed.
• The poverty rate climbed to 13.2 percent from 12.5 percent, and the number of people classified as poor jumped by 2.6 million to 39.8 million, according to a Census Bureau report released today.
• Real per capita income for the U.S. as a whole declined by 3.1 percent last year to $26,964, the report showed.

This is why these numbers are dramatically understated; to government officials if a family of four brings in $23,000 they are not in poverty. I would define any single person making $22,025 as living in poverty, not to mention a family of four.

• The poverty threshold in 2008 was defined as $22,025 in income for a family of four.

If you are a newer reader, when I started the blog in 2007 the number on food stamps was 1 in 11 Americans, it has now reached 1 in 9. [Jun 8, 2009: 1 in 9 Americans on Food Stamps] Since food stamps is not considered "income" in the Census report I suppose that's a green shoot - we are understating people's prosperity by the value of food stamps.

• The rise in poverty is putting a strain on social services and charities. At the Atlanta Community Food Bank, demand in August was up by about 20 percent from a year earlier, said Bill Bolling, the founder and executive director.
• “There are a lot of people who have never needed help that need it now,” he said. “It is quite a different environment.”

Family incomes in the poverty area do not include the value of food stamps, money received through tax credits or unreported income. On the other side, the poverty threshold has not been adjusted over the years to reflect the rising relative costs of housing and medical care and does not take account of large regional differences in the cost of living.

[Jun 22, 2009: WSJ - Numbers on Welfare See Sharp Increase]
[Feb 20, 2009: NYT - Newly Poor Swell Lines @ Food Banks Nationwide]
[Nov 14, 2008: Wall Street Journal - A Run on (Food) Banks]