Tuesday, September 13, 2011

Government Report Poverty Rises to 46.2M, or 15.1% of Population - Reality Far Worse

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A few years ago I did a post on the poverty rate in the country [Sep 11, 2009: US Poverty Rate Rises to 11 Year High - But Still Vastly Understated] - it become one of my most widely commented posts over at Seeking Alpha as I declared it's all hocus pocus mostly due to the fact what the government considers enough income to be "NOT" in poverty is a sad joke.

Back then the poverty rate had just climbed from 12.5% to 13.2% of the population.  And 39.8M people.  Today we have a report showing that has climbed (in 2 years) by an additional 6.4M and to 15.1% of the population.   But that's not the whole story.

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2 years ago the threshold for 'poverty' for a family of four was $22,025.  It has been upped by a whopping 1.4% over the past 2 years to $22,314.  These thresholds are why I believe the headline yelling about the poverty rate to be silly.

So if you have a family of four and make say $24,000 - you are not in poverty, per government statistics.  I'd challenge most 4 person households to live a decent standard of living at that level of PRE tax income.  Perhaps achievable in rural Nebraska, but highly unlikely in any mid sized or larger city, with cost of living.  Again that's gross income, not after taxes. 

Singles?  The threshold is $11,139.  Again pre tax.  If you make $12,000... or $13,000 or $15,000 as a single - you are not in poverty, per the government.  So at $1000 a month gross - you are not in poverty.  Somehow after taxes you must afford a place to live, a mode of transportation, utilities, food, et al.

(another way to look at it - if you make the federal minimum wage of $7.25 as a single person, you make just over $15,000 a year and are therefore not in poverty.)

A household of two?  The threshold is $14,218.  $7000 a person, gross, to sustain a basic lifestyle for a year. You get the drift.

(source for poverty thresholds here)

Obviously determining 'poverty' is open to opinion.  What the actual rate is, is impossible to determine - but most fair minded people would argue a single person making $12,000 has not escaped poverty.  Of course immediately the catcalls begin for 'yeah but they can afford smokes and soda pop so they can't be in poverty'.  Obviously, 'poverty' in the U.S. is different for those in the U.S. than in sub Saharan Africa.  One should hope so.  After all, this is the 'richest country on Earth'*  But the great hollowing out of the middle class (and increasingly working poor) continues.  So when you hear the 15.1% rate tonight discussed on the nightly news, just realize the data behind the headlines.

*ex all our debt!


Here is the full report [click the full screen icon for an easier read] - hat tip to Ritholtz


2010 Report Plot Points


Please note - food stamps and housing subsides such as section 8 are not counted as income.

[Nov 5, 2010: USA Today - Anti-Poverty Programs Surpass Cost of Medicare in U.S.]
[Oct 22, 2010: Reuters - The Haves, the Have Nots, and the Dreamless Dead]
[Sep 3, 2010: FT.com - The Crisis in Middle America]
[July 26, 2010: [Video] DatelineNBC - America's Increasing Ranks of Poor]
 [Nov 10, 2009: Walmart Executive "There are Families Not Eating at the End of the Month"] 
 [Nov 29, 2009: 1 in 4 Children, and 1 in 8 Americans Now on Food Stamps]
 [Sep 7, 2009: Citigroup - America; A Modern Day Plutonomy]

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