10/14/2004

Poverty Crisis in America?

Did you know that one out of every five U.S. jobs pays less than a poverty-level wage for a family four? It’s true, according to a study done by the nonpartisan Working Poor Families Project. An article was posted about this on Monday, October 11 on the MSNBC News website, called “39 Million Americans in Working Poor Families.”

The article reports that these poor Americans barely have enough money to cover basic needs like housing, groceries and child care. I wonder if these people have television sets, DVD players, and cable…

Where is that poverty line at these days? “A family of four with two children was considered impoverished if its income was less than $18,244 in 2002.” This particular study looked at families with kids that earned no more than twice the poverty level. These people are considered “low-income”, or poor. That is, they have to be making less than $36,488 a year. “The median U.S. income for such families is $62,732.”

Those numbers provide the outcome of “39 Million Americans in Working Poor Families.” In order to rise above “low-income” standards, a person must earn at least $8.84 an hour. Consider our minimum wage at $5.15 an hour.

Suggestions have been made to raise the minimum wage, improve educational opportunities, and make an expansion of the federal earned income tax credit.

This is surely a controversial issue, and one that cannot be resolved by blogging, but there are other things that weren’t mentioned in the article that came to mind.

If the minimum wage increases, the already rising problem of outsourcing will surely mount to outstanding numbers. Also, I’m not sure what families require to get by, but I have a feeling that $36K a year is pretty decent in comparison to actual “poor” people throughout the world. In fact, those folks might appreciate our outsourcing crisis!

7 comments:

Tim Worstall said...

You've grasped (sorry, this sounds terribly patronising, it isn't meant to) one of the major points: that $36 k a year would sound pretty good to many in other countries.
The point is that "poverty" is measured in relative terms, not absolute. If the average US income doubled, and the average income of "poor" Americans doubled, then there would still be just as many poor people in the US then as there are now. The bottom fifth are always poor, whatever the absolute level of income.
The particular report you mention simply accepts that definition of poverty. OK.
However, they also cheat a little.Their measurement of poverty is before we add in the help that poor families get. There's things like housing vouchers, Medicare, EITC, maybe food stamps etc. What they give us are the figures before tax (of which the poor of course pay nothing on their incomes) and before benefits.
Apologies for adding things you might not have thought of yet. There will be a piece by me at www.techcentralstation Friday/Monday looking at this very report, so I'm sort of up to date on it.
I was also amused by the indignation in the report....the poor don't have enough money. Um, could it be that that is because they are poor? Sort of like a definition.
Wave hello to Prof. Tufte for me. Yes, he does know who I am and he also knows that y'all are learning more economics than I ever did.

Bryce Larkin said...

Alright, I know that this might sound mean but low paid workers almost always have the opportunity to find and get a better job, now this is most families not all. I have no pity when it comes to the minimum wage or people earning less than poverty. Just have them get a better job. If there is not a good job where they are living, people should move somewhere else. People can find better paying jobs if they look.

John West said...

A lot of people assume that when minimum wages are raised, that life gets better for everyone including those people that currently receive minumum wage rates. The truth is that most of the people getting at or slightly above minimum wage base standards are teenagers. The most important point is that small businesses and other corporations will no longer be able to higher as many people as they would have, were a minimum wage hike initiated.

miles said...

It is interesting that this articles says that there are 39 million Americans in working poor families. Although I am sure that there are plenty of families that are actually struggling through poverty, I can't help but question if all are. I believe that the American standard of living is very high compared to other countries. Because we have a high standard of living, our poverty level is also higher. When I'm driving through the lower-class neighborhoods, I find it interesting that they have dish or cable despite the appearance of the house itself. Dvds, tvs, and cable are usually viewed as a necessity in America, not a luxury. Such luxuries being viewed as necessities shows how high the standard of living actually is in America.

natty said...

I have been in the poverty level of income (I'm probably not the only one in class either). I can tell you that for me it was not as bad as you might think. True, there were some luxuries that I went without, but by no means did I consider myself in poverty. In fact, some things were better. For example, it was easier to make sure my kids were insured (Medicaid).

Maudi said...

I don't agree the only way to beat the poverty crises is to use outsourcing to our advantage. The problem the Americans face is that it takes education to rise above the poverty level. Americans need to understand that they need to manage or start busnesses that will allow them to utilize the outsourcing or manual labor jobs. Education is the key and we can cry all we want but, the bottom line is the poverty level won't rise until peoples education and competence level rises.

Dr. Tufte said...

Hey guys ... Tim Worstall is a much bigger "name" economist than we have around these parts. And he checked in on your blog! Ain't the internet cool? BTW: Tim's blog is just called Tim Worstall, and is in the list of blogs to the left - go check it out.

And the great thing about that for me is that he said everything I would!