Interesting Facts And Confusing Thoughts About The American Poor

by golbguru on August 1, 2007

Just came across some interesting numbers on American poverty, through this report: “Understanding Poverty in America“. In the write-up below, I am presenting some interesting highlights from the 2004 report (which is based on the Census data from 2002).

To better appreciate the facts, it is important to view them in light of the poverty thresholds (income levels below which a person or a family is considered “poor”) for 2002. Towards that, here are some of the 2002 poverty thresholds from Census.gov.

  • Single person: $9,183
  • Two person household: $11,756
  • Three person household: $14,348
  • Four person household: $18,392

In 2002, according to the US Census Bureau, there were about 35 million “poor” Americans - people who were below those thresholds.

Now, let’s move on to the *typical* characteristics of these poor people, as mentioned in the report [by the way, always keep in mind that "typical" does not mean "all" - it is just a statistical average, and there are always some data that do not fit in this average].

The following are facts about persons defined as “poor” by the Census Bureau, taken from various government reports:

  • Forty-six percent of all poor households actually own their own homes. The average home owned by persons classified as poor by the Census Bureau is a three-bedroom house with one-and-a-half baths, a garage, and a porch or patio.
  • Seventy-six percent of poor households have air conditioning. By contrast, 30 years ago, only 36 percent of the entire U.S. population enjoyed air conditioning.
  • Only 6 percent of poor households are overcrowded. More than two-thirds have more than two rooms per person.
  • The average poor American has more living space than the average individual living in Paris, London, Vienna, Athens, and other cities throughout Europe. (These comparisons are to the average citizens in foreign countries, not to those classified as poor.)
  • Nearly three-quarters of poor households own a car; 30 percent own two or more cars.
  • Ninety-seven percent of poor households have a color television; over half own two or more color televisions.
  • Seventy-eight percent have a VCR or DVD player; 62 percent have cable or satellite TV reception.
  • Seventy-three percent own microwave ovens, more than half have a stereo, and a third have an automatic dishwasher.

Here is what the report says about the food/hunger situation of the poor people:

When asked, some 89 percent of poor households reported they had “enough food to eat” during the entire year, although not always the kinds of food they would prefer. Around 9 percent stated they “sometimes” did not have enough to eat because of a lack of money to buy food.

And, about the general financial situation:

Some 70 percent of poor households report that during the course of the past year they were able to meet “all essential expenses,” including mortgage, rent, utility bills, and important medical care.

The report later concludes:

The typical American defined as “poor” by the government has a car, air conditioning, a refrigerator, a stove, a clothes washer and dryer, and a microwave. He has two color televisions, cable or satellite TV reception, a VCR or DVD player, and a stereo. He is able to obtain medical care. His home is in good repair and is not overcrowded. By his own report, his family is not hungry and he had sufficient funds in the past year to meet his family’s essential needs. While this individual’s life is not opulent, it is equally far from the popular images of dire poverty conveyed by the press, liberal activists, and politicians.

Honestly, the data had me confused about my definition of poverty. Irrespective of how low the income is, if a person (or a family) is able to enjoy most of the things that an average family can enjoy, is able to get proper nourishment, and is able to meet all “essential expenses”, how can such a person be termed as “poor”?

These facts bring up some food for thought. Here is what I have been thinking:

  • Can people really be defined as “poor” based on the income criteria? In the same breath, if income is not a good criteria for defining the “poor” - then it cannot be a good criteria for defining the “rich”.
  • If you look at all the things that a “typical” poor person is enjoying - and then look at the poverty threshold (income level) - it seems to me that poor people might be doing things frugally. Of course this doesn’t say whether they are more (or less) frugal than rich people.
  • It can also be construed that poor people are being too consumerist and in fact, are *poor* in the first place because they try to buy too much on too little income. However, “too little” is a very relative term - and it doesn’t make sense to put any dollar amount income levels here.
  • Is a person, who is $2,000,000 in net debt, but living in a mansion and earning $100,000 a year, richer or poorer than someone who has a positive net worth but is making ends meet with great difficulties (barely able to provide food, education, shelter, etc) ?
  • So who exactly classifies as poor? a person facing financial hardships? but hey, that can happen to people with high income and bad spending habits.

I still don’t have any conclusive answers yet… if you have any, please enlighten us.

A summary of the report referenced above can be obtained through this link (pdf file).

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{ 51 comments… read them below or add one }

1 KMC 08.01.07 at 9:22 am

First, you have to realize that the report you read comes from the Heritage Foundation.

Second, the fact is that the U.S. (and arguably the world) is plain old richer than it was a generation or more ago. All have benefited from this increase in overall wealth. And these observations about prevalence of TVs and so on just reinforces that.

But the fact is, there are people in America unable to consistently eat. By the numbers in this post, over 3 million people responded they sometimes did not have enough to eat. And children are disproportionately represented in that number.

2 Steve Austin 08.01.07 at 10:38 am

This could get political, fast.

KMC, I have a hard time swallowing a relationship between increasing American wealth (not income) and the prevalence of TVs (a depreciating asset).

golbguru, seems that you’re still ruminating on the theme of The Millionaire Next Door. I read that book several years ago, didn’t get a lot out of it, but I found the rich/poor metric interesting: under, average, and prodigious accumulation of wealth. It reinforced my belief that indeed: It’s not what you make; it’s what you do with what you keep of what you make.

3 Brad 08.01.07 at 11:22 am

KMC: “Consider the source” is always good advice, but the stats are obtained from the Bureau of the Census– unless you consider the Census biased, the info is accurate.

What I get out of it is reinforcement of a concept I have long believed in– that it’s far better to be “poor” in the US than anywhere else in the world, and in many ways better to be “poor” here than to be an “average” citizen elsewhere. Poverty is definitely a relative measure, and is a concept very poorly understood by the general public.

When I was a grad student I lived relatively near the poverty level– just a bit above it. I had a decent apartment (with a roommate), ate decently well, owned a car, and generally got by just fine. I had the “usual” American amenities that one would not associate with poverty– two TVs, cable, cell phone . . . and I could afford all of this on grad student pay of about $1k per month.

The bottom line is this– the poverty line is a nice yardstick to get at the “poorest” Americans, but the use of the word “poverty” conjures up images that are in no way in touch with reality.

4 golbguru 08.01.07 at 12:25 pm

KMC: “First, you have to realize that the report you read comes from the Heritage Foundation.” - Like others have said, I am not sure how that affects raw data. Yeah, their interpretation of the data, or recommendations (if any) will have some characteristic flavor, but other than that, it’s just the numbers. By the way, I followed a few of their references just to make sure that there isn’t any blatant bluffing going on - I gave up the chase after I didn’t find any fudging of number for the ones I followed.

Steve Austin: “seems that you’re still ruminating on the theme of The Millionaire Next Door.” - Now that you mention it, I do see the connection. However, when I started writing this post, I didn’t really have the book in my mind. :) But I think I will go back and read the rich/poor metric again; that might answer some of the questions I have.

Brad: “the poverty line is a nice yardstick to get at the “poorest” Americans, but the use of the word “poverty” conjures up images that are in no way in touch with reality.” - that is exactly what’s happening to me, it’s probably years of brainwashing by the media or something. However, it’s mostly visual for me ~ the moment I start *thinking* over it, all the images just break down and confusion results.

By the way, I can totally connect with your grad student lifestyle ~ I am in the same boat right now. :)

5 GTang 08.01.07 at 1:30 pm

Take their first statement. 46% of poor households actually own their own home. Where is the source for that figure that gets about 46%?

The footnote says “U.S Department of Commerce and U.S. Department of Housing and Urban Development, American Housing Survey for the United States: 2001, Tables 3-1, 3-14.”

Online, I think that this means this. If I go to table 3-1, it says (numbers in thousands):

Total households: 71708
Household characteristics/below poverty level: 6667

That’s not 54%.

6 Mike 08.01.07 at 1:34 pm

If you’re interested in more along these lines, you might want to read The Progress Paradox by Gregg Easterbrook. He talks about a lot of the things that have gotten better over the past three decades or so and why nobody feels like anything ever gets better.

I do think this report, by focusing on consumer goods, does tend to obscure the lack of wealth among the poor, the large amount of debt, etc. A TV isn’t going to improve my quality of life much if I’m one paycheck from being on the street.

7 golbguru 08.01.07 at 2:23 pm

@ GTang’s comment: Sorry to say this, but you are not calculating the correct ratio mentioned in the report. With the numbers you have given, you are trying to estimate the percentage of houses occupied by households below poverty level - this is NOT same as determining the percentage of below poverty households who own houses.

Which means, that out of 71,708 houses, 6667 units are occupied by people under poverty level. We are not interested in that number.

To find out “the percentage of poor households actually own their own home”. You should do the following:

  • - Look up Table 3.1 and find the number of below poverty households that own their houses. This number is 6667.
  • - Next, look up Table 4.1 and find the number of below poverty households in rented occupied units. This number is 7829.
  • - Add them up to get the total population of poor households, which is 14496.
  • -Now, you can check that 6667 is 45.99% of 14496. That’s the percentage of poor households that own their houses - the rest of them rent.

By the way the same data can be easily obtained from just observing Table 2.1 - Just look up the column “Below poverty level” and all the calculation is ready made. [Instead of 14496, here they write 14495 - don't know why there is a difference of 1].

Hope that answers it.

8 katewrath 08.01.07 at 3:17 pm

Thank goodness the Heritage Foundation is spending its time explaining why poverty is really no big deal.

Off the top of my head, some of the inconsistencies that occur to me:

1. Owning something doesn’t mean *you* necessarily paid for it. You can inherit a house (or a car, TV, or a microwave) from a family member, but if it requires repairs, you’ll be in serious trouble. Also, there’s a brand new air conditioner and then there’s a 10 year old piece of junk. (A principle that also applies to cars, TVs, microwaves, etc.)

2. Owning an air conditioner does not mean you have air conditioning. In fact, if you don’t pay your utility bills on time, you almost certainly *don’t* have air conditioning.

3.I have my doubts about the accuracy of self-reported data regarding financial difficulty, hunger and medical care. If it were me, I would minimize all three of these issues. Also, the hunger of children strikes me especially hard to quantify. I’ve heard anecdotal stories of children coming to school without breakfast, and insisting they’re not hungry, but then, magically, feeling much better after a trip to the Nurse’s office and the “treat” of a granola bar. (Yes, as I say, anecdotal, but it points to another flaw in the data.)

9 Chris 08.01.07 at 3:32 pm

The 45% calculation seems a bit off, as it ignores homeless people who neither rent nor own and, possibly, people who rent on short-term leases.

10 golbguru 08.01.07 at 4:27 pm

Kateworth: The points you raise are valid, but I wouldn’t consider them to be “inconsistencies” - they real tricky issues to be considered when you classify people as “poor” or “rich”. Plus, it helps to look at the big “poverty” picture (possessions, quality, affordability, etc.) instead of focusing on individual pieces of material possessions.

By the way, most surveys have that issue of authenticity of “self-reported” data. However, that doesn’t simply invalidate the findings. Again, it helps to look at this data in light of multiple Census surveys and findings.


Chris
: Good point - the homeless are indeed not included in the % stats about home. From what I read, there were about 3 million homeless people in 2002 (I am sure people will jump up to raise objections on these numbers too).

I can understand that data is a bit tricky to handle because some of those people don’t remain *consistently* homeless for prolonged periods of time - so some portion of them were in-an-out.

However, it still doesn’t take the merit away from the fact that a significant number of below poverty people actually own their houses.

11 Jason Oliphant 08.01.07 at 9:14 pm

I’m not sure what the big mystery is. You can’t judge whether someone is rich or poor by their annual income. You must look at their total net worth. Most of the people under the current poverty threshold are likely to have net worths close to or less than zero. Since annual income data is readily available from tax filings, that’s what they use.

12 Captured Shadow 08.01.07 at 9:28 pm

There is a growing trend that goods are getting cheaper relative to services. You can buy all of the TVs and Microwaves, and to a lesser extent cars and houses that you want, but you will have a tougher time getting someone to mow your lawn, cut your hair, or babysit your kids. This study ignored services which is becoming a much bigger demarcation of poverty. You can buy a used color tv for $15 in my town that. I did, it works fine but I cannot get a dentist appointment for that same $15. The poor generally cannot get good preventative medical care and that can leave them one medical bill away from penury.

13 Shari 08.01.07 at 10:56 pm

There are a great many problems with these sorts of surveys. First of all, people may be inclined to overstate their “assets” because they want to portray themselves as fortunate rather than unfortunate. Second, “owning” your house doesn’t mean it is paid for in full but that you are in the process of paying for it. Also, what sort of homes do these poor people have? Trailors? Rural dwellings with low real estate values? There’s no context.

“Poverty” in America doesn’t mean you’re starving necessarily. It may mean that you’re living on a diet high in cheap refined carbohydrates (like day-old pastry and bread which can be bought 3 for a buck at some shops) and raising fat children who are building bodies that will experience health problems earlier and more often when they reach adulthood because they aren’t eating more expensive fresh vegetables and fruit or low fat protein from fish or lean meat.

Poverty in the U.S. means you have no security in your life and that you live off of the cast-offs of people who are better off than you. You might die from an infected tooth because you can’t afford a dentist (this happened to a boy in Florida within the last 6 months) but you have 3 second-hand televisions in your house because they’re all CRTs which have been seriously devalued by flat models and you could pick them up from the local trash dump or from a thrift store for a nominal amount of money.

In a heavily consumerist culture where people are constantly “upgrading” their lifestyle, getting your hands on junk for free or for very little money is easy so looking at things like air conditioners, televisions, cars, etc. just doesn’t indicate much about quality of life.

Poverty means you have very few options in life in terms of things like education and health care. You take what is free or cheap so you can get some pleasure out of life and you struggle to pay your bills for necessities. Your kids get new eyeglasses once every 3 years or so whether they need them or not and you get most of your medical care at the emergency room because that’s the only kind of care that the government will pay for.

I guess the people who like to look at possessions as a measure of wealth only believe you are truly poor if you have absolutely nothing as a way of convincing themselves that they don’t need to pay taxes for social programs to help out the poor. It’s a narrow view which may comfort the more affluent but isn’t a reflection of reality.

14 El Guapo 08.02.07 at 12:44 am

My first reaction to the article, and the implied conlcusion that “Society doesn’t need to devote resources to helping the poor, they don’t have it that bad.” is that its reducing “fairness” down to a misleading metric (microwaves? televisions?).

It’s essentially the exact same argument used by pro-slavery Southerners before the Civil War: African-American slaves, who as valuable property incentivized their owners to take care of them, lived better than Northern unskilled or semi-skilled wage earners, who in the days before labor laws were essentially interchangeable, disposable parts. Slavery wasn’t so bad, so why should we get rid of it?

The obvious response, which I think applies here too, is that such social systems are morally, if not materially, bankrupt. Slaves lack freedom, they lack access to the same resources as the rest of us, and they are continually reminded of that fact by watching their richer countrymen enjoy what chance has denied them.

If educational facilities were of the same quality of the south side of Chicago as they are in California gated communities, health care was freely available for all, and employers didn’t draw most job applicants from insular class-based social networks, then I think straight-up standard of living would be a fair metric.

But as it is, a poor kid is statistically not going to make it out of a lifetime of menial service work, whether or not they enjoy a color TV.

15 Steve Austin 08.02.07 at 1:36 am

Following up on Shari’s first paragraph, an important qualification of “46% actually own their homes” might be what fraction of that 46% own their homes outright (which is what I would think “actually own” means, but I guess not according to the survey authors). Leverage is not wealth.

16 plonkee 08.02.07 at 3:05 am

Yes, its better to be poor in the developed world than anywhere else. In terms of material objects, its plausible that its better to be poor in the USA than anywhere else. Poor households in developed countries don’t look like they did 50 years ago.

More important as measures of what poverty means today are things like life expectancy and social mobility. I’m sure silicon valley blogger found statistics that showed that the US was one of the least socially mobile developed countries (the UK was the worst), and in the UK there is a 10 year gap (on average) between the poorest and richest citizens - I imagine its not dissimilar in the US and other developed countries.

17 Kenny 08.02.07 at 5:26 am

Thank you for noting that many “poor” people still get cable or satellite TV, which is a monthly cost in almost all cases.

TV is not a “need,” although media wants you to feel otherwise. Using rabbit ears instead of paying for cable adds up to hundreds of dollars each year that could be used for other purposes.

Some argue that “rural poor” don’t get any TV reception with rabbit ears or other antennas. Perhaps there are books to read, or cows to milk, or trees to chop, or fields to plow.

TV is certainly not a “need” in the same sense as food and shelter.

It’s sad that so many Americans feel that one’s life is inferior if it does not include access to cable or satellite television.

But that’s also the beauty of this country, that we all are free to express our opinions, as diverse as they all are.

18 golbguru 08.02.07 at 10:24 am

All: I tried to leave out the *opinionated* (and probably politicized) parts of the report, and just let the numbers be numbers. Personally, I don’t care what the Heritage foundation does (or doesn’t do) and what it’s political affiliations are. I was looking for a report that put all the numbers together and this one served the purpose.

So, try not to go by the opinions in the report. Look at the numbers/facts and tell us what you feel about it.

Probably, many people are not realizing it, but the poverty metric issues that we are discussing, have very important learnings (which are otherwise not appreciated to such an extent) hidden in them. Some of the commentators above have highlighted them as much. For example:

Steve Austin says: “It’s not what you make; it’s what you do with what you keep of what you make.

Brad says: “The bottom line is this– the poverty line is a nice yardstick to get at the “poorest” Americans, but the use of the word “poverty” conjures up images that are in no way in touch with reality.

Mike says: “I do think this report, by focusing on consumer goods, does tend to obscure the lack of wealth among the poor, the large amount of debt, etc.” — Debt probably plays a very significant part. But mind you, it plays a very significant part even in the *perceived* rich; it’s not just the people under poverty line who are affected by it.

Jason makes another important point: “You can’t judge whether someone is rich or poor by their annual income. You must look at their total net worth.

Later, Shari makes some good points about what poverty is.

Steve says: “Leverage is not wealth.

Plonkee says: “More important as measures of what poverty means today are things like life expectancy and social mobility.

Kenny says: “It’s sad that so many Americans feel that one’s life is inferior if it does not include access to cable or satellite television.

So, sure, feel free to bash the Heritage Foundation (I would join you after I find out more about them), but don’t lose focus of the discussion - which is more in lines of trying to understand “poverty” than to understand the political affiliations of the report.

Borrow the numbers, but draw your own conclusions.

Thanks for the discussion so far, it has been enlightening. :)

19 Debbie 08.02.07 at 10:40 am

I remember learning a while back that in this country, poor people generally do not go hungry. And I attributed that partly to programs like food stamps and free school lunches.

But then I transcribed some interviews for a social worker friend of mine, and someone talked about a family where the dad was out of work but wouldn’t let the mother get a job because he felt that only men should work. Their three kids were definitely hungry. They didn’t have to be, but they were because of the father’s pride mixed with his bad luck (in not finding a job right away). So, it’s complicated.

One issue I’m wondering about is how much a poor person’s income is when you add in the value of social services received. When I was a kid we had food stamps and free school lunches for a brief period. When I was in college, my lifestyle was subsidized by grants, state funding of public schools, and low-interest loans. I knew someone in subsidized housing. I’ve known people who collected unemployment (though that might have counted as income in this study). There are boxes on my utility bill I can check to contribute extra money to pay for the utilities of poor people. Habitat for Humanity lets some folks buy their houses partially with “sweat equity.” And someone above mentioned free emergency room treatment.

20 Robert 08.02.07 at 12:07 pm

In the end this kind of data really means nothing other than we have a poor (haha) definition of the word ‘poor’. It also means that politicians can use this data, which happens to describe the vast majority of people in this country, as a means to push their agendas.

It reminds me of two things. The first was my 9th grade history teacher when he told us that in college he would deliver food during the holidays for ‘needy’ families. Most of the people he delivered to were far better off than he was.

The second was an article some years ago that I saw that said the way the government defined the word ‘wealthy’ included people that made as little as 80k a year. While that isn’t a bad salary, it certainly isn’t what most consider wealthy. What was even worse was that 80k wasn’t purely from payroll income. They considered all kinds of funny income means, like saying that if you owned your home they considered your house payment as extra income. Really weird.

21 Anitra 08.02.07 at 1:37 pm

What does it mean to be poor in the United States? No preventative medicine. Little or no fresh food. Little or no time spent with mom and dad.

22 MoneyNing 08.02.07 at 2:29 pm

I really have a problem with the survey done because so many variables can highly affect things. Are all types of millionaires surveyed (people with 1 million and people with 999 million)? What about the location since that makes such a big difference also.

23 PaulD 08.03.07 at 2:57 am

One question I have about the stats is what percentage of the poor are retired, elderly individuals. It is quite possible for a retired person to have a low income, but a high net worth. For example, a retired person might show up as poor on the income stats, but actually being doing relatively well because his house is fully paid for and he therefore pays no mortgage or rent. The retired person may have a tv, one or more cars, etc. I do not doubt that the poor in America are relatively affluent compared to the world’s poor. At the same time I would like to see more of a break down before I feel I understand this data and what it means.
An additional point that is worth making is that the poor as defined by income is not a static group. A middle class family may be classified as poor one year, because the breadwinner was layed off. The next year, the same family may be solidly middle class. A grad student may be classified as poor, but will soon be makng above average income. A high school graduate may be poor starting out, but over time will move into the middle class.
The poor that are most concerning are the poor who stay that way. I would like to know how large this group is and why they are not benefiting from the U.S. economy.

24 Steve Austin 08.03.07 at 4:09 am

PaulD: There are and always will be those who are in the lower statistical ranks — that is the nature of descriptive statistics. Further, for any given quantile (in this case, the lowest *quintile*) measured over time, there will be some former members (left for another quantile), some new members (arrived from another quantile), and some incumbent members (were in the quantile on prior measurement). You point this out in your second paragraph. If the population being measured grows or shrinks, membership in each quantile grows or shrinks proportionately.

Everyone (poor and rich, domestic and foreign) benefits from the US economy, if they are participating in the world economy and making some rational economic choices. Some participants benefit more than others do due to better choices and/or better fortune (luck). The same can be said for other national economies: remove any one economy from the world, and the remaining world loses resources, producers, and consumers, and is worse off for the loss. Of course, to accept the above, one has to first believe that free enterprise is a positive sum game.

25 Duke Togo 08.03.07 at 3:51 pm

Great points made by Shari. Consumer goods are so cheap and plentiful these days just stating someone has a color tv really doesn’t indicate much. I picked up a new $5 portable tv at K-Mart when they were in bankruptcy. Face it, it’s very easy to get material goods in the USA, the quality of those goods is one factor in determining wealth. Heck, a panhandler could afford many consumer goods with the pocket change he makes, he just doesn’t have the use or the space for a color tv or laptop. With some used cars selling for $100 or less a more telling sign of wealth would be how many of those poor people with cars can afford the insurance.

My instinct is that the Heritage Foundation produces acticles such at this so that people are placated and nothing is done about poverty and lopsided wealth distribution. We can look at this another way, how many poor people are serving in Congress and the US Senate? Why doesn’t the poor population have peers at their income level elected to represent them? How about having elections completely publicaly financed? The expense would be minimal compared to the cost of say an aircraft carrier and maybe we wouldn’t have all those
negative tv ads… maybe tv political ads should be banned completely.

26 minimum wage 08.04.07 at 1:28 pm

Wow, what spin.

I have long been skeptical of that 46% homeownership claim, so I tried some digging.

Turns out that about three-fourths of “poor” homeowners own their homes free-and-clear, i.e. outright, without any mortgage to pay.

This suggests the vast majority of “poor” homeowners either acquired their homes through insider terms (e.g. inherited or bought from family membhers at preferential rates and terms) or are retirees who bought their homes decades ago at much lower prices during their higher-income working years. Put another way, few “poor” homeowners are current workers who bought their homes in arms-length transactions, i.e. at market rates.

Also, how is homeownership defined here? Is a person who owns a cheap depreciating trailer and pays lot rent a homeowner?

27 minimum wage 08.04.07 at 1:37 pm

Re: income mobility (Steve Austin):

Income mobility in the U.S. is largely age-related. Most Americans start at the bottom of the earnings curve and move up as they age - and move back down the earnings curve as they become disabled or (semi-)retired. Those who advance and get promoted move up faster, but even those who do not advance tend to get pay raises over time, esp in government jobs.

28 Reed 08.05.07 at 11:13 am

Trying to defining poor is the wrong way to think about things. What really separates people is wealth not individual pieces of property. Wealth never goes away and lasts for generations.

You could define someone as rich who makes $100,000 a year but is in debt close to a half a million due to mortgage and car payments. If anything happens, lets say a major illness like cancer, suddenly this person is as poor as poor can be. That because they never had any wealth to begin with.

Looking at it this way every person other than those who actually own wealth are only a couple of paychecks away from financial ruin. Only a select percentage of our society is actually wealthy and everyone else is more or less in the same boat. Despite what is portrayed in our society upwards mobility, particularly when relating to social class, is not something that is common.

29 PaulD 08.06.07 at 3:26 am

Reed said:
“Looking at it this way every person other than those who actually own wealth are only a couple of paychecks away from financial ruin. Only a select percentage of our society is actually wealthy and everyone else is more or less in the same boat. Despite what is portrayed in our society upwards mobility, particularly when relating to social class, is not something that is common.”
Actually, the stats that I have read indicated that most people who have high networths obtained the money through their own efforts rather than as inherited wealth. I see a great deal of upward mobility in today’s world and personally know many people who have started with very little and are now wealthy both in terms of net income and networth.
As to people being a few paychecks from financial ruin, I think to the extent that this is true, it is because of poor planning and choices people make. It is possible for a person with moderate income to accumulate wealth in today’s world if they manage their money wisely. I would not consider myself to be only a few paychecks from financial disaster. I am in the upper middle class in terms of household income

30 Minimum Wage 08.06.07 at 5:48 am

Is it possible for someone earning minimum wage with student loan debt to accumulate wealth?

31 PaulD 08.06.07 at 9:31 am

Someone earning the minimum wage should work on improving their value to employers so that he can earn more than the minimum wage. It would be hard to accumlate wealth making the minimum wage. It would not be difficult to earn more than the minimum wage if you have completed high school.

32 Minimum Wage 08.06.07 at 12:43 pm

What if you’re a boomer with a liberal arts degree and no career-related experience, and you’re fat and have bad credit (health/hospital/loss of income)?

33 PaulD 08.06.07 at 1:05 pm

Sure,why not.

34 Minimum Wage 08.06.07 at 4:34 pm

What I meant is, how useful would getting am ordinary skill (I’m sure plumbing would be useful and employable at any age) be for such a person. For example, I considered and rejected accounting (I had a year of undergraduate accounting long ago) because employers don’t hire middle-aged people for entry-level accounting positions.

35 PaulD 08.06.07 at 7:25 pm

Well, plumbers, electricians, handymen make significantly more than the minimum wage. So learning one of those skills will allow you to obtain a decent wage
But really, to make more than the minimum wage, all you need to do is to obtain a minimum wage job, learn the skills necessary to do the job and be reliable and hardworking. If you do this, you will soon obtain a raise because your employer will not want to loose you.

36 Minimum Wage 08.07.07 at 5:25 am

But really, to make more than the minimum wage, all you need to do is to obtain a minimum wage job, learn the skills necessary to do the job and be reliable and hardworking. If you do this, you will soon obtain a raise because your employer will no
———————————————

Where I work, we have about two dozen employees and almost everyone is paid minimum wage. There are a couple long-timers who are paid 20 cents above minimum. There is basically no way to get a raise here. Hard work won’t get you a raise and mediocre work won’t get you a wage cut.

Lots of cheap labor available here, we have three college graduates earning minimum wage.

37 Forex Trading Blog 08.11.07 at 10:39 am

If this is “POOR” so I can’t think how can I describe myself. Let’s take for example the people from Africa. They even do not have food. And how census.gov describes POOR us people? Having own home, car, air-conditioner, enough food for the whole year makes you POOR. WTF? I don’t have other words to say that more polite. Wake up people, if this is the criteria for POOR then more than 90% of the world’s population is POOR. Nothing more to say on this post.

38 The Happy Rock 08.13.07 at 10:42 am

Well, they are some interesting facts, and I think it does speak to the opportunities that we are afforded by living in the US.

But the question remains, who is poor? Just because someone is making a tiny bit of money and goes into debt for TV and air conditioning, doesn’t mean they aren’t poor. Confused, maybe uneducated, but still poor.

I just hope we don’t lose site of the fact they are are many people out there who are really poor. I may not know how to spot them in census data, but I can walk through the streets of Camden NJ, and spot them. Or through the hills of back woods Appalachia. Sometimes our eyes and hearts do a better job at figuring this number crunching.

20/20 did a heart wrenching piece on Camden a few months back that really got to me.

http://abcnews.go.com/2020/story?id=2819991

39 Jason Dean 08.14.07 at 10:41 pm

This is a very interesting article — I highlighted it at my blog, SmartMoneyDaily. This article reminds me of a great book that was recently released: Age of Abundance. It is about how people still haven’t gotten out of the 19th-century mindset and learned to live with abundance, in the absense of threats against basic survival that were omnipresent even through WWII. The other thing that book and this article point out is that American living standards are NOT on the decline — far from it. Some people just have a vested interest in believing the sky is falling.

40 Janette 09.15.07 at 8:36 am

I work in an interesting situation of a small city in a rural part of the country. Generational poverty is rampant here. I still hear stories of being sharecroppers. I would consider more than half of my students “poor”. They come from families who show no signs of hope. They do not dream of college and careers. Their parents send us SRS packages- trying to get them labeled as disabled- so they can get money for their children. These parents were brought up on welfare and don’t seem to have a clue as to the next step.
It is frustrating and disheartening to see bright students beaten down by their peers for being “too smart”.
The poor are definitely here- it is a mind set. You are not poor- in my mind- if you are a student going to college- for somehow you have the money to do that -AND the will.
Changing the poor comes from opportunity and helping children see that the opportunity is for them!

41 Jeff 09.16.07 at 9:52 pm

I work for a law firm that specializes in representing people with tax debt. As part of our representation, I put together a financial summary for most clients, and I get to see a lot of the inner workings of individual’s financial lives. We have clients that are below the poverty line, and clients that make hundreds of thousands of dollars a year. Here’s my take on some of the key issues raised:

Income is not an indicator of wealth; however, you can’t save more than you make (obvious, I know, but sometimes forgotten).

People that make a lot of money can more easily live beyond their means than the poor because of the way the credit industry views customers.

Owning a home is too often a meaningless stat. Unless you have built up equity (formerly a given, no longer in the days of zero down, sub-prime lending), owning just makes you feel better about yourself. Owning frequently is renting from your lender instead of landlord.

Regarding the statistic: Some 70 percent of poor households report that during the course of the past year they were able to meet “all essential expenses,” including mortgage, rent, utility bills, and important medical care.
This seems true to me, but it hides an important truth, especially regarding medical care. 70% can pay essential expenses–this year. The 30% who can’t most likely were laid off or had major medical expenses. Unfortunately, the next year, there will be 30% who have the same situation, but it’s not neccesarily the same 30%. Over a five or ten year period, a MUCH larger percentage of those under the poverty line are going to be unable to pay “essential expenses.” That’s the real heart of poverty in America: there’s no health insurance, savings, or family wealth to utilize so when things go bad (and they do for everyone eventually), they’re SCREWED. Without intervention of some sort (government, charity, or other), that 30% unable to pay “essentials” would be close to 100% within a decade (my estimation).

Always remember, if you live in America, you almost certainly live with electricity. Not so for much of the world. Even still, that doesn’t mean poor Americans have it good. Foreign and domestic poverty are on different levels, but both should be addressed (I won’t give any sort of political view there, just throwing it out there).

My two cents.

42 3rdworldian 12.17.07 at 1:38 pm

I can’t believe this! KMC, yes, maybe Americans are richer than their elders, but the world’s have-nots are more now, and they are poorer if you compare them to the “rich”. Hahah, so you call rich those who have air conditioners and own a house, shit man, have you been lately to a poor country?

43 Ames Tiedeman 01.13.08 at 10:33 am

I thought the Democrats promised to end poverty back in the 1960’s. What happend?

44 maggie 04.30.08 at 7:23 pm

Re: Home Ownership.

How many of those people who own their own homes are secure in that home ownership? How many have subprime loans or loans with adjustable rates that are going or may soon jump to a not-affordable level, or maybe there is a balloon payment due that they can’t pay?

“Owning” your house with a large mortgage balance doesn’t mean much unless you actually have the money to make the mortgage payments… this month, next month, and all the months after that.
If you are in a low-wage job, with little or no savings, and credit card debt, and a mortgage, good luck to you in keeping the house if something unexpected comes up… like large medical bills, unemployment, divorce, etc.

45 CeCE 03.30.09 at 9:15 pm

The thing is, poverty does not just mean your homeless. And a College student may not “necessarily” have the money to pay for College. I know I do not. They may get all their money in grants and loans (but those loans can accure to over 50,000 dollars) and if you do not get a decent job after graduation. People act like its so easy to move up the latter, but if your poor all your life its really hard. Plus, College does not guarantee good job. Even if you apply like 10 places a day, theres a chance they wont hire you, especially in this economy so your forced to take a minimum wage job with barley any pay raise per year. And even if the pay does get raised, minimum wage goes up. So you can work your ass off and still be poor. So yes, I think a College graduate could be poor. And you need to take in factors like mental illness such as bipolar, depression, etc and factors like disabilitys being blind, anxious, hearing impaired, wheelchair bound, etc. Also employers do discriminate and will hire if they know you will make them money. Does that include a bipolar person? I doubt it.

46 Rebecca DeGennaro 08.02.09 at 9:16 am

Let’s look at this a bit closer…
The working class “Poor” generally have lower credit scores and higher interst rates…meaning higher mortgage payments on the homes they are PURCHASING. This does not mean they own their homes free and clear. What it does mean is this…

If a low-income working class person is paying on a mortgage of $100,000 at 9% (of course this is a lease option, because their income and credit would prevent them from qualifying on such a high purchase price…even though getting a home under this price range is very difficult to find…especially if you have to purchase with a seller-held mortgage), this would make their monthly payments $802.64 per month. When a wealthier person applies for the same home, backed by a good income and a better credit score, their payments would be around $500 per month (using the most recent interest rates offered right now). So now, you have lower income and higher payments, putting them MORE at risk of losing their so-called “Home Ownership” through foreclosure and bankruptcy.

When the poor were asked how they acquired their televisions and electronics, the answer was probably more along the lines of “our parents gave it to us…” or “my friend was moving and let me have it…”. Because they own these things does not neccessarily mean they “purchased” the items and forgot about the essentials of daily living…like FOOD and shelter.

When asked about electric bills and utilities…did you ask them how many times in the last 2 years a utility was turned off because they couldn’t make the payment? Or did you ask how they got the money to have their electricity turned back on? My guess is they had to borrow the money from a family member or wait several days or even a week for their next measley paycheck, only to find out that the power compant charged them a deposit of $150 on top of their outstanding utility bill in order to have the service reinstated. Now they have to decide which of their other bills will not be paid this month.

When they were asked about their food situation, did they tell you what they have to feed their children? Things like SPAM, Hamburger Helper, instant mashed potatoes, tomato sandwiches and oatmeal are probably served regulary at their dinner tables. The Surgeon General has advised that these types of foods cause obesity, which lead to higher risks of heart disease, diabetes, and a whole list of other health problems. But when the cost of fresh fruits and vegetables and leaner cuts of meat are so high, the working class poor have no other option than to feed their families the only way they can afford to do so. This leads to more medical problems and higher healthcare costs. Because they typically are not offered medical insurance PAID FOR by their employers…they do not have medical insurance. Which leads me to my next point:

The working class poor will drive MILES to seek out a hospital which will provide care without providing proof of insurance. Do they get their medical needs for free? NO! They are billed at HIGHER rates than any INSURED person walking into that same hospital and receiving the same medical attention. They cannot pay the high rates, so the bill goes to collections, and of course, it affects their credit scores…once again penalizing the poor.

So…the working class poor make less than the average American, eat unhealthy diets, pay higher interest rates, pay higher healthcare costs, have lower credit scores, pay higher fees and deposits for essential utilities like electricity and water, and have no medical insurance. Live more frugally?? You bet they do! They have no other choice.

The whole American system is designed to keep the poor… poor, and the rich…rich. Every day we have to listen to all those people out there boo-hoo-ing about there 6 figure retirement plans going to hell and the Banking Industry CEOs whining about their profits, and the Auto Industry CEOs crying like little babies. To make matters WORSE, we are supposed to excited about the Minimum Wage jumping to a WHOPPING $7.25/hr (that’s an annual income of $15,080 if you are lucky enough to be ALLOWED to work 40 hours per week)!

Well…this is to all of those out there who think the minimum wage raise will help those folks who work in YOUR businesses, busting their butts, day in and day out. You know…the little guys who are ringing up YOUR sales, shipping YOUR products all over the world, keeping YOUR profit in the black so you can live in YOUR big homes and drive YOUR fancy cars and keep YOUR pensions and retirement plans. Oh…you don’t know us do you? We are the cashiers, the mechanics, the janitors, the pencil pushers, the salesmen, the clerks in your stores and your warehouses. You don’t know our names…you have never asked. But we are the working class poor and we would all like to say KISS OUR ASS!!!!

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