What's your Poverty I.Q.? (U.S.)

[footenote]

I was surprised how low my Poverty I.Q. is! (Defined as <$24k / yr income for a family of four in the U.S.) Link to full article below, but here are interesting data points:

- U.S. poverty is not geographically concentrated. Only 10% of those living in poverty are in the poor, urban neighborhoods we associate with poverty. Recently poverty has grown in American suburbs. (This really surprised me. I would have guessed closer to 50%.)

- 66% of those living in poverty (<$24k / yr for family of four) are white. And this proportion has been steady over several decades.

- Few families live in poverty over many years. Much more typical are periodic, relatively brief periods of poverty-level income. (Ex: one year of living below the poverty line due to job loss.) (I believed that the opposite was true.)

- U.S. poverty rate is about 2X that of European nations. (I would have guessed about the same.)

- The vast majority of those living in poverty have worked and will work again if out of work currently.

http://opinionator.blogs.nytimes.com/2013/11/02/poverty-in-america-is-mainstream/?src=me&ref=general

What's your Poverty I.Q.? Anything else in the article surprise you?

[Jamesqf]

Link is broken.  And most NYT articles are paywalled, though I did find a link to this that wasn't http://opinionator.blogs.nytimes.com/2013/11/02/poverty-in-america-is-mainstream/?_r=0 but I don't see a quiz there.

Of course the question that immediately springs to my mind is why spending a year or two out of a lifetime in "poverty" should be seen as a problem.  Certainly many of us have had the experience of being "starving students", or of starting out life on a shoestring budget.  Or indeed, of taking a year or two off to just travel (as some people have written about here).  Isn't than a normal & expected part of life?

So how do we distinguish this situational, temporary "poverty" from the institutionalized, lifelong poverty that some experience?

[footenote]

Sorry about that. Try googling the article and using Chrome Incognito to read it.

I agree that short "stints" of poverty shouldn't be a huge challenge for most Americans. (A challenge nevertheless!)

[Don Voice]

- U.S. poverty rate is about 2X that of European nations. (I would have guessed about the same.)

I haven't read the article, but the above tid bit caught my eye. I don't know how they define poverty in the article, but depending on the definition the rate in the US can be either double or half of the "official" definition. It's not an apples-to-apples comparison with European nations. When you take into account things like SNAP, SS, and the EITC, the poverty rate decreases significantly. Looking at the official US poverty rate is really only useful in and of itself when looking at trends over time. Comparing it to another nation, or to get an idea of the "true" poverty rate in the US is not what it's meant for.

[footenote]

- U.S. poverty rate is about 2X that of European nations. (I would have guessed about the same.)

I haven't read the article, but the above tid bit caught my eye. I don't know how they define poverty in the article, but depending on the definition the rate in the US can be either double or half of the "official" definition. It's not an apples-to-apples comparison with European nations. When you take into account things like SNAP, SS, and the EITC, the poverty rate decreases significantly. Looking at the official US poverty rate is really only useful in and of itself when looking at trends over time. Comparing it to another nation, or to get an idea of the "true" poverty rate in the US is not what it's meant for.

Don - The article was using less than $24,000 income per year for a family of four as the poverty level.

I agree that it's a tricky comparison. Here's the full paragraph:

"We currently expend among the fewest resources within the industrialized countries in terms of pulling families out of poverty and protecting them from falling into it. And the United States is one of the few developed nations that does not provide universal health care, affordable child care, or reasonably priced low-income housing. As a result, our poverty rate is approximately twice the European average."

[footenote]

Serpent - I completely agree it doesn't answer the deeper question of defining poverty or comparing "poverty" among countries. I was just providing everything the article author provided on the question.

Were you surprised by any of the facts I summarized?

[Don Voice]

Were you surprised by any of the facts I summarized?

My point is that the "facts" presented are under dispute. For example, the claim that we spend the smallest amount on pulling people out of poverty among industrialized nations is either terribly misleading or a flat out lie. Here's some info from the OECD:


source: http://www.oecd.org/els/soc/socialexpendituredatabasesocx.htm

As you can see, we're far from the bottom, and if you convert those numbers to per capita and PPP, I think we fare even better due to our disproportionately large GDP. It goes back to the old saying about lies, damned lies, and statistics. Except in this case I would replace statistics with "government published statistics provided with no context".

[footenote]

Thanks for that data, Don. So the U.S. is higher in public support than Mexico, Korea, Turkey, Chile, Israel, and some of eastern Europe. And the U.S. is roughly on par with Austria, Hungary, Canada and Switzerland. And we are lower in public support than the rest. Is that a correct interpretation? (Agree that GDP differential muddies the water.)

I agree that these numbers are very difficult to dispassionately analyze.

[Deano]

You can spend oodles on pulling families out of poverty, the system is set up in such a way that poverty is the inevitable result. That's true for the US and now for my country too (Canada).

That stat is, quite frankly, quite meaningless when discussing poverty.

[mpbaker22]

There's also the question of what is poverty.  I live with expenses below the poverty line (by choice), yet I make 3-4 times the poverty line in income.  I can tell you that barring major medical bills, it's not an impoverished lifestyle at all.  In fact, I drive 130 miles to work every week, I eat out ~3 times a week (I even bought an $8 beer on Saturday!).  My personally prepared meals are typically up to 25% meat and another 25% vegetables (if not more on both accounts).  I have an endless wardrobe of clothes I don't wear.  I have so much space in my apartment, I don't use 50% of it.  The list could go on and one.

So, first we have to throw government definitions out the window and define what poverty really is.

[Jamesqf]

There's also the question of what is poverty. 

And how about all those FIRE folks, who may have half a million or more in investments, but who are only taking out a poverty-level income because that's all they need to live comfortably?

[plainjane]

There's also the question of what is poverty. 

And how about all those FIRE folks, who may have half a million or more in investments, but who are only taking out a poverty-level income because that's all they need to live comfortably?

There are a couple of big differences from my perspective:
- they have a backup fund if there is a big expense that comes in (they generally choose to live below the "poverty level", but if push comes to shove, they can pay for a solution and not have it a debt at 20% interest rates)
- they have time to spend on the things that cost less (they aren't spending 60+h/week working to make that money and thus having less time and energy to do xyz)
- they don't have the stress of _needing_ to make it all work on that number (e.g. it is much easier to walk on a thin line painted on the ground than something which is the same or greater width but 50 feet up)

[Jamesqf]

There are a couple of big differences from my perspective:

Sure, and I agree.  But my point was that if you measure a "poverty" rate simply by annual income, these folks are going to be included - along with grad students that'll be pulling down $100K salaries in a year or two, people who've taken a year or two off for travel & such, and others who aren't properly part of the long-term poor.

[footenote]

There are a couple of big differences from my perspective:

Sure, and I agree.  But my point was that if you measure a "poverty" rate simply by annual income, these folks are going to be included - along with grad students that'll be pulling down $100K salaries in a year or two, people who've taken a year or two off for travel & such, and others who aren't properly part of the long-term poor.

That was one of the points of the article: that the vast majority of those living in poverty in the U.S. are not in that condition long term. And that they are very spread out geographically.

[plainjane]

There are a couple of big differences from my perspective:

Sure, and I agree.  But my point was that if you measure a "poverty" rate simply by annual income, these folks are going to be included - along with grad students that'll be pulling down $100K salaries in a year or two, people who've taken a year or two off for travel & such, and others who aren't properly part of the long-term poor.

That was one of the points of the article: that the vast majority of those living in poverty in the U.S. are not in that condition long term. And that they are very spread out geographically.

I knew someone who was trying to figure out how to measure poverty in the north, where there is more subsistence living, and income was a very bad measure of whether someone needed help or not.  It was a very difficult question to sort through.

[mpbaker22]

There's also the question of what is poverty. 

And how about all those FIRE folks, who may have half a million or more in investments, but who are only taking out a poverty-level income because that's all they need to live comfortably?

There are a couple of big differences from my perspective:
- they have a backup fund if there is a big expense that comes in (they generally choose to live below the "poverty level", but if push comes to shove, they can pay for a solution and not have it a debt at 20% interest rates)
- they have time to spend on the things that cost less (they aren't spending 60+h/week working to make that money and thus having less time and energy to do xyz)
- they don't have the stress of _needing_ to make it all work on that number (e.g. it is much easier to walk on a thin line painted on the ground than something which is the same or greater width but 50 feet up)

You are correct in some ways ... except if I were to get to $200,000 and live on my 4% withdrawal rate, I would be added to the list of those in poverty by the government.  The point is, there are plenty of ways to have income below the poverty line and not be at all impoverished.  If I made less money, I could easily cut my expenses to 66% of the poverty line, allowing me to maintain a 33% savings rate.  So most of your argument is invalid.

[plainjane]

There's also the question of what is poverty. 

And how about all those FIRE folks, who may have half a million or more in investments, but who are only taking out a poverty-level income because that's all they need to live comfortably?

There are a couple of big differences from my perspective:

You are correct in some ways ... except if I were to get to $200,000 and live on my 4% withdrawal rate, I would be added to the list of those in poverty by the government.  The point is, there are plenty of ways to have income below the poverty line and not be at all impoverished.  If I made less money, I could easily cut my expenses to 66% of the poverty line, allowing me to maintain a 33% savings rate.  So most of your argument is invalid.

Actually, I think we're all saying the same thing.  Poverty as measured strictly by household income is a bad measure, but it's an easy one for everyone to use.

Similarly, and in the opposite direction, one of my clients sells [expensive product].  When they buy advertising, they therefore go after venues which over-index on people with a higher HHI than the national average.  However, we also know that there are a surprising number of people with what looks like a low HHI who are buying them, often with cash.  How do they afford [expensive product]?  They might have big stashes, they might be independent contractors/entrepreneurs who decide they want [expensive product] and do a bit of extra work to afford it, or they might decide that they can cut $x out of their budget this year to afford [expensive product] because they really want it - just like we decide we can cut $x out of our budgets because we want FI. 

The end result is that the client and all the agencies know income isn't the best variable, but it's the one that is easiest for us all to work with, because it's the one that advertisers have measured already.