The poverty line

[Pooplips]

I was thinking about the poverty line the other day. I was trying to determine if my family could live on that level of income. I believe it is possible, but where I chose to live would be a very big factor.

Then I began to think about the poverty line itself. I don't know all the details of how they determine that number but it all seems very abitrary. Many people on this forum and especially on the ERE forum live below the poverty line and live very normal lives.

Is there a different metric we could use to determine who is in poverty? If you have two cars, a cell phone, air conditioning, cable and Internet are you living in "poverty" simply because you do not earn a certain level of income? The media will say so.

Just curious what the forum thinks.

[agent_clone]

From my point of view the poverty line is an abritrary number, essentially there will always be 'poor' people because it is a movable target and relative to other people.  It is also part of the reason that more equal societies tend to be happier... because your not as jealous of what others have.

That being said, I think there is a difference between living with expenses around the poverty line but having money if needed, and living with expenses around the poverty line, but not having the extra money, or the ability to save the extra money.

[Pooplips]

I understand you point; and agree the number is arbitrary. Is there a better way to determine who is living in poverty?

I agree with your statement "there will always be poor because it is a movable target relative to other people" just like there will always be a middle class. I hate when people say the middle class is shrinking.

[LibrarIan]

I'm often torn on subjects like these. I feel like I live well beneath what I could. I have a crappy car, a small apartment, no cable, I don't buy the latest gadgets, etc. However, we've all heard the stories of people on government assistance driving nice cars, surfing on smartphones and buying cable packages. Whether or not you think these people deserve these things is irrelevant. Why is that they get a free pass and have all these nice things while I'm being responsible and going without? I don't know the answer, but I think it deserves asking.

However, people are indeed in poverty. While one number isn't going to mean the same thing to everyone everywhere, you have to make some kind of designation. If poverty = $x to the government, that's just the way it's going to be. I do think that, based on the fact we live in a wealthier consumer-driven economy, the perception of poverty is skewed in such a way that it might be commonplace for someone who is poor (in whatever state you deem poor to be) to have a nice TV. The amount the government arrives at might just be from them projecting their own spendy lifestyles on other people who they assume want to spend similarly.

[I'm a red panda]

I think there is a lot of difference between living below the poverty line by choice and living there because you have no choice.

Many people on this forum make decisions to live sparse lives, but they have resources available to them that someone who is truly living in poverty do not.  (Think the grocery store challenges- sure easier to do if you have a stove or a microwave.)

Not to mention if you are living there by choice you also have a backup if something goes wrong. That piece of mind is priceless.

[spokey doke]

There is a fairly standard distinction between income and wealth, with the former being used to determine a 'poverty' designation and access to assistance based upon that designation.  But we all know that wealth is what makes the bigger difference, as it provides an enormous safety net and flexibility.  Throw in the social capital that comes along with most people who have wealth (even if they spend less than the poverty line), and that safety net gets bigger and stronger.  Apples and oranges.

So why don't we use these other measures?  One reason is that they are more difficult to measure.

[infogoon]

Then I began to think about the poverty line itself. I don't know all the details of how they determine that number but it all seems very abitrary.

The "poverty line" was originally set at three times the average grocery expenditure for a family, because people back then spent roughly a third of their budget on food. Since then, it's gotten adjusted for inflation every so often, but that's about it.

It's an artifact of a different time, and very, very arbitrary.

[RootofGood]

We live just above the FPL with a budget of $32,400 (assuming a paid off house).  FPL for our family of 5 is $28,410. 

Of course our $32.4k budget doesn't include work-related costs.  If I had to pay rent or a mortgage, I wouldn't want to live on a poverty level income.  We could probably do it, but it wouldn't be as fun as our life right now. 

Another important point is the subsidies that those below the poverty line receive.  Free food, free housing, free healthcare, etc.  $28k per year plus those subsidies might provide a lifestyle similar to the one we enjoy right now. 

[Retired To Win]

I think there is a lot of difference between living below the poverty line by choice and living there because you have no choice.

Many people on this forum make decisions to live sparse lives, but they have resources available to them that someone who is truly living in poverty do not.  (Think the grocery store challenges- sure easier to do if you have a stove or a microwave.)...

I can't buy this line of reasoning at all.

With annual basic living expenses of under $15,000, I'm sure I fall below the poverty line.  And in this and other forums, commenters sometimes make reference (like this one above!) to the "sparse lives" people like me must be leading.  That misconception is the reason why I started my blog article on my spending with a fairly detailed description of my lifestyle.  Anyone reading that could not possibly conclude that I live poor.

Hell, I'm pretty sure that MMM Pete and his family ALSO live below the poverty line for a family of 3.  And that doesn't say much for the government's (or other's) conceptions of what it takes to live reasonably... if you spend reasonably.

And I'll be DAMNED if I am going to consider somebody poor because they don't have cable, internet or a smartphone.  NONE of that is basic to living even in America. (Think tv antennas, wifi and library pc stations, and a good old landline).  Oh, and a microwave can be had at the thrift store for $10... which is one hell of a lot less than a fricking carton of cigarettes.

Yes, I am sure that some families are hardpressed financially.  But they at the very least helped themselves to end up there.  Just start with the issue of why a low-income couple would choose to have multiple children.

OK, that got a little ranty.  But I get ranty when people start looking for excuses outside their own behavior and decisions to explain why they are where they are and why they can't get out of where they are unless someone else pays for it.

[2lazy2retire]

I think there is a lot of difference between living below the poverty line by choice and living there because you have no choice.

Many people on this forum make decisions to live sparse lives, but they have resources available to them that someone who is truly living in poverty do not.  (Think the grocery store challenges- sure easier to do if you have a stove or a microwave.)...

I can't buy this line of reasoning at all.

With annual basic living expenses of under $15,000, I'm sure I fall below the poverty line.  And in this and other forums, commenters sometimes make reference (like this one above!) to the "sparse lives" people like me must be leading.  That misconception is the reason why I started my blog article on my spending with a fairly detailed description of my lifestyle.  Anyone reading that could not possibly conclude that I live poor.

Hell, I'm pretty sure that MMM Pete and his family ALSO live below the poverty line for a family of 3.  And that doesn't say much for the government's (or other's) conceptions of what it takes to live reasonably... if you spend reasonably.

And I'll be DAMNED if I am going to consider somebody poor because they don't have cable, internet or a smartphone.  NONE of that is basic to living even in America. (Think tv antennas, wifi and library pc stations, and a good old landline).  Oh, and a microwave can be had at the thrift store for $10... which is one hell of a lot less than a fricking carton of cigarettes.

Yes, I am sure that some families are hardpressed financially.  But they at the very least helped themselves to end up there.  Just start with the issue of why a low-income couple would choose to have multiple children.

OK, that got a little ranty.  But I get ranty when people start looking for excuses outside their own behavior and decisions to explain why they are where they are and why they can't get out of where they are unless someone else pays for it.

Yep its all their own fault. Hope none your charity giving goes to help these spongers or their ilk.

[Gimesalot]

There are a few things that these conversations about poverty tend to leave out.  First, poverty is not just about what you own or don't it's also a mindset.  For example, after we bought our house, which used to be section 8 voucher housing, we discovered that there was an "Indiana Jones - Temple of Doom" roach infestation in the downstairs apartment.  Tenants never told us because, previous landlords didn't care and had never done anything about it.  They couldn't complain or leave, they had no money.  They just accepted it.

After those people left, we found out that their house had a dangerously high level of black mold contamination, due to a leak in the bathroom.  Again, they didn't say anything, so we had no idea.  It ruined a bunch of their furniture and I am guessing it is why a bunch of the kids had breathing problems.

The reality is that most poor people make it by on a day to day basis.  It is the emergencies that really mess things up.  Remember, it is a very different life to have expenses around the poverty level with paid off housing but a lot of cash saved up for emergencies and to have the same expenses with nothing in the bank.

And in Louisiana, you have to list assets on the food stamp application.  Over $1000 and you receive no benefit.

[CommonCents]

We live just above the FPL with a budget of $32,400 (assuming a paid off house).  FPL for our family of 5 is $28,410. 

RoG, people who are in poverty don't have a paid off house, so that's not really a fair apples to apples comparison.  What is your budget without a paid off house?  (I'd also say to someone in poverty, that 15% could be a critical difference.)  Don't get me wrong - I think your living expenses are commendable and I believe it's totally possible to actually live happily at the poverty line - I just don't think your story is that comparable to someone at the poverty.

OP, I read Nickeled and Dimed and found it a fascinating read for opening my eyes to some of the issues for those in poverty.  For one, they often have hard, back breaking work that causes them to prematurely age and have health issues.  Someone who is educated with an office job, family that has it together and can help if need be (whether babysitting, loaning items or financial advice & education) is in a different position.  When our car was hit by a truck driver, we were able to borrow my mother-in-laws car until ours was fixed.  It made me realize how lucky we were overall, to be able to rely on family help when needed and that others don't have that luxury.  And in many other ways - that we aren't paying extra to live week by week because we don't have cash for a monthly rental, etc.

[KCM5]

I think there is a lot of difference between living below the poverty line by choice and living there because you have no choice.

Many people on this forum make decisions to live sparse lives, but they have resources available to them that someone who is truly living in poverty do not.  (Think the grocery store challenges- sure easier to do if you have a stove or a microwave.)...

I can't buy this line of reasoning at all.

With annual basic living expenses of under $15,000, I'm sure I fall below the poverty line.  And in this and other forums, commenters sometimes make reference (like this one above!) to the "sparse lives" people like me must be leading.  That misconception is the reason why I started my blog article on my spending with a fairly detailed description of my lifestyle.  Anyone reading that could not possibly conclude that I live poor.

Hell, I'm pretty sure that MMM Pete and his family ALSO live below the poverty line for a family of 3.  And that doesn't say much for the government's (or other's) conceptions of what it takes to live reasonably... if you spend reasonably.

And I'll be DAMNED if I am going to consider somebody poor because they don't have cable, internet or a smartphone.  NONE of that is basic to living even in America. (Think tv antennas, wifi and library pc stations, and a good old landline).  Oh, and a microwave can be had at the thrift store for $10... which is one hell of a lot less than a fricking carton of cigarettes.

Yes, I am sure that some families are hardpressed financially.  But they at the very least helped themselves to end up there.  Just start with the issue of why a low-income couple would choose to have multiple children.

OK, that got a little ranty.  But I get ranty when people start looking for excuses outside their own behavior and decisions to explain why they are where they are and why they can't get out of where they are unless someone else pays for it.

Actually, for a single person the poverty level is just under 12k. So you're living at 125% of the poverty level. Perhaps even with a paid off house? I think it helps to look outside of our own experiences and privileges when discussing poverty.  Also, the margins are so thin at those levels that a few grand can make a huge difference in life experience and financial health.

[cerebus]

I'm not exactly clear what the poverty levels are in the USA or how it equates to normal living requirements. Yes the MMM family and a lot of us live below poverty expense levels (note: NOT income), but they also own a beautiful house and a wealth of possessions and millions in the bank, and definitely not a slum with mold problems away from decent grocery stores and with basically no choices, and no buffer against the thin margin of your living expense to cover any emergencies that come up.

It's a whole different kind of experience, and it's punishing mentally and spiritually. I've somewhat been there and come out of it, not on welfare but supporting a family on truly excruciating amounts of money. And daily I see the shacks down the road from us for the people who earn R3000 a month as a maid or behind a grocery till, and I'm sorry, I'm all for lifestyle optimisation and frugality, but there's a line I'll draw and I won't put my family below it. That's the dropoff point of poverty for me.

It varies by situation, but it's easy enough to identify by the characteristics of what they can and can't afford. In this country if you need to use the public health system, that's poverty, and you endanger your life or your child. If your grocery shopping is bags of mielie pap and frozen off-cuts of indeterminate meat, that's poverty. If you take a public 'taxi' to your job (actually a minivan crowded with commuters), that's poverty. It's a mistake to dismiss the existence of poverty just because you've practised some self-control and very entitled lifestyle optimisation that most people on earth can't dream of.

[Pooplips]

Then I began to think about the poverty line itself. I don't know all the details of how they determine that number but it all seems very abitrary.

The "poverty line" was originally set at three times the average grocery expenditure for a family, because people back then spent roughly a third of their budget on food. Since then, it's gotten adjusted for inflation every so often, but that's about it.

It's an artifact of a different time, and very, very arbitrary.

Thanks for the info. That is actually really fascinating factoid.

[Pooplips]

We live just above the FPL with a budget of $32,400 (assuming a paid off house).  FPL for our family of 5 is $28,410. 

RoG, people who are in poverty don't have a paid off house, so that's not really a fair apples to apples comparison.  What is your budget without a paid off house?  (I'd also say to someone in poverty, that 15% could be a critical difference.)  Don't get me wrong - I think your living expenses are commendable and I believe it's totally possible to actually live happily at the poverty line - I just don't think your story is that comparable to someone at the poverty.

OP, I read Nickeled and Dimed and found it a fascinating read for opening my eyes to some of the issues for those in poverty.  For one, they often have hard, back breaking work that causes them to prematurely age and have health issues.  Someone who is educated with an office job, family that has it together and can help if need be (whether babysitting, loaning items or financial advice & education) is in a different position.  When our car was hit by a truck driver, we were able to borrow my mother-in-laws car until ours was fixed.  It made me realize how lucky we were overall, to be able to rely on family help when needed and that others don't have that luxury.  And in many other ways - that we aren't paying extra to live week by week because we don't have cash for a monthly rental, etc.

Thanks for the information. I will definantly look for that book; sounds interesting.

[Pooplips]

It varies by situation, but it's easy enough to identify by the characteristics of what they can and can't afford. In this country if you need to use the public health system, that's poverty, and you endanger your life or your child. If your grocery shopping is bags of mielie pap and frozen off-cuts of indeterminate meat, that's poverty. If you take a public 'taxi' to your job (actually a minivan crowded with commuters), that's poverty. It's a mistake to dismiss the existence of poverty just because you've practised some self-control and very entitled lifestyle optimisation that most people on earth can't dream of.

I agree that you can identify real poverty, and I also understand that each person will have their own view of what poverty is. I am curious if there is point where you can determine "Yes, you are in poverty, you need help" or "You just need a face punch. Get your crap together." My assumtion in that there is no way to delineate that.

But, theoretically, if it could be determined do you think it would change public opinion on government assistance?

[sheepstache]

The thing that jerks me back and forth is that politician's observation that some particular population of poor people wasn't really poor because they had refrigerators and so forth.

My mostly-liberal facebook feed duly spewed forth outrage. I agreed, because poverty is relative and it doesn't matter how many mod cons you have if you have no access to sufficient education for your children, no transportation to doctors who aren't quacks, zero social capital or life experience that would help you move to a different area, etc.

But on the other hand, from a stoic position, refrigerators and clean running water and living at a peaceful moment in history are all fucking great!

I should take a moment to clarify that while I consider "shit happens" to be a great mental model for myself, it's not in line with my stoicism to apply it to other people, so this is just me wrestling with the problem, not judging the poor.

Another way of looking at it is new immigrants who come in and live in poverty conditions but make their way up vs. inter-generational poverty. It seems obvious that long-term poverty has to do with what's in your head.  At least so long as we keep attacking issues like prejudice and disability, and offering monetary support from the state for those without family or church sources.

But most people, on both sides of political spectrum, aren't totally comfortable with the government having anything to do with what's in people's heads.

[cerebus]

I agree that you can identify real poverty, and I also understand that each person will have their own view of what poverty is. I am curious if there is point where you can determine "Yes, you are in poverty, you need help" or "You just need a face punch. Get your crap together." My assumtion in that there is no way to delineate that.

I think it's a bit dangerous to try to delineate it too much, and the government already places far too much of a stigma and too many obstacles to getting social aid as it is. If someone asks for food stamps, and then earn below a certain amount, I think well give it to them, why the hell not? It's food, and you can afford it, and if you can't afford it, raise taxes so people don't starve. I tend to be more socialistic leaning than most Americans though anyway. There seems to be a strong correlation between the greater (and better managed, more liberal) social welfare through taxation and the resulting increased quality of life in a lot of European countries.

But, theoretically, if it could be determined do you think it would change public opinion on government assistance?

I guess some clarification on the definitions would only be a good thing.

[RootofGood]

RoG, people who are in poverty don't have a paid off house, so that's not really a fair apples to apples comparison.  What is your budget without a paid off house?  (I'd also say to someone in poverty, that 15% could be a critical difference.)  Don't get me wrong - I think your living expenses are commendable and I believe it's totally possible to actually live happily at the poverty line - I just don't think your story is that comparable to someone at the poverty.

That's why I provided the caveat that I'm spending near-poverty level but with a paid off house.  A mortgage would add $7k per year to our spending (so $40k).  Though if I only made a poverty level income, I wouldn't be living in a 4 BR 1800 sf house.  I'd go buy a $50k 3 BR half-duplex or $80k 3 BR townhome 2 blocks down the road. 

Although it's really hard to compare apples to apples because I'm paying for just about everything except health insurance (which will be heavily subsidized once the wifey quits working too). 

[NICE!]

Developed world poverty looks nothing like developing world poverty. They're in different galaxies.

That said, I don't think we should be cool with the anti-poor people rhetoric I often here (including in this thread). Is it better for people to focus on what they can do to lift themselves up? Yes, absolutely. But that doesn't mean we shouldn't ignore that opportunity isn't always equal and that there's often a vicious cycle keeping people in bad situations.

I've actually found that the people who've pulled themselves up by their own bootstraps to be the worst about judging other poor people. Just because you made it out doesn't mean everyone else can. Maybe you got a little bit lucky? Maybe others had worse situations than you? Maybe you were born with more will and determination?

End tangent - yes, the US poverty line is arbitrary and people accept it without questioning. News reports are based explicitly upon it, despite the fact that journalists are supposed to be skeptical of official data. The same goes for inflation, growth, unemployment, and other rates.

As others have noted, a better metric for poverty would be hard to create. It would definitely include shelter, food, health, and social capital. The first two are easier to measure, the third isn't overly difficult, but the last is impossible and extremely important.

[iknowiyam]

I understand you point; and agree the number is arbitrary. Is there a better way to determine who is living in poverty?

I agree with your statement "there will always be poor because it is a movable target relative to other people" just like there will always be a middle class. I hate when people say the middle class is shrinking.

This is a good and interesting question. I generally think of food insecurity (see link) when I think of household poverty, regardless of the reasons for the lack of food. Does the person run out of food at times when they have absolutely no money available? Do they skip meals to stretch their food supply? Do the children "take turns" eating breakfast on different days? Do they eat unsafe or socially unacceptable food (like from dumpsters)?

http://www.ers.usda.gov/topics/food-nutrition-assistance/food-security-in-the-us/definitions-of-food-security.aspx

It is hard to judge people based on the presence or absence of material goods. These items may have been obtained through gifts, contests, inheritance (iphone hand-me down), theft, counterfeit (fake designer handbags), thrift stores (I have new silk Gucci slacks from Goodwill), or a life that has only recently taken a dramatic turn for the worse.

[Bob W]

Poverty line is pretty arbitrary.   In many cases it is a tool used to determine who qualifies for Government benefits. 

There are percentages of poverty 120%,  140% etc.   These numbers are used to determine certain Government program benefits.   

For example,  a $40K income qualifies for the free and reduced lunch program.   That is why something like 80% of the kids in my state are qualified.  (it is really a joke since the school already charges $15,000 per year per student.  One would think they could provide a hot $2 lunch at that rate?)(schools like to get that free and reduced lunch statistic up as high as they can because it qualifies the schools for additional grants and funding)

At certain poverty levels in rural areas one qualifies for the USDA rural development program which provides 1% 33 year loans at 105% of property value.   So in our area one can buy a 60K house for $300 a month including taxes and insurance.   A 60K house around here can be pretty nice.   


I happen to work in a field where most all my clients are well below the poverty level. 

Here is one example Judy---

Judy has an $850 monthly SSI income

Her expenses are as follows:

Rent $140  (nice two bedroom subsidized low income apartment with a yard)
Cable $120
Utilities $90
Phone $50
Food $150  ( she receives $90 in food stamps which is more than enough but she spends a lot extra and weighs a lot)
Medical $0   (Medicaid)
Misc/Discretionary -  $300

As you can see,  she has a whole lot of "fun" money.  So much so that we have to work to keep her checking below $1,000 to keep her qualified for Medicaid.  If she wasn't  spending money on cable, cell phone and fat food she would have $600 per month in discretionary money.  Her transportation is provided free to her.

I'll let you decide if she is poor or not --- but I will tell you she has no worries and is guaranteed this level of income for the rest of her life.  She is well below the stated poverty level but her lifestyle would be the envy of the rest of the world.

I'm sure it is different for many folks who are poor.   

Here is another example of Joe --

Joe has SSI income of $850 and Sheltered Workshop income of $250 per month. (he works 40 hours per week) So his after tax monthly income is $1,100.  He has two roommates and lives in a very nice double wide on several acres with and awesome covered deck. 

His expenses are as follows:

Rent/ute - $200
Phone/Cable -  $50
Medical - 0
Food above his food stamps -  $150
Clothes - 50

Discretionary =$650   We have to work hard to keep him below $1,000 in the bank.

He takes several nice vacations per year and spend lots of money on eating out and entertainment.   His lifestyle is low stress and abundant.

Is he poor?  You decide.  The government certainly qualifies him as poor.

As I say,  I'm sure it is vastly different for many people who are qualified as poor but many, in my experience,  many have similar situations as those mentioned above.

Neither of these folks smokes or drinks or is involved in drugs.


Being poor around here based on income and does not take into account -

Food stamps,  free lunches and breakfasts,  free medical care,  subsidized rent,  free cell phones,  free transportation,  Meals on Wheels,  free or subsidized childcare,  discounted entertainment,  food pantry,  etc...

There is a whole industry employing millions of people to support the "poor."   Many of these "poor" industry workers are paid by the government and have great retirement and benefit plans.    Without the "poor" they would be out of a job.   Without the "poor" Wal-Mart would be out of business.   


The poor are in fact a very important and vibrant part of our economy.   They keep the dollars moving around and keep those dollars flowing to China.     

[Roland of Gilead]

If you have $2 million in the bank but decide to test yourself on a three month hike of the Pacific Crest trail, spending about $500 a month, are you living in poverty?   

[bacchi]

That's why I provided the caveat that I'm spending near-poverty level but with a paid off house.  A mortgage would add $7k per year to our spending (so $40k).  Though if I only made a poverty level income, I wouldn't be living in a 4 BR 1800 sf house.  I'd go buy a $50k 3 BR half-duplex or $80k 3 BR townhome 2 blocks down the road. 

Do poverty level income people usually qualify for mortgages?

[NICE!]

As you can see,  she has a whole lot of "fun" money.  So much so that we have to work to keep her checking below $1,000 to keep her qualified for Medicaid.  If she wasn't  spending money on cable, cell phone and fat food she would have $600 per month in discretionary money.  Her transportation is provided free to her.

Bob, why aren't you and your organizations trying to push their accounts higher than $1,000 so that they can build savings? What nets will they lose? Is there no room for reducing it as their savings grows instead of just cutting it off?

[Zikoris]

The poverty line in my province is around 22K for a couple. We spend around 18K per year on what we consider a ridiculously lavish lifestyle (downtown Vancouver living, lots of shows and activities, etc). So here at least it's totally bogus.

[johnhenry]

It varies by situation, but it's easy enough to identify by the characteristics of what they can and can't afford. In this country if you need to use the public health system, that's poverty, and you endanger your life or your child. If your grocery shopping is bags of mielie pap and frozen off-cuts of indeterminate meat, that's poverty. If you take a public 'taxi' to your job (actually a minivan crowded with commuters), that's poverty. It's a mistake to dismiss the existence of poverty just because you've practised some self-control and very entitled lifestyle optimisation that most people on earth can't dream of.

I agree that you can identify real poverty, and I also understand that each person will have their own view of what poverty is. I am curious if there is point where you can determine "Yes, you are in poverty, you need help" or "You just need a face punch. Get your crap together." My assumtion in that there is no way to delineate that.

But, theoretically, if it could be determined do you think it would change public opinion on government assistance?

It really is sad that we are unable to see the forest because of the trees!!  I can tell by your line of questioning that you want the world to be fair.  That's commendable, I guess.

Wouldn't we all sleep better at night if some appointed person could line up everyone from the poorest neighborhoods and accurately, fairly give them the treatment they deserve??  A "government handout" to those who need it and a face punch to the rest.... as you prescribe.

Take a minute to look at Christy Walton's net worth.  About $16B when her husband died in 2005.  About $40B today. 

I don't have anything against rich people and I don't have anything against poor people.  But if it is fair to put those below the poverty line under the microscope to examine the relationship between their income (or more appropriately their wealth) and what they have contributed to society, is it not fair to "judge" the rich (everyone else) by those same standards.

Yes, the poor in our first-world societies live in more absolute comfort than the poor in centuries past.  They have TV, cell phones, cars when those things didn't even exist for rich centuries ago.  But instead of traveling from coast to coast aboard luxurious train cars, the uber wealthy today traverse the globe on mega yachts with helicopters.  So what is the question again??  And why are we directing it only at the poor and not everyone??

I just don't understand the logic (or emotion) that causes rational people to fixate on whether or not a 42 inch flat screen TV is too big for a family on food stamps, but don't see an unfairness in Christy Walton being ranked as the highest female philanthropist because over a 5 year period (2002-2006) she contributed 3.5M of a fortune that was about $16B at the time.

Again, I'm not picking on Christy Walton.  I've never met her.  I'm sure she's a nice lady.  But ask yourself this question, completely honestly.  Whose lifestyle is more DEPENDENT on the existence of our government?? Christy Walton's? Or the person who receives the largest combination of food stamps, welfare, etc... the most egregious welfare queen you can imagine???  If you snapped your fingers and our government ceased to exist, which person would have their standard of living altered the most??  Yes the welfare checks would stop coming, but those are denominated in dollars and dollars themselves would be worthless.  Sure, Ms. Walton would be wealthy because of the real property she used to "own" but can no longer own because there is no government to even record and enforce private property "ownership". But how long would Wal-Mart stores and warehouses full of food and TVs keep those things on their shelves before the masses basically "redistributed" it all among themselves??   

[Pooplips]

Thanks Bob W. I appreciate your insite.

[Pooplips]

It really is sad that we are unable to see the forest because of the trees!!  I can tell by your line of questioning that you want the world to be fair.  That's commendable, I guess.

I absolutley do not want nor expect the world to be fair. I am sorry if my questions are coming off that way. I just wanted toget the opinions of the forum on some hypothetical questions and hear some others thoughts with an open mind.

After discovering in these posts that the poverty line is arbitrary and means nothing; my curiosity turned too, is there a better way to measure poverty?

It is an interesting thought you bring up to try the same style of comparison to a "rich" person.

[justajane]

I always appreciate Bob's insider insight's on this topic. I also live in Missouri, and approximately 50% of my school district qualifies for free or reduced lunch, but the threshold for that is pretty high.

My sister is a single mom with no income who the government probably considers poor, since she gets Medicaid and food stamps. But she definitely has amenities that my family doesn't - cable, smartphones (for her, her 12 and 15 year old kids), a bigger house than we have, etc. I don't begrudge her those things, since I would much rather have a financial cushion than basically artificially keep my savings low so that I can continue to receive benefits. She has intentionally not cashed checks to be able to stay on food stamps.

Because of my personal experiences, I find myself stuck between the stereotypical liberals that defend the choices of the poor and the stereotypical conservatives that rant about entitlements. I can see both sides, although I tend to relate more to the former. What I mostly dislike is the lack of nuance and the polarization. For instance, if I dare to say that I don't think soda and junk food should qualify for SNAP that I hate the poor and think they should starve to death. I think some of these programs should be reformed precisely because I do believe in a social safety net and want it to help as many people as possible.

[Pooplips]

I always appreciate Bob's insider insight's on this topic. I also live in Missouri, and approximately 50% of my school district qualifies for free or reduced lunch, but the threshold for that is pretty high.

My sister is a single mom with no income who the government probably considers poor, since she gets Medicaid and food stamps. But she definitely has amenities that my family doesn't - cable, smartphones (for her, her 12 and 15 year old kids), a bigger house than we have, etc. I don't begrudge her those things, since I would much rather have a financial cushion than basically artificially keep my savings low so that I can continue to receive benefits. She has intentionally not cashed checks to be able to stay on food stamps.

Because of my personal experiences, I find myself stuck between the stereotypical liberals that defend the choices of the poor and the stereotypical conservatives that rant about entitlements. I can see both sides, although I tend to relate more to the former. What I mostly dislike is the lack of nuance and the polarization. For instance, if I dare to say that I don't think soda and junk food should qualify for SNAP that I hate the poor and think they should starve to death. I think some of these programs should be reformed precisely because I do believe in a social safety net and want it to help as many people as possible.

Well said.

[mm1970]

I always appreciate Bob's insider insight's on this topic. I also live in Missouri, and approximately 50% of my school district qualifies for free or reduced lunch, but the threshold for that is pretty high.

My sister is a single mom with no income who the government probably considers poor, since she gets Medicaid and food stamps. But she definitely has amenities that my family doesn't - cable, smartphones (for her, her 12 and 15 year old kids), a bigger house than we have, etc. I don't begrudge her those things, since I would much rather have a financial cushion than basically artificially keep my savings low so that I can continue to receive benefits. She has intentionally not cashed checks to be able to stay on food stamps.

Because of my personal experiences, I find myself stuck between the stereotypical liberals that defend the choices of the poor and the stereotypical conservatives that rant about entitlements. I can see both sides, although I tend to relate more to the former. What I mostly dislike is the lack of nuance and the polarization. For instance, if I dare to say that I don't think soda and junk food should qualify for SNAP that I hate the poor and think they should starve to death. I think some of these programs should be reformed precisely because I do believe in a social safety net and want it to help as many people as possible.

This was a good post.

I think what I see here with entitlements (I'm in CA), is that there are often "cliffs".  If you work and earn too much, you lose Sect 8, food stamps, medicaid, child care, etc.

I've seen women posting on a local board, looking for child care information.  Here you have a 30 year old single mother of 3 who decides to go back to school.  When she runs the numbers, she realizes that she cannot afford community college, child care, and books.  So she decides to try night school.  I'm not sure what the answer to that is.  She does have a good attitude about it "listen to me kids, stay in school!  I should go to all the high schools and show people what happens when you drop out!"  Sure she gets lots of aid, but around here it's not enough to live terribly comfortably.  The wait list for housing is 8 years long.

[handsnhearts]

This is why some European countries now have a minimum payout to all citizens.  It takes away the whole judgement aspect.  If you want to be an artist, go for it.  If you want to be a druggie-bum, go for it.  If you want to earn tons of money and be wealthy, go for it.  But you will always have enough for a basic shelter, health insurance, food, and education.  Now there are other problems with this kind of a system, but I think it helps take the judgement away and break the cycles of intergenerational poverty.

[Bob W]

As you can see,  she has a whole lot of "fun" money.  So much so that we have to work to keep her checking below $1,000 to keep her qualified for Medicaid.  If she wasn't  spending money on cable, cell phone and fat food she would have $600 per month in discretionary money.  Her transportation is provided free to her.

Bob, why aren't you and your organizations trying to push their accounts higher than $1,000 so that they can build savings? What nets will they lose? Is there no room for reducing it as their savings grows instead of just cutting it off?

We don't make the rules.  Probably if we did we would just take half of all investment accounts that people saved and redistribute them to the poor.   

But seriously,  if one has more than $999 then one loses Medicaid.   Now Medicaid pays for 100% of medication,  hospitalization, treatments,  doctor's visits at zero out of pocket.

Medicaid also pays for support staff and a house keeper. 

There are cut outs for those that wish to save for buying a house.  But why would anyone want to buy a house when your rent is $150 and you do zero maintenance or repairs?   

So you don't want to mess with your Medicaid. 

[mathlete]

However, we've all heard the stories of people on government assistance driving nice cars, surfing on smartphones and buying cable packages.

I think those stories are mostly bullshit. They tend to come from someone's grandma in the form of emails with subject lines that begin "RE:RE:RE:RER:FW:FW:FW:FW:RE:FW:RE".

That's not to say that I haven't known the occasional welfare recipient who has a data plan and a Netflix subscription, but life on welfare sucks. If they need that to distract from their troubles, I'm not going to fuss about it. Especially when I'm living on a six figure income.

[mathlete]

This is why some European countries now have a minimum payout to all citizens.  It takes away the whole judgement aspect.  If you want to be an artist, go for it.  If you want to be a druggie-bum, go for it.  If you want to earn tons of money and be wealthy, go for it.  But you will always have enough for a basic shelter, health insurance, food, and education.  Now there are other problems with this kind of a system, but I think it helps take the judgement away and break the cycles of intergenerational poverty.

Universal basic income has always fascinated me. I don't know that it would work in a country of 330 million people that practically every disadvantaged person on earth would try to move to if they could though.

Anyway, I think it is ultimately a good idea, and something we'll probably have to do as we move towards abundance.

[NICE!]

This is why some European countries now have a minimum payout to all citizens.  It takes away the whole judgement aspect.  If you want to be an artist, go for it.  If you want to be a druggie-bum, go for it.  If you want to earn tons of money and be wealthy, go for it.  But you will always have enough for a basic shelter, health insurance, food, and education.  Now there are other problems with this kind of a system, but I think it helps take the judgement away and break the cycles of intergenerational poverty.

Word but even Paul Krugman says (in his textbook) that these policies lead to much higher structural unemployment and economic inefficiency. I guess it is up to you to determine if that is better or worse, but Krugman is definitely no conservative.

[CommonCents]

As you can see,  she has a whole lot of "fun" money.  So much so that we have to work to keep her checking below $1,000 to keep her qualified for Medicaid.  If she wasn't  spending money on cable, cell phone and fat food she would have $600 per month in discretionary money.  Her transportation is provided free to her.

Bob, why aren't you and your organizations trying to push their accounts higher than $1,000 so that they can build savings? What nets will they lose? Is there no room for reducing it as their savings grows instead of just cutting it off?

We don't make the rules.  Probably if we did we would just take half of all investment accounts that people saved and redistribute them to the poor.   

But seriously,  if one has more than $999 then one loses Medicaid.   Now Medicaid pays for 100% of medication,  hospitalization, treatments,  doctor's visits at zero out of pocket.

Medicaid also pays for support staff and a house keeper. 

There are cut outs for those that wish to save for buying a house.  But why would anyone want to buy a house when your rent is $150 and you do zero maintenance or repairs?   

So you don't want to mess with your Medicaid.

Ahh...you do know that Medicaid eligibility varies by state, right?  (The right of states to take up the Medicaid expansion was pretty hotly debated...)  And that some states have graduated benefits/premiums, and others do not?  I'm in a pretty generous state myself, and there are many programs requiring copays.  (Also consider - if you make it cost money for the person with diabetes and intellectual disabilities to get assistance in learning how to manage the diabetes, well, when they inevitably fail, and end up with amputated limbs, I'd like to point out that's considerably more costly for the taxpayer than the preventive or maintenance measures.)

Support staff and housekeeper is pretty biased description.  In my state, we will pay for someone to help with "Activities of Daily Living" (ADLs) like getting dressed, eating or ambulating, if medical necessary.  This might be for someone in a wheelchair - or someone with intellectually disabilities who literally can't do it themselves. 

[RootofGood]

Do poverty level income people usually qualify for mortgages?

Assuming they meet the income and asset guidelines and have reasonably good credit, yes.  FHA, VA, etc loans are also a lot easier to get (and require less down) than conventional conforming mortgages from private banks. 

I put in a poverty level income for my family of 5 and an online mortgage calculator says I could qualify for $120k loan (with 3.5% down using FHA).  That's what the 3 BR house across the street just sold for, and way more than the 2-3 BR townhomes, duplexes and condos go for around here. 

My poverty level SIL just bought a house for $100k using one of these low income first time homebuyer's loans.  4 BR house in a so so area.  Obviously it can happen.  I imagine getting the few thousand dollar down payment is a huge issue (I let my SIL borrow it) and having crap credit is a huge problem.  Her house has worked out phenomenally well for her and she's actually building equity and able to have stability of residence for her 4 kids. 

She also has a smartphone, directtv (satellite I guess??), internet, and gets a lot of food stamps.  She's probably a pretty average member of the working poor.  Reasonably good pink collar job that just doesn't pay much (data entry for a corporation), but has benefits and free HI for her (kids are CHIP/medicaid).  She gets a massive EITC every year and that's when she catches up on bills, lives large (weekend at the beach), etc.  She can't afford a $1000 car repair bill in September though (tax refund = February, gone by July).  Not passing judgment, just being an honest correspondent. 

But yes, even poor people can get swanky fat six figure mortgages.  This is America.

[Bob W]

This is why some European countries now have a minimum payout to all citizens.  It takes away the whole judgement aspect.  If you want to be an artist, go for it.  If you want to be a druggie-bum, go for it.  If you want to earn tons of money and be wealthy, go for it.  But you will always have enough for a basic shelter, health insurance, food, and education.  Now there are other problems with this kind of a system, but I think it helps take the judgement away and break the cycles of intergenerational poverty.

I like the basic premise of the minimum pay for all citizens.  As it is now in the USA the way we support our citizens is assbackwards  and creates a lot of incentives,  disincentives and unintended consequences.

Take Salt Lake City for instance -- They were spending about 17,000 per year in programs,  band aides and community support workers to address their homelessness situation.   Someone has the bright idea to just give the homeless a home.   That only costs 7,000 per year. 

And guess what,  people with a home are more likely to get a job and less likely to be criminals or drug addicts.   

Some problems are just a little to obvious --- Such as the problems created by the never ending food stamp programs.   So a long time ago we didn't want people to starve so we started commodity programs,  basically free government cheese.  That morphed into food stamps for the elederly and poor.  That morphed into SNAP, that morphed into a nation of overweight and malnourished poor people.   

Now the solution is to give a very limited amount of food to those who truly need it and keep it simple,  like chicken, veggies and potatos.   

But that might infringe on people's rights to have choices, so the SNAP (food stamp) program will pay for lobster, caviar and imported French cheese if that is what you like.

But back to the original question ----

http://www.census.gov/hhes/www/poverty/about/overview/measure.html

Its complicated.

[Bob W]

As you can see,  she has a whole lot of "fun" money.  So much so that we have to work to keep her checking below $1,000 to keep her qualified for Medicaid.  If she wasn't  spending money on cable, cell phone and fat food she would have $600 per month in discretionary money.  Her transportation is provided free to her.

Bob, why aren't you and your organizations trying to push their accounts higher than $1,000 so that they can build savings? What nets will they lose? Is there no room for reducing it as their savings grows instead of just cutting it off?

We don't make the rules.  Probably if we did we would just take half of all investment accounts that people saved and redistribute them to the poor.   

But seriously,  if one has more than $999 then one loses Medicaid.   Now Medicaid pays for 100% of medication,  hospitalization, treatments,  doctor's visits at zero out of pocket.

Medicaid also pays for support staff and a house keeper. 

There are cut outs for those that wish to save for buying a house.  But why would anyone want to buy a house when your rent is $150 and you do zero maintenance or repairs?   

So you don't want to mess with your Medicaid.

Ahh...you do know that Medicaid eligibility varies by state, right?  (The right of states to take up the Medicaid expansion was pretty hotly debated...)  And that some states have graduated benefits/premiums, and others do not?  I'm in a pretty generous state myself, and there are many programs requiring copays.  (Also consider - if you make it cost money for the person with diabetes and intellectual disabilities to get assistance in learning how to manage the diabetes, well, when they inevitably fail, and end up with amputated limbs, I'd like to point out that's considerably more costly for the taxpayer than the preventive or maintenance measures.)

Support staff and housekeeper is pretty biased description.  In my state, we will pay for someone to help with "Activities of Daily Living" (ADLs) like getting dressed, eating or ambulating, if medical necessary.  This might be for someone in a wheelchair - or someone with intellectually disabilities who literally can't do it themselves.

Yes, I do know that Medicaid varies by state.   I also have several clients that I personally sign up for our Division of Aging services.   They don't call it house keeping but that is what it is.   The folks I sign up are capable of cleaning their own houses they just choose not to and eventually their homes become vermin infested so it is just easier to send someone in to keep it clean for them.

[johnhenry]

This is why some European countries now have a minimum payout to all citizens.  It takes away the whole judgement aspect.  If you want to be an artist, go for it.  If you want to be a druggie-bum, go for it.  If you want to earn tons of money and be wealthy, go for it.  But you will always have enough for a basic shelter, health insurance, food, and education.  Now there are other problems with this kind of a system, but I think it helps take the judgement away and break the cycles of intergenerational poverty.

Universal basic income has always fascinated me. I don't know that it would work in a country of 330 million people that practically every disadvantaged person on earth would try to move to if they could though.

Anyway, I think it is ultimately a good idea, and something we'll probably have to do as we move towards abundance.

It is a good idea.  But we will move towards it because it is a more FAIR system.  It doesn't have anything to do with "abundance".   We make our own money and levy taxes denominated in that money.  We have everything we need to pay everyone enough of those tax credits to supply themselves with a basic standard of living.

But even a universal basic income won't help as long as the system is structured to ensure that wealth continues to accumulate more unequally.  People want to be in control of their own economic destinies on a level playing field with their fellow citizens.  It's a legitimate social goal to want to provide that basic standard of living for all citizens.  But even that is the equivalent of tossing bread to the peasants.  It doesn't matter how egalitarian the "laws on the books" are.  If wealth continues to concentrate it will be inevitable that more poor citizens are motivated to just live off what the government decides to give them.  Political equality is meaningless in the face of economic inequality.

For a universal basic income to "make sense" you have to understand it as a government attempting to provide fairness, not a government actually trying to provide food, shelter, etc.  Think about it like a rich person.  As long as you are pretty much guaranteed to own an increasing piece of the overall pie because of things like low inheritance taxes, lower capital gains taxes, a ceiling on payroll tax income, etc..... you can't be unseated.  Wealth is relative.  If government programs change to suddenly supply each poor family with $40K per year instead of $25K per year... that's just an opportunity for those of us with wealth to charge (EVEN!) more for college tuition, groceries, rent, etc.  A universal basic income is only PART of the solution.

[gimp]

Definitely not where I live. However, I could almost definitely live well on half the poverty line in certain areas (read: butt-fuck egypt).

[forummm]

With annual basic living expenses of under $15,000, I'm sure I fall below the poverty line. 
....

Hell, I'm pretty sure that MMM Pete and his family ALSO live below the poverty line for a family of 3. 

Unless you have someone else in your household included in that $15k, neither you nor MMM are living below the poverty line. http://aspe.hhs.gov/poverty/15poverty.cfm

But you need to make sure housing expense is included in your costs to see what a typical person living below the poverty line would live like. For MMM it sounds like rent on his house would be doubling his budget.

And keep in mind that people under the poverty line doesn't mean everyone is 99%. There are many who are at 15%, 23%, etc. That's very little income.

[Blonde Lawyer]

Bob,

It sounds like your clients might be physically able to clean their places but not mentally able.  Being willing to live with vermin is indicative of mental deficiency in my book.  Thanks for your insight on this interesting topic.

[iknowiyam]

However, we've all heard the stories of people on government assistance driving nice cars, surfing on smartphones and buying cable packages.

I think those stories are mostly bullshit. They tend to come from someone's grandma in the form of emails with subject lines that begin "RE:RE:RE:RER:FW:FW:FW:FW:RE:FW:RE".

That's not to say that I haven't known the occasional welfare recipient who has a data plan and a Netflix subscription, but life on welfare sucks. If they need that to distract from their troubles, I'm not going to fuss about it. Especially when I'm living on a six figure income.

RE:RE:FWD: This made me lol

As an illustration, my old neighbor used to get SNAP/food stamps. She also had an iphone with data plan. However, by herself she sewed most of her 3 children's clothes AND ran an Etsy craft shop while watching her kids to help cover household expenses not met by husband's job and SNAP. She did a lot of work, and FWIW her smart phone helped. Her kids were all below school age.

I wish she did not have that phone... but still IMO it is "tiny detail exaggeration" to say it defined her life at that time.

[NICE!]

I really recommend people use Milton Friedman's term "negative income tax." You'll lose even open-minded people by talking about guaranteed income provided by the government. I consider myself pretty willing to consider ideas, am not a rapid capitalist, and I know the two ideas are very similar...yet I have a reflexive distaste for "guaranteed income."

Take that for what it is worth (probably not much).

[Janie]

Scarcity by Sendhil Mullainathan and Eldar Shafir is really worthwhile reading on some of the factors that help keep people stuck in poverty.

[minority_finance_mo]

And in Louisiana, you have to list assets on the food stamp application.  Over $1000 and you receive no benefit.

$1000 - are you sure?? If that's the case, that's absolutely insane - that kind of program has got to be doing more harm than good by encouraging families not to have more than $1000 saved....