Wednesday, July 19, 2017

Official Statistics Don't Recognize Scope of US Poverty

During the Great Recession, the ranks of the poor and impoverished in America swelled. Yet, a decade after the recession began, its aftermath remains broad and extensive.

Following the Great Recession, the poverty rate increased to 15.1 percent in 2010 and registered 15.0 percent in 2011, according to a report by Stanford University.

By 2015, 13.5 percent, or 43.1 million, Americans lived in poverty. However, according to a supplemental poverty measure, the poverty rate was 14.3 percent. That was six years after the Great Recession ended.

The official poverty rate in the United States had ranged from a high of 22.4 percent when it was first estimated for 1959 to a low of 11.1 percent in 1973. The launch of major “War on Poverty” programs in 1964 has kept the poverty rate fluctuating between roughly 11 and 15 percent ever since.

What does it all mean?

Despite the “War on Poverty" and repeated economic expansions, nearly 1 in 6 Americans still lives in poverty. But the problem goes well beyond that.

On top of the 43.1 million Americans living in poverty, an additional 97.3 million (33 percent) people in the US are low‐income, defined as having incomes below twice the federal poverty line, or $47,700 for a family of four.

Taken together, this means that 48 percent of the US population is poor or low income. That’s 1 in every 2 people.

Consider that for a moment: census data shows that half the population qualifies as poor or low income.

If you’re wondering how this can be, take a look at national income data; it's quite elucidating.

According to the Social Security Administration, in 2015:

- 50 percent of wage earners made less than $30,000
- 61.5 percent of wage earners made less than $40,000
- 70.5 percent of wage earners made less than $50,000

It’s a snapshot of the economic struggles most Americans are facing. Again, half of US workers earn less than $30K annually.

What officially defines poverty? The federal government offers this definition, according to the 2017 poverty guidelines:

1 person - $12,060
2 people - $16,240
3 people - $20,420
4 people - $24,600

By this criteria, a family of four that makes $25,000 this year is not considered by the federal government to be in poverty.

I beg to differ. If we’re being honest, millions more Americans are genuinely impoverished, though they are not officially recognized as such.

This is not even a discussion about fairness. The poor always have been, and always be, among us. But, surely, we can do better. After all, the US remains one of the richest nations in the world.

These weak income levels are a primary reason that our economy has averaged a meager 2.16 percent annual growth rate over the last five years. That’s less than two-thirds of the historic average.

As I’ve said many times for many years, the majority of Americans simply do not have enough income to grow the economy at levels once considered normal or customary.

The US economy is based on demand and consumption, not manufacturing and exporting. If Americans aren’t vigorously spending, the economy grounds to a halt, as it has over the past decade.

There is nothing to suggest that incomes are going to rise significantly this year, or any time in the near future, or that the poverty rate will suddenly decline toward its 1973 low.

We can’t even get the government to be honest about how many of its citizens are truly impoverished.

The first step to correcting a problem is to admit that you have one, and the federal government can’t — or won’t — do that.