Poverty on the Rise?

Let us talk about poverty for a moment.
Poverty in America has been in the news quite a bit lately, but most people do not even know how to define it.
Here is a little history: Back in the 60’s, LBJ decided to declare war on poverty and the government scrambled to find a way to measure it. Mollie Orshansky, working in the Social Security Administration came up with a methodology, that is still in use today.

“Orshansky developed her poverty thresholds by taking the cost of a minimum adequate diet for families of different sizes and multiplying the cost by three to allow for other expenses. (The minimum diet she used was the Economy Food Plan, the cheapest of four food plans issued by the U.S. Department of Agriculture. The factor of three was derived from a 1955 Agriculture Department survey.) Poor families were those whose yearly income was below the threshold for a family of a given size. She intended that the method be used for research, not to determine eligibility for antipoverty programs.”- Institute for Research on Poverty

Notice “minimum adequate diet”, this is a diet that the average person can get by for short term emergencies.
So, you definitely will not be high on the hog, and will probably lose a lot of weight, as you will not be getting your recommended daily allowances of all of your vitamins.
The other interesting factor is the multiple of 3. The poverty level operates under the assumption that you should spend 1/3rd of your income on food, 1/3rd on housing and the other 1/3rd on everything else (including taxes).

So let us look at the 2010 US Census numbers for poverty thresholds:
Poverty Thresholds for 2010 by Size of Family and Number of Related Children Under 18 Years


Size of family unit Weighted Eight
average None One Two Three Four Five Six Seven or more
thresholds

One person (unrelated individual)....... 11,139
Under 65 years.............................. 11,344 11,344
65 years and over........................... 10,458 10,458

Two people...................................... 14,218
Householder under 65 years........... 14,676 14,602 15,030
Householder 65 years and over........ 13,194 13,180 14,973

Three people.................................... 17,374 17,057 17,552 17,568
Four people..................................... 22,314 22,491 22,859 22,113 22,190
Five people...................................... 26,439 27,123 27,518 26,675 26,023 25,625
Six people........................................ 29,897 31,197 31,320 30,675 30,056 29,137 28,591
Seven people................................... 34,009 35,896 36,120 35,347 34,809 33,805 32,635 31,351
Eight people.................................... 37,934 40,146 40,501 39,772 39,133 38,227 37,076 35,879 35,575
Nine people or more.......................... 45,220 48,293 48,527 47,882 47,340 46,451 45,227 44,120 43,845 42,156
Source: U.S. Census Bureau.

To put this in perspective:
If you are a single person and you make $11,139 per year or less, you fall under the poverty threshold and are considered impoverished, this works out to $928.25 per month (roughly 128 hours at the current minimum wage of $7.25)
Say, an average of 30 days per month and this gives you an amount of $30.94 per day you have to make to be over the poverty threshold.
You would have $10 per day to spend on food. Per day! Can you imagine?

$300 per month to spend on housing and $300 per month to spend on utilities, clothes, transportation, insurance and taxes. Yes, taxes. Even though you will not be filing a 1040 at this wage level you still have to pay your FICA taxes. Let me know if you find an apartment for $300 per month.
In my own case it would be a family of 3, with one child and we would have to make less than $17,552 per year ($1662.67 per month; $48.75 per pay), leaving me to feed my family on $16.25 per day (McDonald’s dollar menu here we come) and finding housing for $487.55 per month.

Now comes the announcement that the Census is improving their methods of measuring poverty. Let us hope it projects a more realistic view of the costs of living today.

Other articles
Poverty Rate even higher
Obama Redefining Poverty
Poverty and Inequality in the US
How We Measure Poverty