Median income below poverty?
Thanks for the outstanding article on the working poor. ["Nickel and dimed: Barbara Ehrenreich and tap-dancing on the edge," cover story, March 11]. Ehrenreich and Raskin are true journalists. I'm not worthy.
One teeny-weeny item the article omitted: how the US Department of Health and Human Services vastly underestimates the poverty line.
The current poverty thresholds were developed in 1964 by Mollie Orshansky of the Social Security Administration, based on the USDA's 1955 Household Food Consumption Survey that families of three or more persons spent about one third of their after-tax money income on food.
She then took the USDA's economy food plan ("designed for temporary or emergency use when funds are low") and multiplied it by three. She called it "a conservative underestimate" of poverty.
It has been adjusted for inflation ever since. However, over the last 40 years, housing, transportation, healthcare and childcare costs have inflated faster than the cost of food. Today, according to independent research from both the Economic Policy Institute and the Urban Institute, families of three or more persons spend about one fifth of their after-tax money income on food (check your own monthly bills and you'll agree).
So, the real poverty line is more than one-and-a-half times what our government says it is. The official 2004 US poverty line for a family of three is $15,670. But the actual poverty line for a family of three is $26,116. For a family of four, the actual poverty line is $31,416. Mind you, these are after-tax numbers.
How many families of four do you think are taking home $31,416 or less after taxes? Here's a hint: The median household income in the United States in 2002 was $42,409. Subtract payroll taxes (social security, Medicare), and (VA) state and federal income taxes (all told, roughly $11,874 if you're not cheating), you end up with $30,534 after taxes. Where was that poverty line again?
What I'm saying (with a bit of admittedly fancy math) is that theoretically the median income in the United States is below the poverty line.
Are you? Which is to say, are you unable to afford some basic necessity? Be honest. You're not alone (I personally can't afford to pay health insurance– although I do occasionally buy Feast! cheese).
So why aren't we all in the poor house? Well, consumer debt is at an all-time high of $1.98 trillion, excluding mortgages. Can you guess who owes all that money? Ka-ching!