There is an interesting article by Robert Samuelson that discussed what exactly "poverty" is.
Who is poor in America? This is not an easy question to answer, and the Obama administration would make it harder. It's hard because there's no conclusive definition of poverty. Low income matters, though how low is unclear. Poverty is also a mindset that fosters self-defeating behavior – bad work habits, family breakdown, out-of-wedlock births and addictions. Finally, poverty results from lousy luck: accidents, job losses, disability.According to the article, the statistics are misleading because they fail to take into account certain things, such as other sources of income, like food stamps and other subsidies, or the impact immigration has on the poverty level - roughly 75% of the increase in the poverty population was among the Hispanics, which Samuelson states is due to immigration.
Despite poverty's messiness, we've tended to measure progress against it by a single statistic, the federal poverty line. It was originally designed in the early 1960s by Mollie Orshansky, an analyst at the Social Security Administration, and became part of Lyndon Johnson's War on Poverty. She took the Agriculture Department's estimated cost for a bare-bones – but adequate – diet and multiplied it by three. That figure is adjusted annually for inflation. In 2008, the poverty threshold was $21,834 for a four-member family with two children under 18.
While that may be the case, I find the interpretation of such statistics to be interesting. I unerstand how difficult it would be to raise a family of four on a total annual income of $30,000, but lets look at this from the perspective of a conservative activist like John Smithson.
Smithson wrote of the same article the following editorial note:
Did you know that most poverty level families spend twice their stated income? If you make $30,000 per year, as a family, you are in the top 7% of the world's population as relates to wealth. If you are a homeless "bum" in the United States, you have access to a higher level of wealth and social benefits than 90% of the world's population. More than 80% of the world's population lives on less than $10 per day per person. The top three richest nations in the world based on per capita income are these : Number One - Tiawan; Number Two - U.S. and Number three - Japan. 35 million Americans live below the "poverty line" according to the Census Bureau. 97% of poor households own a color TV; 46% own their own homes; only 2.6% of poor children experience hunger at some point during the year and 2% of poor families say they "often" do not have enough to eat during the year; the average consumption of vitamins and protein is the same for poor and middle class children. These facts coupled with the following article will give you a much better idea of poverty in America. As with most of the "facts" used by the neo-Marxist Left to justify the theft of wealth from the working middle class, they are not honest facts.Ignoring the cost of living in America, Smithson believes Americans who have a family income of $30,000 per year are among the richest in the world - on paper they are, but he fails to take into consideration the cost of living. He states some numbers like "97% of poor households own a color TV," but I have to ask: "How many Americans own a black and white television?"
Smithson also references home ownership, but I wonder if his figures mean that families that are at the poverty level actually own their home, or are paying a mortgage on their property, in which case, they don't really own their home.
Does Smithson believe that Americans can live on less then "$10 per day per person?" If you think about a family of four living on $9 per day per person, that amounts to $3204 per person and $12,816 per year. Lets say they "own" their home. The average mortgage is around $1,500 a month, which means $18,000 per year - that puts us over the $30,000.
Using Smithson's logic, things just don't seem to add up, and that is because they don't. American poverty is different from foreign poverty, and both cannot be judged on the same scale. This is where conservative activists fail and why they are so far removed from the electorate. Just consider their constant attacks against organizations like ACORN that worked hard to help empower the impoverished...
Update - June 4th, 2010 - John Smithson had commented on this post claiming my figures were off. I admit they are a little dated, being from 2006, but I would say that his numbers are way off. According to Smithson, "the average mortgage nationwide is 69,220 and the monthly payment (30 year fixed) is 490 at 5%." Let's take a look at some more recent figures...
According to figures from RealEstateabc.com, updated June 1st, 2010, my original figures were closer to the pin, but the website goes into greater detail, separating median price by region.
The median home price, the point at which half of all homes are sold for more and half are sold for less, rose everywhere but the West in April, on a monthly basis.The lowest median price is $146,400 - $77,180 greater then Smithson's figure. The median price for the entire United States of America is close to around $175,000.
In the Midwest, the median price increased to $146,400 from $135,600 in March, and the new price is up 5.8 percent over the year before.
The median price in the Northeast rose to $243,000 from $239,400 the month previous, and has risen 2.1 percent over April 2009.
The South saw its median price for existing homes climb to $150,000 in April from $147,900. The price grew 1.2 percent over last year.
In the West, the median price fell to $212,100 from $216,100, but it's still up 3.8 percent on a yearly basis.
In my original post, I had only indicated an average mortgage cost of $1,500. Smithson wrote that $490 is the average cost, at 5% interest. Let's take the lowest median price and plug it into a mortgage calculator for a 30-year fixed mortgage at 5%.
The results are interesting - the monthly mortgage payment would equal $1,048.91 - $451.09 off from my original estimate, but, the calculator I used reminded me of something - property taxes and homeowners insurance. Tack on an extra $2,196 in yearly taxes and $481 in average homeowners insurance annual premiums and we have a grand total of $1,271.99 per month. Keep in mind that I did not enter a down payment, which is typically 10% - this would have only knocked $78.59 off the monthly total.
It looks like I was off by a little, but even so, these figures add up to be a large percentage of a person's income. For a family earning $30,000 per year, the cost of a home mortgage, property taxes, and insurance premiums add up to over half their annual income. Add up costs for food, clothing, transportation, etc. and things are put into perspective. While a family earning $30k a year looks great in comparison to a family overseas earning $400 per year, understanding the cost of living is very important, and to try to compare, neglecting those facts, would be unethical.