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About half of Americans are in poverty or near poverty, have low incomes

Summary:
This is one of those claims about the United States that we rather like. Not because we revel in the low living standards of the cousins you understand, but because it’s something that is both true and entirely meaningless. This insistence that some half of all Americans live in poverty or near poverty - the alternative formulation being in poverty or have low incomes.Every month, millions of working folks are forced to choose between rent, bills, healthcare, childcare and food because they are not paid a living wage. According to one measure, 43.5% of Americans were living in poverty or low-income households in 2017, with the latter often just one emergency or missed paycheck away from falling below the poverty line.Well, yes, that 43.5% is in fact correct. Correct given the definition

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This is one of those claims about the United States that we rather like. Not because we revel in the low living standards of the cousins you understand, but because it’s something that is both true and entirely meaningless. This insistence that some half of all Americans live in poverty or near poverty - the alternative formulation being in poverty or have low incomes.

Every month, millions of working folks are forced to choose between rent, bills, healthcare, childcare and food because they are not paid a living wage. According to one measure, 43.5% of Americans were living in poverty or low-income households in 2017, with the latter often just one emergency or missed paycheck away from falling below the poverty line.

Well, yes, that 43.5% is in fact correct. Correct given the definition being used that is. Compared to the average human living standard over time or across geography now it’s ludicrously ridiculous but given how it is constructed it is in fact true:

“By the Official Poverty Measure (OPM), more than 95 million Americans (nearly 30 percent of the total population) are either in poverty or considered ‘low-income’ (living below twice the poverty line),” the report says. “That number rises to 140 million people (43.5 percent) when using the SPM, which takes into account federal assistance resources, such as refundable tax credits, as well as critical out-of-pocket expenses for food, clothing, housing, and utilities. It also takes into account geographic differences in costs of living.”

The crucial part is that “twice”. The numbers do vary a bit over the years, the Official Poverty Line is linked to earnings in the early 1960s upgraded for inflation only, the SPM is linked to a percentage of current median household incomes and clearly household incomes vary with changes in wages as well as inflation. There is also the necessary adjustment for household size to consider.

But by and large and roughly that poverty line is 40 to 50% of median wages/median household income. 200% of the poverty line is thus 80 to 100% of median wages/household income.

That official poverty measure for a family of four (two adults, two children) was $26,200 last year, 200% of that is $52,400, Median household income (for 2019) was $68,000 or so. The SPM is higher than the OPM. As we say, that estimation that the poverty line is 40 to 50% of median household income is not accurate but it’s a darn good guide.

The claim that 40% of whatever of American live in poverty or near poverty, or in poverty or have low incomes, is entirely driven by the initial definition that “poverty and near poverty” is close to median income.

Half the population has an income below median. It’s only in Lake Wobgeon that this won’t be true and as Garrison Keiller has spent decades telling all and sundry that’s a fantasy world.

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Tim Worstall
Tim Worstall is a British-born writer and Senior Fellow of the Adam Smith Institute. Worstall is a regular contributor to Forbes and the Register. He has also written for the Guardian, the New York Times, PandoDaily, the Daily Telegraph blogs, the Times, and The Wall Street Journal. In 2010 his blog was listed as one of the top 100 UK political blogs by Total Politics.

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