Poverty Series III: The Numbers Lie & Myths Abound
Eileen F. had an idyllic middle-class upbringing. Reared by two loving parents, both professionals in their fields, she attended Ivy League schools and went on to become a teacher. Now 58 years old and partially disabled, Eileen struggles to pay the $700 per month rent on her small cabin in upstate New York. She supplements her $463 disability check with odd jobs she can do at home, like transcribing the minutes from town meetings and editing newsletters for a non-profit group. She earns, on average, a little over $600 a month from these jobs, bringing her income up to about $1100 a month.
It’s a life Eileen never expected, and one she says smashed her expectations, leaving her feeling oddly embarrassed and filled with anxiety. On occasion, she has to borrow $10 or $20 from better-off friends to pay for basic necessities. Even though she is insured, she is afraid to get the hip replacement she needs for fear of losing income during the recovery period.
According to national government standards, Eileen F. does not statistically count as one of the millions of Americans living in poverty. Her yearly income of $13,200 is $2413 above the 2008 poverty threshold for single adults, ages 65 and under, as determined by the U.S. Census Bureau. The threshold caps at $9,944 for singles over the age of 65, and at $13,540 for a family of two. It is this threshold that determines national statistics on the number of people living in poverty in the United States. Last August, the U.S. Census Bureau issued a report stating that 37.3 million Americans, approximately 12.5% of the population, were living in poverty in 2007, a slight increase from the 2006 figure of 36.5 million.
The model used to determine poverty thresholds was born from studies done by Mollie Orshansky for the Social Security Administration in the 1960s. The Orshansky method has often been criticized, but has not substantially changed since its adoption as a federal standard. One of the major flaws in Orshansky’s method, which is based on minimum-level food consumption, is that it assumes that others costs, such as housing, transportation, and daycare, can be cut back in hard times at the same proportion as food.
In effect, Orshansky started her food-costs-to-total-expenditures procedure by considering a hypothetical average (middle-income) family, spending one third of its income on food, which was faced with a need to cut back on its expenditures. She made the assumption that the family would be able to cut back its food expenditures and its nonfood expenditures by the same proportion. This assumption was, of course, a simplifying assumption or first approximation, as she herself recognized. However, she had no data to support a specific different relationship between food and nonfood expenditure cutbacks. Under this assumption, one third of the family’s expenditures would be for food no matter how far it had cut back on its total expenditures. - Social Security Bulletin, Vol. 55, No. 4, Winter 1992, pp. 3-14.
There are many arguments that can be made against the Orshansky method, but the end result is that millions of America’s poor are not counted in the official statistics. Variables, such as geography, non-cash benefits, and actual cost-of-living expenses make it difficult to gauge the number of people who subsist in our society with inadequate resources to meet essential daily needs. However, it takes no great leap of logic to understand that the figures used by the government grossly underestimate the number of those living in poverty.
Outside of the Census Bureau’s national statistics, which are most often quoted by politicians and the media, there is the matter of who is financially eligible for federal aid programs. Every year, the Department of Health and Human Services publishes their own poverty guidelines in the Federal Register, employing an adaptation of Orshansky’s threshold. In 2008, those guidelines were $10,400 for a single adult, $14,000 for a family of two, and $21,200 for a family of four.
Peggy Wireman, Ph.D. has extensive experience with government, economic, and social policy, and recently authored the book, Connecting the Dots, which “addresses the complex relationships between family and community, and between community and other players affecting family and community life.” Dr. Wireman, who has a keen understanding of governmental statistics, says that the definition of poverty has been out-of-date for decades.
“It was based on the assumption that people spent one-third of their income on food. Thus, food expenditure was then multiplied to account for everything. The problem is that relatively speaking, the cost of food has gone down while the cost of housing and health care has gone up. A more realistic approach was developed by Wider Oppurtunties for Women. They calculated what it would cost a family to live without government subsidy and without charity on a modest budget. Modest meant housing, food, child care, health care, and a car which used to go to work and for one shopping trip a week. The budget does not include funds for savings, education, entertainment, or any meals outside the home. It is about twice the (official) poverty level.”
There is a persistent myth that assistance for poor families is easy to get and readily available. While States and Counties employ their own guidelines, as well as the federal government’s, in determining who qualifies for various programs, they are all based on models that cut countless poor people off from the possibility of assistance.
In Minnesota, for example, applicants for emergency assistance in the most populous county, Hennepin, must prove that the assistance given will be cost-effective and offer long-term (12 month) resolution to the immediate problem. What this means is that those who find themselves in an emergency situation –- such as unexpectedly losing their job –- must show the County reason this won’t happen again next month, or the month after that. Those who haven’t secured new employment have no way to guarantee this, so the County denies emergency assistance to them on the grounds that it would not be cost-effective.
Also disqualified are applicants who pay more than 40% of their gross wages for rent. Under the county’s guidelines, a single head of household earning $8/hr. could pay no more than $554 per month for shelter. Outside of subsidized housing, a decades-old mortgage, or a dwelling in which the costs are shared by others, a $554 per month family apartment in the Metro area simply does not exist.
Bootstrap theories abound and are widely accepted, but Dr. Wireman has a different take after dedicating years of her life to studying the economic issues of American families.
“Most Americans,” Wireman says, “feel that people are poor because they don’t work hard enough. Unfortunately, this is a myth. If all workers who are making poverty-level wages quit tomorrow the country would shut down. We would have no child care centers, no hospitals, no restaurants, no stores. Unfortunately, too, the myths that prevailed about welfare have been extended to cover all single parents. Working harder at lowly paid jobs does not lift people out of poverty. The reason so many people are struggling today is that the productivity of workers is no longer being shared equitably with the workers. The minimum wage corrected for inflation was $10 a hour in 1968. Eighty percent of American workers work in manufacturing of non-supervisory service jobs. Their wage increase per hour since 1973 has been 35 cents. Productivity has been rising. Between 1995 and 2005 it increased by one-third, but two-thirds of this went to top management and the stock market. Only one-third of the increase was shared with the workers.”
In Connecting the Dots, Dr. Wireman exposes the changes in business practices and public commitments that have made the American Dream unrealistic for millions of workers, both blue and white collar, and lays out a framework that she believes may help undo the damage.
In the interim, the rich are getting richer, and the poor are getting poorer, and women like Eileen, and other people I’ve spoken with in the course of writing this series, including single parents and the elderly, often feel invisible in the colorful, abundant landscape that is the American Dream. They nurture their hopes, and tend to their crises paycheck by paycheck, looking less for temporary handouts than for a long-term way up, and out of the vicious cycle of poverty.
Note: A condensed version of this article was published by the Huffington Post.
Next: Part IV, The Health Care Crisis