The True Cost of Living

7 December 2007

In the United States, the official numbers tell us that approximately 36.5 million people live in poverty. As shockingly high as those numbers appear, I think they still significantly underrate the problem. The government uses an absurdly low cost of living to measure poverty. For example, it puts the poverty line for a family of four at about $5,000 per person per year.

How can we expect a person in the United States to live on $5,000 per year and not call it poverty? We cannot reasonably do that. I doubt a person could afford just rent and food on that.

We need to calculate a reasonable cost of living that includes all the necessary expenses required to survive and support oneself with a reasonable comfort of living. I say a reasonable comfort of living because a person can survive by living in a cardboard box, but we would still consider them poor.

Our cost of living needs to include the costs of food, clothes, shelter, and healthcare. It also needs to include the costs of retirement and student loans. Additionally, it needs to include the costs it takes to earn the income. This includes transportation, education, baby sitting, and other job expenses. Additionally, the cost of living needs to include the costs of unemployment insurance in places where the government does not provide it. The costs of shelter need to include not only rent (or a mortgage), but also the cost of repairs, home insurance, furnishings, and utilities such as heat, hot water, electricity, and a phone.

If we want to make a true cost of living, we need to make a reasonable budget that includes all of those expenses. Then we need to end poverty by making sure children and everyone else can get enough education and training to get a job that pays them a true living wage.

If you want to try to estimate the true cost of living in the United States by making a budget that includes all those expenses, please post it in this thread at the Hunger and Poverty Discussion Forums. You can also discuss other related topics in the forums. It is completely free, and all viewpoints are welcome.

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 | Posted by | Categories: American Poverty |

I just read a disheartening article about Federal Reserve Board Chairman Ben Bernanke’s bleak outlook on the American economy. I include an excerpt:

On Thursday, one day after American stock markets plummeted in the face of mounting bank losses, soaring oil prices and record lows for the US dollar, Federal Reserve Board Chairman Ben Bernanke gave a gloomy economic forecast in testimony before Congress’ Joint Economic Committee.

Bernanke admitted that the US housing slump and the credit crisis resulting from soaring defaults of subprime mortgages had worsened since credit markets froze last August, and predicted that US economic growth would fall sharply in the fourth quarter of 2007 and the beginning of 2008.

He said the housing crisis would worsen in the coming months, as millions of homeowners with adjustable rate mortgages faced sharply higher interest payments when new rates kicked in, and hinted that the crisis on Wall Street could spiral into a full-blown recession.

[...]

“I’m very concerned that there may be a bigger storm on the horizon. Quite frankly, I think we are at a moment of economic crisis stemming from four key areas: falling housing prices, lack of confidence in credit-worthiness, the weak dollar and high oil prices. Each of these problems alone would be enough of a threat to our economic well-being. But taken together, they are essentially the four horsemen of economic crisis…”

Even during periods of so-called economic progress in the United States, the working class struggles with poverty. Approximately 40% of U.S. people fall into poverty during any 10 year period. Millions of working people live in poverty in the United States. Millions of college graduates live in poverty in the United States. Not only do millions of U.S. children live in poverty, but millions face hunger.

I do not want to even imagine what would happen during a U.S. economic recession!

Worst yet, the Federal Reserve is privately-owned. It works for the interests of the rich. When the economy goes downhill, they will hang the working-class out to dry to protect the status and assets of the rich.

Without reliable credit, the typical American will lose their car, their home, and most of their other possessions. The typical debt-ridden American can afford little without a credit card.

I urge everyone reading this to make smart financial decisions. Use self-control, and consider the long-term effects of your choices. Let’s try to save our money, and try to avoid succumbing to impulsive desires to purchase needless material goods. Also, remember to diversify your savings and investments. In an economic crisis, even seemingly secure investments can go under. Consider the people who lost all the money they had in the bank during the Great Depression when the banks failed.

Discuss the current economic situation, personal budgeting, and related issues in the Hunger and Poverty Forums. We need you to share your knowledge and opinions. It’s completely free, and all viewpoints are welcome.

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 | Posted by | Categories: American Poverty |

I love an article by Alyssa Katharine Ritz Battistoni about American poverty. In it she makes a lot of great points poverty in the United States. One point that especially stuck out follows:

It’s much easier to dismiss poor people as undeserving, unsavory, crackheads, welfare queens–not like respectable middle-class Americans–than to acknowledge the enormous problems that continue to plague our society. What it really comes down to is not morality or work ethic but that some of us have sufficient resources to cushion us from our mistakes and others do not. For millions of Americans, one fluke event can turn a delicate balancing act into financial free-fall. And when the government doesn’t provide an adequate safety net, it’s a long way down to the bottom.

I agree! Perhaps to avoid guilt and excuse inaction, many people brush poverty off as a self-inflicted phenomenon. These people claim that poor people make themselves poor through laziness, bad decision-making, and other self-destructive behavior. While all of us–both poor and not–often make lazy, short-sighted, and self-destructive decisions, we must realize we do NOT live in a meritocracy. Many people do not receive the same opportunities, and instead get thrown extra obstacles, and this results in poverty. Take for example, the poor child born into an innercity ghetto without a father; the child must grow up around violence and drugs, and go to a substandard school; this child will most likely remain in poverty for the rest of his or her life.

We can fight poverty, not by giving free hand-outs to undeserving people, but by providing fair opportunity to those who have not received it.

Remember, millions of college graduates are poor in the United States, and millions of employed people are poor in the United States.

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 | Posted by | Categories: American Poverty |

Poverty Dynamics

13 September 2007

A recent article at thespectrum.com explored the dynamics of poverty. I include an excerpt:

Typically identified by income level, now poverty can stake claim to people’s quality of life, which is spiraling downward. More hours at the daily grind means there is less time for family, decreased opportunities to vacation and attend or participate in cultural arts, sports or other leisure activities. Reaping the benefits of a bigger paycheck has come at the expense of people’s rest and relaxation.

Less opportunity for a mental, physical and emotional break from occupational duties has impoverished the American worker from a state of health and well-being. Obesity rates are the highest ever in U.S. history. Studies show an increase in stroke and cardiovascular disease. Furthermore, depression is on the rise and drains more than $83 billion annually from the American economy, affects 19 million Americans, and results in thousands of preventable suicides, according to a 2006 report by the Depression and Bipolar Support Alliance.

I agree with the article’s sentiment that poverty requires a more dynamic approach than simply measuring income levels. The concept of poverty refers to qualitative state, and thus quantitative measurements fail to show the true levels of poverty.

The government’s gross underestimations of poverty demonstrate the problem with quantitative measurements. The United States government sets the poverty line for a family of four at only $5,000 per person. How can person in the United States live unpoorly with only $5,000 a year? That translates to less than $450 per month, less than $14 per day. Who could make a monthly budget for $450 that could pay for food, clothes, shelter (including utilities), healthcare, education, transportation, and everything else required to live self-sufficiently and get to work? Most people can’t even afford rent and utilities with that. It would be hard enough to buy food alone on $13 dollars per day!

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 | Posted by | Categories: American Poverty |

Immigration and Poverty

8 September 2007

On Wednesday, Robert J. Samuelson wrote an article about poverty in which he blamed stagnant and rising poverty rates on immigration. Since then, I have noticed many blog posts and letters to the editor about Samuelson’s article.

Samuelson’s observation notes a common overlooked factor in poverty. Simply put, statistics show that the United States poverty rate has declined slightly overall in the last two decades, if we do not count the poor immigrants who moved to the United States. These poor immigrants add to the poverty rate.

Of course, Samuelson honestly notes that poverty for natives has risen since 2000, meaning that both the poverty rate for whites and the poverty rate for blacks has risen since 2000. I assume this happened as a result of Bush taking office, as it similarly happened during the Reagan and Bush Sr. eras.

Regardless, as Samuelson’s points show, we have to remember that stagnant poverty rates in the United States do not necessary indicate a complete lack of progress, and rising poverty rates do not necessarily mean regress. For example, quite plausibly, many poor immigrants would live in even poorer conditions if they had not come to the United States, which they presumably did to get better opportunities and employment.

In ideal circumstances, all people in the United States including immigrants would receive high-quality educations, and every working person in the United States including immigrants would get paid enough to not live in poverty. Regardless of immigration, the United States (and the whole world) has two huge problems that allow poverty: Firstly, not everyone can afford education, and many people only get a poor-quality education. Secondly, many working people still live in poverty due to low pay, which many people refer to as the lack of a living wage. Those two problems contribute to each other, in that low-paying jobs mean people do not have enough money to afford quality education, and lack of quality education means people cannot get high-paying jobs.

As a result of those problems, even native poor people often cannot escape poverty. Thus, poor immigrants add to the number of poor people.

To fight poverty, we need to solve those two general domestic problems, so that all people in the United States have a viable route out of poverty. Additionally, we need to work towards global solutions for poverty so that poor people do not continue to flow into the United States. Opening up trade and economic investments into countries like Mexico will help create local opportunities for poor people from those countries.

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 | Posted by | Categories: American Poverty |

Michael Stetz recently wrote an article about how the housing crisis adds to the poverty picture in the United States. I include an excerpt:

Nationally, more people are losing their homes because of the subprime mortgage meltdown. Wages have been flat. We feel fortunate to pay 3 bucks for a gallon of gas.

A growing number of middle-class people are anxious, they say.

“Poverty is a hot issue,” said Donald Mathis, president of the Community Action Partnership, which represents hundreds of poverty-fighting agencies nationwide.

Mathis points to a recent poll showing more angst among Americans when it comes to poverty.

In a poll taken in June by the Zogby research firm, 55 percent of those responding said they were “very concerned” about poverty. The poll found 58 percent believed poverty was the single-most-important or a top priority facing the nation’s leaders.

The spate of home foreclosures is particularly alarming, Mathis said. Many people feel vulnerable. Poverty is sometimes hidden, invisible. This is not. This could happen to someone down the street, he said.

Regardless of how well the United States can pull through the current housing crisis, I think we have to worry about the underlying problem. In the United States, most hard working people cannot afford houses. The working class simply does not earn enough to afford houses–even though they build them.

For the most part, working class people can only get homes by renting or through mortgages. Despite what the deed may say, when a person has mortgage, the bank really owns the property.

Working class people only get an allowance from the powers that be. When the economy turns sour, the working class loses that allowance.

To fight the underlying problem, we need to make it so working class people own their homes outright, instead of getting swindled by rich, unproductive usurers.

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 | Posted by | Categories: American Poverty |
Children suffering from Poverty