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Thursday, September 3, 2015

SOONER OR LATER, MOST OF US WILL FACE POVERTY

Poverty is actually a common experience in the US. Most of us will be poor, and most of us will be on welfare, too. The official Census Bureau measure shows a 2013 poverty rate of 14.5%— that’s 45 million people in households with gross annual income below the poverty line of $24,624 for a family of four. But this measure counts only those whose total income ended up below that line at the end of the year; it tells nothing about how their income may have fluctuated during the year. Suppose someone supporting a partner and two young children on an annual salary of $50,000, is laid off on June 30 and doesn’t find another job by the end the year. His or her gross income for the year was $25,000. Even though the person had zero income for the second half of that year, the poverty rate doesn’t include the person because their annual income was above the threshold. That’s a problem. The Census Bureau knows this, so it publishes a “dynamic” poverty rate that looks at movement in and out of poverty over time. This data show that 34.5% of the population were poor for two months or more at least once in the four-year period from 2009 to 2012. But this still understates the problem. Examining relative poverty rates from 1968-2011, shows that more than 60% of Americans between the ages of 25 and 60 fell into the bottom 20% of the income distribution for at least a year , and 25% were in the bottom quintile for five years or more. The boundary between being poor, low-income, and middle income is thin and permeable, and many of us are just an accident, illness, job loss, or newborn baby away from slipping into poverty.

Source: Spotlight on Poverty, 8/12/15, Close to Poverty