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37.9 million.
That's the number of Americans currently living in poverty, accounting for 11.6% of the total population. That's despite the fact that America ranks first as the richest nation in the world in terms of GDP.
The United States is known for having this great abundance, and at the same time, alongside that abundance, there is widespread poverty and economic insecurity.
Sometimes you question, you know, we're in the United States of America, how can the citizens be going through such an issue? We always boast that we're superpower, that we are the richest in the world and things just don't make sense.
Poverty in the US had been steadily improving over the past decade. From a height of 48.8 million people living in poverty in 2013 to 34 million in 2019. That was until the pandemic changed its course. COVID absolutely had a very deep impact on the access to employment and long-term employment for a number of families that were already vulnerable for various reasons.
Prior, it was myself and my two older brothers, along with my stepdad, that constantly worked to provide for everyone in the house. But after COVID 19 and the whole lockdown, we were laid off. And ever since then, we have had issues finding a job.
Poverty is expensive. About 11% of the federal budget or $665 billion goes to economic security programs. Child poverty alone is estimated to cost the US over $1 trillion based on the latest research from 2018. There are also really high costs on an individual level.
Poverty leads to more anxiety. It leads to more stress. It leads to more health problems, all kinds of things that amplify the effect of poverty. The feelings that you would usually encounter when you're in this position is mostly depression. Why can't I find a job? Why are we in this situation? You know, we're trying our best and sometimes it's just falling back down on our face.
So how did poverty become such a big issue in the United States and why is it so difficult to end it?
Income inequality is one of the big reasons why the US suffers from such high rates of poverty. The income for the top 10% was more than 13 times higher than income at the bottom 10%, according to the US Census. We unfortunately in the United States are at the very high end in terms of income inequality. And so what happens is when the distance gets further and further away, the rungs on the ladder get further away and it's harder for people to climb those rungs out of poverty into the middle and to the upper class.
The pandemic has made inequality worse. The Gini index, which measures the nation's income inequality, rose for the first time in a decade by 1.2% in 2021. The reason the pandemic has made that worse is because when you talk to large organizations, corporations, what they saw was that staff was leaving, but they had a response to that, right? Their response was, let's give bonuses. Let's give raises.
Many organizations, many small businesses, government, they don't have that luxury. So inflation has kept up with the money that most people in the 1% have made. But it has deepened and widened the gap between those that have money and those that do not.
Research by MIT estimates that the living wage in the United States is $24.16 per hour for a family of four. But the federal minimum wage is set at $7.25 per hour. This means that a typical family of four needs to work more than two full-time minimum wage jobs to earn a living wage, and single-parent families need to work significantly harder. We worked at a banquet hall.
Any sort of party, we would set it up, come early, set the tables, dishes, plates, silverware, everything, you name it. We worked for $15 an hour. It was really bad. I would say we were really overworked. 13-hour shifts sometimes. We were really frustrated with where we were, but at the same time, it was like, what do we do if we leave? You know, we were at that stage of like, yeah, we hate this job, but we have to keep it to continue going.
Problems with wages are especially worse for workers of certain races. If we're looking at the broader population of people who are poor or low income, meaning one emergency away from being poor, we're talking about approximately 140 million people. Out of the 140 million, well over 70 million people, well over half of that population are people of color.
The US also suffers from a lack of social safety nets that protect Americans from poverty. If you look at, for example, the amount of cash that people might get if they're low-income, it's very, very minimal. Right now we receive welfare and it's roughly around $250 for my household of seven and it actually has helped us a lot. Sometimes the numbers really don't make sense because how can a large family just live off a couple hundred dollars, especially now in this day and age where you go to the grocery store, you spend and a few items are $100.
Most countries, for example, European countries, have what's known as a child allowance, where if you have a child, you get a certain amount of monthly income to help raise that child. That's pretty common. But in the United States, we don't have anything like that. And in the United States, we don't have universal benefits, for example, health care or child care.
It's also a system that many times is pervasive in actually creating poverty situations. So I'll give you an example. If I'm eligible for Medicaid today and I'm also eligible for cash assistance and I'm also eligible for SNAP, if I get a job that provides me even a little bit closer out of poverty, I lose all those benefits immediately, which means that I'm incentivized if I need health care for my children and I have a job that's not going to provide it right away to not look for employment that is going to pay me an amount that's going to make me ineligible for certain benefits, right?
So while people are working really hard for upward mobility, the systems that we have in place don't give them the grace to be able to come out of poverty and provide their own agency to actually create the opportunity for upward mobility. The official poverty measure in the US today is based on calculations from the mid-1960s. It's calculated by comparing pretax income against a threshold set at three times the cost of minimum diet In 1963. A large number of federal programs still rely on this measure to figure out who is eligible for assistance and welfare.
The researcher, whose work became the basis of that measure, never intended it to be used in the way that it currently is, both as a widespread measure of poverty, but then as the basis of all of these different social welfare programs and allocations of resources towards those programs.
It doesn't take certain very obvious indicators into consideration. To start, it looks at pre-tax income, which is not what I'm taking home every day so that doesn't make sense. It also doesn't look at different family compositions, which absolutely impacts how a family may spend money. If I am the type of family that has both of my parents living with me, I'm going to spend more. It doesn't look at expenses around food or child care.
So in many ways, it's incredibly out of date because it has not kept up with the way life has changed for most Americans. As a response to these criticisms, the supplemental poverty measure was developed in 2011 as an improvement over the existing measure. It incorporates into the measurement both the cost of basic needs like food, clothing, utilities, but also government transfers and programs.
So you could see the effect of government programs in addressing poverty and economic insecurity. It also takes into account geographical differences. So the supplemental poverty threshold is more of a range depending on where you live, your household size and what your housing status is. So it is more comprehensive .
In that way, it's an improvement on the official poverty measure. But some experts argue that even the supplemental poverty measure isn't a perfect method. While it looked to close the gap on certain indicators that the original poverty measure was not taking into consideration, it did not go far enough. Food is one of those places where we are still not taking into account what food may cause in a state like New York versus a state like Mississippi. S
o if you have a universal brush for the whole country, you're going to miss a number of people that are either at risk of falling into poverty or are already technically living in poverty but are not counted by the measure.
The Census Bureau told CNBC that both the official poverty measure and the supplemental poverty measure provide a consistent data of poverty measurement and that the Bureau continually strives to innovate and improve the design and measurement of their well-being statistics.
This difficulty in measuring poverty has also led some experts to argue that poverty isn't as serious of an issue as it's made to believe. Poverty in the United States and the way it's normally understood is not a big issue at all. It's deliberately miscounted.
So the reality is that we have poverty in the United States because the Census Bureau ignores the entire welfare state when it goes to count poverty. You count poverty by saying, well, a household has an income, say less than $26,000 a year, but all the welfare benefits or 95% of the welfare benefits are not counted, and they also undercount earnings by about 50%. Therefore, you have a lot of poverty basically because most of the resources that these folks have are not counted. Unless we can get an accurate number of just how prevalent poverty is in the United States, attempting to eradicate it is close to impossible.
When we don't have those numbers. A lot of folks who are making policy decisions are flying blind. Whether I'm a large corporation that is looking to invest in an organization or in a city, or whether I am a public official that is trying to figure out how much SNAP is enough SNAP. If I don't have a baseline, there's no way I'm ever going to be solving the problem. If COVID has proven anything. Poverty is an issue that can be resolved with the right policy.
Government assistance led to a significant decline in the supplemental poverty measure, lifting 45.4 million Americans out of poverty during the height of the pandemic. Policy, I would say, is one of our strongest tools in fully addressing and eradicating poverty. It is where we can define what the problems are, accurately measure what the problems are, and then design and implement the programs we need to address the true extent of poverty.
A really good example that I'll use is that of the elderly. This is the one real success story in the United States as we've really been able to reduce the poverty rates amongst the elderly as a result of primarily social security and Medicare. So if we didn't have those programs today, poverty rates for the elderly would go from about 10% to 40%. And that shows you the dramatic impact that government programs and policies can have on reducing poverty.
Figuring out a more accurate method of measuring poverty is a vital step in eradicating the issue. I would begin with changing how we define and measure poverty to include the full extent of economic insecurity.
Another way of measuring poverty, and this is a way that European countries and other countries use is what's known as a relative measure. And so they say if you fall below 50% of median income, then we're going to count you in poverty. So if the median income was $70,000 and you fell below $35,000, you'd be counted as being in poverty.
More targeted social programs could also have a significant impact on the impoverished community. Some of those programs may include an expanded child tax credit, the kind of which we saw in 2021 when it was expanded during the pandemic, raising the minimum wage immediately to at least $15 an hour, but then moving towards a living wage and guaranteeing that everybody who wants to work can work as a guaranteed ability and access to a good paying job. I think a really straightforward solution that people have been talking about more recently is the idea of a universal basic income.
So here the idea is that if poverty is a lack of income, then a very straightforward way is to transfer some income. Here's the analogy I would use to get people to shift their way of thinking, and it's the analogy of musical chairs. Let's say we have ten people playing and eight chairs available. Now, who's going to win and lose at that game? Well, if we focus on the individual level factors, people that were in a bad position when the music stopped and so on. But if we focus on the structure of the game, then two people are going to lose out regardless of the individual attributes. And that's what's going on here in the United States. We're focusing on, people aren't working hard enough. They're not doing this. They're not doing that. When really the problem is that there aren't enough chairs in the game.
