While politicians have been devoting more and more rhetoric as of late to the problems of the middle class, a new study shows just how deeply entrenched in poverty much of the country remains.
“If you go to India or you go to any number of other Third World countries, you have two problems: You have greater inequality of income and wealth. You also have less opportunity for people to rise from the have-not to the have,” Issa said, according to CNN Money.
A Census Bureau report in October 2014 said that more than 48 million Americans live below the poverty line, and while Issa seems to think that’s not such a raw deal in this country, a new study from Brookings shows just the opposite. They found out who is living in “deep poverty,” meaning the families whose household cash income under half the federal poverty threshold
Who is living in deep poverty?
According a recent study by Luke Shaefer and Kathryn Edin, more than 1.5 million families in 2011 were bringing in $2 or less in cash income per person per day. Beyond that, more than 6% of the U.S. population have a household cash income that’s less than 50% of the federal poverty threshold. For perspective on that income, in 2015, the deep poverty threshold was an annual cash income of less than $5,885 for an individual, $7,965 for a single-parent with one child, or $12,125 for a married couple with two kids. By comparison, the median income of the country: $52,000 in 2013.
The study shows that there is a large group of people in the U.S. living on next to nothing. Statistically, one of the largest groups in poverty is children. Of the 6% of the U.S. population living in deep poverty, 7.1 million are children. Brookings says that over 10% of children younger than 6 live in families in deep poverty. While Brookings notes that the typical person in deep poverty is born in the U.S., young, white, and living in a family, it should be noted that 10% and 12% of black Americans and Hispanics, respectively, are in deep poverty, while only 5% of whites fall into that bracket. And individuals and single-mother families are at greatest risk of falling into deep poverty.
How do these families get by?
They depend heavily on government support. The USDA’s “thrifty” plan for food would cost a family of four $6,760 a year, which isn’t doable for a family in deep poverty. These families therefore depend on SNAP, which covers the difference between 30% of adjusted income and the cost of the “thrifty” food plan. For example, a married couple with two children and an income of $10,000 would receive about $550 per month, or $6,600 annually.
Families in deep poverty can get help with housing by qualifying for a voucher or rent subsidy — but these programs are in high demand, and there are often over-enrollment issues. Such programs will cap family contributions to housing at 30% of adjusted income, like SNAP. Families also can receive subsidized care through Medicaid and CHIP programs — which is necessary when the average premium for a family health insurance plan is about $1,400 per month.
How poverty hurts the economy
Just as improving the lives of middle class Americans will help the economy, relieving the burdens of those in deep poverty would help as well. Brookings’ study showed that the poorer a household is, the higher percentage of its spending is devoted to necessities. The deeply poor spend on average $3,138 per year on food or about $260 a month, according to Brookings. Even in Brookings’ study, though, they found a discrepancy between how much those in poverty are spending versus their income. The study suggests that their income may go unreported or the average numbers are being affected by outliers — or some may get more income through borrowing or illegal activity.
For those living in deep poverty, their strapped wallets stops them from contributing more to the economy, and upward mobility is more difficult the further down the rung they are. According to Brookings, 14% of those who were born deeply poor will be in deep poverty at age 40, which is about three times as many as those who were not born in deep poverty.