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Poverty in Time of Depression
A funny thing happened on the way to the poor house

by Bryan Zepp Jamieson
February 9, 2009

Any idea what the poverty rate is right now?

Well, don't feel bad. Neither do I. The most recent listing I could find was for 2006, when an average of 12.6% of the general population were below the poverty level.

Of course, like most stats coming out of the Bush administration, these numbers, bad as they were, were self-serving bullshit. There's so many things wrong with how America measures poverty that you can't even begin to start.

To begin with, there's the official poverty level, which was $21,200 in 2007. The poverty level is determined to mean that, assuming no other expenses, there's enough money coming in for the family to afford the rent or mortgage, food, some clothing, and transportation to and from school or work. It does NOT include medical care in the formula.

In a lot of other countries, poverty is defined as a percentage of the median income. If for example, the average income in Lower Slobbovia is 20,000 Snowballs a year, then poverty is defined as 60% or less of the average number of Snowballs, or, in this case, 12,000 Snowballs a year. Severe poverty would be 8,000 Snowballs.

In the US, the median income in 2007 was $57,518 per household. Since a household averages 3.2 people, we'll factor the difference in to make it a family of four, using the federal calculations, which would make it about $65,000 median for a family of four.

So the poverty level would be $39,000 for a family of four, and extreme poverty would be $32,500.

If we use AVERAGE income, it gets much worse due to the grotesque inequity in distribution of income. Seven percent of households make over a third of the total income. The average income in the US is considerably higher than the median for this reason. Well, someone has to pay for all those limousines and big parties and trips to tropical tax havens, and it might as well be natural born suckers like the American voters.

But it gets worse.

As nearly everyone knows, if you are unemployed and destitute, you qualify for medicare. But for families at the median income, there isn't much in the way of coverage other than that provided by employers, and as a result, nearly all the 43 million uninsured you hear about are middle class or lower middle class.

It isn't hard to rack up $20,000 among a family of four in medical expenses. The average cost for medical care per capita in the US is $7,439. If you eliminate the elderly and the serious ill, the five percent of the population who rack up about half of the medical costs, that still means an average of nearly $4,000 per head for the remaining 95% of the population. Even if all four are essentially healthy, medical care can run into the thousands just with routine exams and dental care. And of course, here in America, people aren't healthy. A fairly normal set of health problems – treatment for allergies, high blood pressure, braces for the teeth – can easily leave a family making that median income below the poverty level, forced to choose between maintaining clothing at wear-and-tear levels or doing without prescriptions. And to qualify for medicare, a median income family has to give up all but one car, and use up any and all assets, including company pensions, 401(k)s, and all other assets of value.

Imagine what the poverty level would be if it included being able to afford medical care. Even using the “official” poverty level of $21K, adding that in would bring the poverty level for that family of four up to nearly $36K.

Oddly enough, insurance isn't considered a necessity. Not medical insurance, since we just finished discussing medical care and I don't propose to double count it, but all the other types of insurance families need. Auto insurance. Life insurance. If they have a mortgage, they are required to have insurance on the house, and some landlords now require insurance. It's pretty easy to rack up a couple of thousand in premiums a year, especially if one of the kids is driving age.

Does that $39,000 that family of four making 60% of median income as the poverty level sound so absurd? We're already there just by adding medical care and insurance to the mix. Many people in America simply go without.

Because the government also lies to us about the inflation rate, the amounts they allocate for necessities (housing, food, clothing) are usually low-balled, usually a percentage of the value of the dollar in 1984. But the inflation indicator used doesn't include gasoline (and so it didn't count when speculators drove the price of gas up to near $5 a gallon last summer), but DOES include things that don't pertain to most lower middle class families, like the price of a new pickup truck.

So the percentage of Americans living in what a Canadian or German might consider poverty is probably not less than 30% of the entire population, and could be as high as 40%. Not that 21.8% was anything to brag about in the “richest country in the world”.

Mind you, all these numbers date from 2007 and before, which predates the beginning of what the government insists is only a recession. Since it began in December of 2007, 3.7 million jobs have vanished.

The media cheerfully reported that as of December 2008, despite that, the number of welfare cases hadn't gone up. Which means that unless these people are robbing banks or growing marijuana or have found some other niche in the black economy, they are starving. I suspect the figures for welfare cases, like most everything else the government is telling us about the economy, is pure bullshit.

Unemployment, supposedly 7.6%, is almost certainly about 12%, and if you count people “working fulltime”, i.e., more than 32 hours a week, at minimum wage or so, then it's probably closer to 14%. A lot of them have simply dropped off the economic radar.

And the economic contraction is rapidly worsening. Looking over the outlines of the Senate stimulus package, I have little hope of seeing the contraction being eased any in the foreseeable future. Far too much of it is in the form of tax cuts, designed to mollify fat cats with far too great a sense of entitlement who are peeved because broke consumers aren't buying their shit any more. The CBO issued a report showing that the tax cuts could actually COST the country another 2 million jobs.

Nobody knows just where the bottom of all this is. I'm now expecting a Depression, perhaps as deep as the one in the 1930s. I think Wall Street, the owners of the GOP, are expecting one, too. The day the new unemployment numbers came out (and the “official number” was worse than people expected), the Dow jumped 218 points. Wall Street loves their pet Americans poor, frightened and docile. They make the best workers that way.

But they aren't above it. The WSJ announced huge operating losses for the past quarter, and that stalwart champion of unrestrained capitalism may be about to be hoist on its own petard and left to hang in the wind, buffeted by market forces it never truly understood.

I don't know what the Obama administration can do about the Stimulus package, short of shooting every third Republican, which is probably a bit extreme. But for now, they could make the government statistics a lot more straightforward, and end the practice of lying to us about what our economic condition really is.

It won't cheer us up any, but at least people will know for real what it is we're up against.

Posted: February 11, 2009

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