On Economic Mobility & Poverty Thresholds

by Leigh Graham

categories: Culture of Poverty, Federal, Government, Health & Healthcare, Housing, Hunger, Inequality, Jobs & Unemployment, Policy, Race Ethnicity Class & Gender, Research, Social Programs, The Economy, Women

Published July 02, 2009 @ 12:00PM PT

Following up on my earlier post on downward economic mobility and rising economic insecurity, new data, described below, shows just how economically vulnerable the majority of middle-class households are in the U.S.  Once again I wonder, will this trigger us to do something about how we measure poverty in the U.S., now that so many of us hover at its door?  Knowing our national myths of a bootstrapping, classless society, we'll probably just redefine it down even further to renew the distance between ourselves and our poorer neighbors!  After all we've vilified them so much, we certainly don't want to become one of them now!

But we really need to come to grips with how few of us can afford what should be basic rights for all of us: housing, education, and a livable wage and healthy work-life balance.  I add that "balance" because the right to work shouldn't be backbreaking, enslaving, or heart-attack inducing - especially since we're working harder and harder for less and less money.   As the middle-class disappears, we need to confront the poverty they - we - face in this country.

Courtesy of the terrific blog Poverty & Policy, I see that the think tank Demos and the Institute on Assets and Social Policy at Brandeis (my alma mater) has released a new report demonstrating just how many purportedly middle-class families are economically insecure, especially African-American and Latin@ households:

In the pre-recession period of 2000 to 2006, the percentage of African-American middle-class families who were economically secure fell from 26 percent to 16 percent (a loss of 10 percentage points). Economic security among Latino middle-class families fell from 23 percent to 12 percent (an 11 percentage point loss).

In comparison, economic security among the middle class as a whole declined from 29 to 24 percent, a decline of only five percentage points.

Economic security is measured according to a household's portfolio of: financial assets (e.g., a house or retirement account), health insurance, housing costs, degree of education, and overall budget.   In contrast, poverty is measured, basically, according to how much of a pre-tax household budget is spent on food and how many people are in that household.  That's it.  It doesn't reflect geographic differences in the cost of living, it doesn't consider how much households are spending on housing - the major expenditure for most of us - and it hasn't been revised since it was first devised in the 1960s.  It also has zero cultural component, i.e., how much this barebones economic deprivation restricts full participation in society - e.g., the less likelihood of the poor to be able to vote, the reduced access to doctors, retail services, banks, etc., the weaker schools in poor neighborhoods. And so on.

No wonder so many of us these days describe a sense of economic hardship and genuine fear, yet don't count as or qualify as poor.  Since the threshhold was defined, 10-15% of Americans have lived in poverty at any given time - about 37M Americans in 2008.  It's like a tidy little number that we can just accept as an outcome of an unequal capitalist society. Well, some will always be poor.  Wipes hands, walks away.

Yet now we have 33M Americans, or 1 in 9, on food stamps.  And it's not clear if these subsidized families middle-class or poor.  Does it matter?   Do we care?

It seems we care about this dying middle-class, but it's clear most of us haven't followed this to its logical conclusion: more Americans are slipping into poverty, and we should re-define poverty according to this collective lived experience.  I'll start: 40% or more of your income spent on housing? Less than 3 months from foreclosure or eviction?  No health insurance?

What else would you include as signifying as living in poverty in America?

(Photo from Bloomington Ave S, Minneapolis, by Andrew Ciscel)