How much poverty is there in the U.S. today?
Defining poverty by income level is tricky and makes comparisons between countries difficult. In 2011, the government reported that 15% of the total U.S. population, or 46 million people, live with incomes below the official poverty line of $22,811 for a family with two adults and two children. (The standard is adjusted for different household sizes.) Almost half of this group in poverty have incomes lower than 50% of the official poverty level.
Another way of defining poverty is to consider those with incomes less than half of the median income as poor. (The median is the midpoint.) In January 2012, the estimated median household income was about 50,000. Using this definition, over 19% of the U.S. population is poor.
For comparison purposes, fewer than 10% of the people in most Western and Northern European countries have incomes at less than half the median. Recently the Brookings Institution reported that one-third of Americans live in poverty or near-poverty, while Yale political scientist Jacob Hacker's work demonstrates that over half of American families have experienced serious economic troubles over the past decade.
How has the U.S. poverty rate changed in the past few years?
During the 1960s and 1970s the official poverty rate in the U.S. declined, falling from 17% in 1965 to 11% in 1978. The rate then increased throughout the 1980s but fell back to 11% in 2000. However, in 8 of the first 11 years of the 21st century the rate has risen. It is now back to 15%.
Who are the poor?
Poverty is not equally distributed among all segments of the population. Overall, about 1 in 6 people are poor, but 1 in 4 African Americans and Hispanics are poor. Single-parent families, especially those headed by women, are more likely to be poor than the overall population. In the U.S., 22% of children live in poverty, compared to under 5% in Western Europe. The largest portion of poor people, 45%, are white, despite conservative attempts to racialize the discussion about poverty.
Why are some groups more likely to be poor than others?
Poverty is closely linked to the labor market in the United States: it is concentrated among groups that have been, and often still are, the victims of discriminatory practices in hiring and pay. Furthermore, economic policies that create or continue a segmented labor market—one having high- and low-wage sectors—typically result in the concentration of African Americans, Hispanics, and, to a still significant extent, women, in low-wage, service-sector jobs and in temp work. The low wages of these sectors of the job market produce poverty.
Didn't we have a War on Poverty? What happened?
Yes, in 1964 President Johnson announced a War on Poverty with the goal of reducing poverty in the United States. An important spark to this effort was the publication of The Other America by one of DSA's founders, Michael Harrington. The War on Poverty significantly reduced the proportion of the population living in poverty from 1965 to 1978, causing it to drop from 1 in 6 to 1 in 9. The War on Poverty created Medicare and about doubled Social Security payments, indexing them to inflation so that as one rose, the other would also rise. These policies led to poverty rates among the elderly dropping from 30% in 1962 to only 9% today. After 1978, however, much of this effort was not only abandoned but actually reversed, as Republican-led administrations failed to increase the minimum wage and the Clinton administration ended "welfare as we know it." From Reagan onwards, the federal government also largely abandoned any role in providing housing for low-income Americans.
What creates poverty? Why are people poor?
Unregulated markets organized for the maximization of profits have a strong tendency to concentrate income and wealth at the top. Workers in the United States have very few rights and protections compared to other rich countries. As a result, the share of income going to the bottom 90% of households has steadily declined for the past three decades, dropping from 64% in 1965 to 51% in 2009. Most of the gain to the top 10% of households was actually captured by the top 1%. Equally important, business owners and managers have a strong interest in seeing significant numbers of workers with low wages, since the threat of competition and job loss to low-wage workers can be used to prevent other workers from organizing for higher wages.
What are some policies that would reduce poverty?
Labor market legislation
The single most important government policy to affect the labor market is setting the minimum wage. Over the past four decades, increases in the minimum wage have lagged behind income growth. In 1967, a full-time job at the minimum wage provided an income that was 36% of the median family income; by 2010, it provided an income representing only 30% of the median. Today, half of poor families have a full-time worker as a household member.
Most wealthy countries tax the rich more than the United States does, and they reduce the level of poverty and inequality by transferring some of the money to lower income households, both in the form of direct cash benefits and in the form of social goods such as health care and education. The United States does very little of this; our pre- and post-tax levels of inequality and poverty are quite similar.
Another method for reducing both poverty and inequality would be to mandate that the federal and state governments serve as employers of last resort, ensuring that all who are willing and able to work have access to well-paying jobs. We did a significant amount of this in the 1930s to counter the huge increase in unemployment during the Depression. More recently, Argentina has used this policy to ensure productive work to many otherwise unemployed. From infrastructure improvements to education, there is plenty of work to be done that would benefit our society.
Making workplaces more democratic
Poverty and inequality are rooted in the drive of business to maximize profits, often justified by the argument that the only stakeholders that an enterprise should serve are shareholders or owners. In contrast, many countries in Western and Northern Europe require that workers have a strong voice in decision-making, in a practice sometimes called codetermination. As a result, decisions to increase or decrease production, start a new product line, etc., must take into account the needs of the workers as well as the desires of managers and shareholders. Even more basically, in the United States federal government protection of union organizing efforts has been drastically undercut. Thus, the percentage of working people in unions has declined from 30% of the workforce in 1970 to 12% today. This weakens the bargaining power of working people over their own wages and benefits, let alone strategic decisions about their workplaces.