Previously on This Just In…
Any media story on poverty in America is bound to be accompanied by a photo like this:
The above question in the headline is a good one. Is poverty too prevalent in America? Put another way, how poor are the poor?
To answer that question, here’s a blog of mine from 2007 that I submit still holds true today:
The federal minimum wage goes up Tuesday (tomorrow) from $5.15 an hour to $5.85, the first increase in the federal minimum wage in a decade. Minimum wage workers will get an additional 70-cent boost each summer for the next two years, ending in 2009 at $7.25 an hour. That comes to just above $15,000 yearly before taxes for a 52-week work year.
USA Today interviewed fast-food waitress Fawn Townsend of Raleigh, North Carolina who gets a pay raise Tuesday.
“My goal personally is to get a vehicle so I can independently go back and forth to work and maybe pick up extra work so I can have that extra income, because minimum wage is not cutting it,” said Townsend, who is 24 and single. “Being a single person, you can’t pay all your bills with one minimum wage job.”
I’ve got news for Fawn. The minimum wage is not intended to be, nor should it be a living, family wage.
Only about three percent of workers earning the minimum wage are single parents. Slightly more than one percent of all minimum wage workers were adult heads of households with incomes less than $10,000. About 60 percent of minimum wage workers are single individuals, many of them living with their parents.
Minimum wage workers are not parents struggling to feed their children. Rather, they are high school or college students living at home. The level of the minimum wage is irrelevant for most people in poverty. Only about 10 percent of poor people of working age have full-time jobs.
The minimum wage, along with increasing it, is a bad economic move for many reasons.
1. The vast majority of economists believe the minimum wage law costs the economy thousands of jobs.
2. Teenagers, workers in training, college students, interns, and part-time workers all have their options and opportunities limited by the minimum wage.
3. A low-paying job remains an entry point for those with few marketable skills.
4. Abolishing the minimum wage will allow businesses to achieve greater efficiency and lower prices.
5. When you force American companies to pay a certain wage, you increase the likelihood that those companies will outsource jobs to foreign workers, where labor is much cheaper.
6. Non-profit charitable organizations are hurt by the minimum wage.
7. The minimum wage can drive some small companies out of business.
8. A minimum wage gives businesses an additional incentive to mechanize duties previously held by humans.
9. Cost-of-living differences in various areas of the country make a universal minimum wage difficult to set.
10. The minimum wage creates a competitive advantage for foreign companies, providing yet another obstacle in the ability of American companies to compete globally.
11. The minimum wage law is just another example of government condescendingly controlling our actions and destroying personal choice. Citizens do have the ability to say no to a lower wage.
Poverty and the minimum wage are becoming a major issue in the Democratic presidential race. John Edwards and Barack Obama are emphasizing raising the minimum wage during their tours of impoverished areas.
I raise the following question: Just how poor are the poor?
The Heritage Foundation produced this report in January 2004. If you haven’t seen it, it has some surprising facts that Mr. Obama and Mr. Edwards may want to consider before they embark on their next ghetto tour:
January 5, 2004
Understanding Poverty in America
by Robert E. Rector and Kirk A. Johnson, Ph.D.
Poverty is an important and emotional issue. Last year, the Census Bureau released its annual report on poverty in the United States declaring that there were nearly 35 million poor persons living in this country in 2002, a small increase from the preceding year. To understand poverty in America, it is important to look behind these numbers–to look at the actual living conditions of the individuals the government deems to be poor.
For most Americans, the word “poverty” suggests destitution: an inability to provide a family with nutritious food, clothing, and reasonable shelter. But only a small number of the 35 million persons classified as “poor” by the Census Bureau fit that description. While real material hardship certainly does occur, it is limited in scope and severity. Most of America’s “poor” live in material conditions that would be judged as comfortable or well-off just a few generations ago. Today, the expenditures per person of the lowest-income one-fifth (or quintile) of households equal those of the median American household in the early 1970s, after adjusting for inflation.
The following are facts about persons defined as “poor” by the Census Bureau, taken from various government reports:
• Forty-six percent of all poor households actually own their own homes. The average home owned by persons classified as poor by the Census Bureau is a three-bedroom house with one-and-a-half baths, a garage, and a porch or patio.
• Seventy-six percent of poor households have air conditioning. By contrast, 30 years ago, only 36 percent of the entire U.S. population enjoyed air conditioning.
• Only 6 percent of poor households are overcrowded. More than two-thirds have more than two rooms per person.
• The average poor American has more living space than the average individual living in Paris, London, Vienna, Athens, and other cities throughout Europe. (These comparisons are to the average citizens in foreign countries, not to those classified as poor.)
• Nearly three-quarters of poor households own a car; 30 percent own two or more cars.
• Ninety-seven percent of poor households have a color television; over half own two or more color televisions.
• Seventy-eight percent have a VCR or DVD player; 62 percent have cable or satellite TV reception.
• Seventy-three percent own microwave ovens, more than half have a stereo, and a third have an automatic dishwasher.
As a group, America’s poor are far from being chronically undernourished. The average consumption of protein, vitamins, and minerals is virtually the same for poor and middle-class children and, in most cases, is well above recommended norms. Poor children actually consume more meat than do higher-income children and have average protein intakes 100 percent above recommended levels. Most poor children today are, in fact, supernourished and grow up to be, on average, one inch taller and 10 pounds heavier that the GIs who stormed the beaches of Normandy in World War II.
While the poor are generally well-nourished, some poor families do experience hunger, meaning a temporary discomfort due to food shortages. According to the U.S. Department of Agriculture (USDA), 13 percent of poor families and 2.6 percent of poor children experience hunger at some point during the year. In most cases, their hunger is short-term.
Eighty-nine percent of the poor report their families have “enough” food to eat, while only 2 percent say they “often” do not have enough to eat.
Overall, the typical American defined as poor by the government has a car, air conditioning, a refrigerator, a stove, a clothes washer and dryer, and a microwave. He has two color televisions, cable or satellite TV reception, a VCR or DVD player, and a stereo. He is able to obtain medical care. His home is in good repair and is not overcrowded. By his own report, his family is not hungry and he had sufficient funds in the past year to meet his family’s essential needs. While this individual’s life is not opulent, it is equally far from the popular images of dire poverty conveyed by the press, liberal activists, and politicians.
Of course, the living conditions of the average poor American should not be taken as representing all the poor. There is actually a wide range in living conditions among the poor. For example, over a quarter of poor households have cell phones and telephone answering machines, but, at the other extreme, approximately one-tenth have no phone at all. While the majority of poor households do not experience significant material problems, roughly a third do experience at least one problem such as overcrowding, temporary hunger, or difficulty getting medical care.
The best news is that remaining poverty can readily be reduced further, particularly among children. There are two main reasons that American children are poor: Their parents don’t work much, and fathers are absent from the home. (I wonder if Obama and Edwards ever mention this on their campaign trail?)
In good economic times or bad, the typical poor family with children is supported by only 800 hours of work during a year: That amounts to 16 hours of work per week. If work in each family were raised to 2,000 hours per year–the equivalent of one adult working 40 hours per week throughout the year–nearly 75 percent of poor children would be lifted out of official poverty.
Father absence is another major cause of child poverty. Nearly two-thirds of poor children reside in single-parent homes; each year, an additional 1.3 million children are born out of wedlock. If poor mothers married the fathers of their children, almost three-quarters would immediately be lifted out of poverty.
While work and marriage are steady ladders out of poverty, the welfare system perversely remains hostile to both. Major programs such as food stamps, public housing, and Medicaid continue to reward idleness and penalize marriage. If welfare could be turned around to encourage work and marriage, remaining poverty would drop quickly.
—July 23, 2007