Counting The Poorest Among Us

by Dish Staff

Jordan Weissmann highlights some recent attempts to ascertain how many Americans live in extreme poverty—under $2 a day—that came up with very different numbers:

According to H. Luke Shaefer of the University of Michigan and Kathryn Edin of Johns Hopkins, the number of families living under that low, low line has grown 159 percent since 1996. … Part of the reason Shaefer and Edin’s headline number was so startlingly high—they calculated that the extreme poverty rate among households with children was a chilling 4.3 percent—could be attributed to a very narrow definition of income that ignored all noncash safety net benefits. Today, most of the government’s poverty-fighting efforts don’t involve straightforward cash. Food stamps? Housing vouchers? Tax credits? None were included. Once they accounted for those programs, only 613,000 families were living below the $2-a-day mark in 2011—still up by about half since the Clinton years.

At a bare minimum, then, hundreds of thousands of American households are living in true destitution. (For a family of three, the federal poverty line works out to about $17 per day, per person.) According to the new Brookings report, however, even Shaefer and Edin’s most conservative estimates of extreme poverty might have been too high. If you look at data on income, the pair’s estimates essentially hold up. But Brookings fellow Laurence Chandy and MIT Ph.D. student Cory Smith found that if you examine U.S. consumption statistics, then the number of families surviving on less than $2 each per day falls close to zero.

Chandy explains how he arrived at that conclusion:

Part of the reason for this is that even the poorest people surveyed in America appear to find a way to meet their most basic material needs (valued above $2 a day) even if their reported income is zero or close to zero. Furthermore, the poor in America have access to public goods—public education, criminal justice and infrastructure—that would be the envy of the poor in the developing world.

However, poverty is manifested in different ways in the U.S. and developing countries. Focusing narrowly on material needs means missing other critical components of welfare that may be especially lacking among America’s poorest people. For instance, those whose survival depends on in-kind assistance may be assured that their most basic material needs are met, but the absence of a reliable source of income makes it extremely difficult to cope with the unexpected, such as replacing broken or stolen assets or emergency travel. These individuals face a virtual exclusion from the cash economy implying a dearth of agency that directly affects their welfare.