How Can The Poor Have So Many Amenities? Part 1

The Heritage Foundation has released a study titled “Air Conditioning, Cable TV, and an Xbox: What is Poverty in the United States Today?”  Let’s take a look at some of this report and take a moment to think about poverty and amenities.

Here’s a chart from the report that shows the percentage of poor households that have various amenities:

Percentage of Poor U.S. Households Which Have Various Amenities from heritage.org99.6% of the poor have a refrigerator and 81.4% have a microwave.  Clearly the poor aren’t as distressed as previously thought.  Or, are they?  To find out, I went to the Heritage Foundation’s full length report and took a look at it to find the definition of poverty that’s being used.  I found:

Each year for the past two decades, the U.S. Census Bureau has reported that over 30 million Americans were living in “poverty.” In recent years, the Census has reported that one in seven Americans are poor. But what does it mean to be “poor” in America? How poor are America’s poor?

No footnote.  We have a hint, though, that they’re pulling their definition of poor from U.S. Census Bureau reports on poverty, and that the number they pull is for 30 million.  Now, only if we knew how that 30 million was defined.  I kept reading and found another hint:

Regrettably, annual Census reports not only exaggerate current poverty, but also suggest that the number of poor persons[5] and their living conditions have remained virtually unchanged for four decades or more.

Yay, a footnote!  What does it say?

[5] According to the census, 14.3 percent of the population was poor in 2009, almost the same percentage as in 1966 when the War on Poverty was just starting.

Well, that wasn’t at all helpful in defining their use of the term “poor.”  Also, nice dig with the “when the War on Poverty was just starting” comment.  Way to subtly undermine a social program by implying it’s useless.  Let’s read on:

Each year, the U.S. Census Bureau releases its annual report on income and poverty. [7] This report, though widely publicized by the press, provides only a bare count of the number of Americans who are allegedly poor. It provides no data on or description of their actual living conditions.

Wait a second…  Just a few paragraphs ago you said “annual Census reports… suggest that the number of poor persons and their living conditions have remained virtually unchanged for four decades or more,” [emphasis mine] and then you say “the U.S. Census Bureau releases its annual report on income and poverty…[which]… provides only a bare count of the number of Americans who are allegedly poor.  It provides no data on or description of their actual living conditions.” So which does the Census do?  Does it gather data and report on the living conditions of the poor or not?  Geez.

But at least we have a footnote, and the hope of a useful reference.

[7]Carmen DeNavas-Walt, Bernadette D. Proctor, and Jessica C. Smith, “Income, Poverty, and Health Insurance Coverage in the United States,” U.S. Census Bureau, Current Population Reports, P60-238, September 2010, at http://www.census.gov/prod/2010pubs/p60-238.pdf (June 21, 2011).

Yay, a link!  Though, does anyone else think it’s a little weird that they’re using a Census report for 2009 matched to a Residential Energy Survey from 2005?  I would think one would try to match the data by year.

Anyways, I hopped over the the .pdf and gave it a quick look over.  It says it uses the official poverty measure to define households as poor.  I found a webpage from the Census Bureau that explains “How the Census Bureau Measures Poverty.”  There’s an Excel spreadsheet that shows Poverty Thresholds for 2009 by Size of Family and Number of Related Children Under 18 Years [.XLS – 48K].  Here’s a snippet of that table:

Size of family unit Weighted Average Thresholds Related children under 18 years
None One Two
One person (unrelated individual) $10,956
   Under 65 years $11,161 $11,161
   65 years and over $10,289 $10,289
Two people $13,991
   Householder under 65 years $14,439 $14,366
   Householder 65 years and over $12,982 $12,968 $14,731
Three people $17,098 $16,781 $17,268 $17,285
Four people $21,954 $22,128 $22,490 $21,756
Five people $25,991 $26,686 $27,074 $26,245

So, here’s what these “allegedly” poor people are earning in a year.  I don’t know about you, but if I’m a single mom raising two kids, I’m pretty sure I wouldn’t be “allegedly” poor while earning less than $17,285 per year.  I would be actually poor.

So, how is it that these poor folks get all the fabulous amenities such as refrigerators and TVs and ceiling fans?  The Heritage Foundation thinks it has the answer:

Consumer items that were luxuries or significant purchases for the middle class a few decades ago have become commonplace in poor households. In part, this is caused by a normal downward trend in price following the introduction of a new product. Initially, new products tend to be expensive and available only to the affluent. Over time, prices fall sharply, and the product saturates the entire population, including poor households.

As a rule of thumb, poor households tend to obtain modern conveniences about a dozen years after the middle class. Today, most poor families have conveniences that were unaffordable to the middle class not too long ago.

In part.  I would like to make a point: it sounds like they’re talking about the retail price of items.  That will be important.  The other part, we find out later, is because of a sudden influx of the newly poor from the Big Recession:

However, the increase in poverty during the recession is, to a considerable degree, the result of working-class families losing employment. One would not expect these families to dispose of their normal household conveniences in those circumstances. Thus, paradoxically, the increase in the number of working- and middle-class families who have become temporarily poor is likely to increase slightly the share of poor households that own various items.

You think?  So, poor people have amenities like ceiling fans and computers because the retail cost dropped over time.  The poor also tend to have amenities because there are a lot of people who were previously making enough money to support their amenities, but aren’t making enough money at the moment.

If you ask me, there’s another force at work:  read about it in How Can The Poor Have So Many Amenities?  Part 2.

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