The Real Cost of Being Poor, reflections from the heartland

Published on Zcommentaries, by Paul Street, Aug 8, 2015.

Serious debates over what the minimum wage should be in various U.S. locales and jurisdictions should start with serious information on what it actually costs to live in the different places where Americans live.  

One common reference point, the U.S. federal poverty level, is sorely inadequate to the task. It has two basic flaws. First of all, it is absurdly low, based as it is on a hopelessly antiquated 1950s formula that multiplies a minimum food budget three times. The formula made a certain miserly sense when it was set in 1955 (when the average U.S. family actually did spend one third of its budget on food), but it is wholly inappropriate today. The minimum required outlays for rent, transportation, child care, health insurance, medical care have since risen significantly both in absolute terms and as a percentage of U.S. household expenditures.

Here’s the federal poverty level right now (Federal Register Notice, January 22, 2015): one person in a household: $11,770; two persons: $15,930; three (say, one parent and two children): $20,090; four (say, two parents and two children): $24,250; five: $28,410; six: $32,750. I defy any household that does not grow its own food and manufacture its own clothes and medicine while foregoing modern health care, insurance, telecommunications, and transportation, to try to live with minimum basic level of comfort and health at these levels.

A second major flaw in the U.S. poverty level is that that it is not adjusted for significant geographic variations in the cost of living across US metropolitan areas. It costs considerably more to get by in Chicago or New York City than it does in “downstate” rural Illinois or “upstate” New York. It is much more expensive to live in San Francisco than it is in Bakersfield, California … //

… With most Americans’ wages stagnating for more than a decade and with the lowest paid workers’ wages shrinking, is it any wonder that half of the more than 24 million Americans who rely on food banks for basic nutrition are employed?

The EPI’s figures are worth keeping in mind the next time you hear the Chamber of Commerce or the American Enterprise Institute express horror at the notion that the minimum wage should go as “astronomically” high as $15 an hour. Even such a dramatically increased minimum wage translates into just $30,000 a year for a worker fortunate enough to stay employed full time.

Put two parents with two children successfully in the job market full time and you still come up $6, 667 short in Iowa City, where the local Proctor and Gamble plant is currently hiring (through an employment firm called Staff Management/SMX) warehouse and production workers for just over $10 an hour ($20,000 per years if able to get full time hours year round).

Considering all this, I can be forgiven, perhaps, for not showering praise on my local county (Johnson County, Iowa) board of supervisors for agreeing (under pressure from local labor activists) to consider a proposed ordinance that would raise the county’s minimum wage from $7.25 to $10.10 an hour by 2017 in three 95-cent increments. To be sure, the current U.S. minimum wage of $7.25 an hour is another bad joke. (If it had kept pace with increases in U.S. labor productivity since the 1970s, it would be $18 an hour today. At its current level, it translates [assuming full-time year round work] into $14,500 per year, well below the horrific federal poverty level for a three-person family) … //

… (full text).

(Paul Street is an author in Iowa City. His latest book is They Rule: The 1% v. Democracy, Ed. Paradigm, 2014 … and on amazon, Sept 2014).

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REAL ESTATE: Australia Orders More Foreign Homeowners to Sell, on WSJ, by Rebecca Thurlow, Aug 8, 2015:
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Blogger-Affäre um Landesverrat, Geheimnisverrat, auf Wallstreet, 7. August 2015: Verfassungsschutz nahm Blogger und Bundestagsabgeordnete ins Visier;

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Verschwörung der Mächtigen, Todesurteil des Euro ist gefällt, auf Wallstreet, 4. April 2015: am 17. Oktober 2015 folgt der nächste große Crash … Schuld daran soll ein geheimnisvoller „Club“ der Mächtigen sein.

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