Why the Very Poor Have Become Poorer


Christopher Jencks in the NY Review Books:

In $2.00 a Day: Living on Almost Nothing in America, Kathryn Edin and Luke Shaefer argue that what they call “extreme” poverty roughly doubled between 1996 and 2012. If they are right—and I think they are—the reader might wonder how I can still claim that poor families’ living standards have risen. The answer is that inequality has risen even among the poor. Half of today’s officially poor families are doing better than those we counted as poor in the 1960s, but as I learned from reading $2.00 a Day (and have spent many hours verifying), the poorest of the poor are also worse off today than they were in 1969. $2.00 a Day is a vivid account of how such families live. It also makes a strong case for blaming their misery on deliberate political choices at both the federal and state levels.

Kathryn Edin is a professor at Johns Hopkins University who has spent much of the past twenty-five years talking with low-income Americans about their lives. In 2010, when the national unemployment rate was over 9 percent, she began meeting parents who said they had no regular income whatever from work, from welfare, or from any other source. Their economic plight sounded worse than anything she had previously encountered, and she began pondering how to figure out what had happened, and why.

In 2011 Edin met Luke Shaefer, a young professor at the University of Michigan who had worked extensively with the Census Bureau’s Survey of Income and Program Participation (SIPP). This survey was the best available source of data on poor families, and Edin persuaded Shaefer to investigate what it showed about households with little or no income.3 To do that, they had to decide what criteria to use.

A single mother with two children was officially poor in 2011 if she reported an annual income below $18,123. If she reported less than half that amount, the Census classified her and her children as living in “deep” poverty. However, the Census had never had a term for families as poor as those Edin and Shaefer wanted to count, so they chose their own term: “extreme” poverty.

They also chose a third-world definition of who belonged in their new category. The World Bank counted third-world families as poor if they lived on less than $1.90 a day per family member. Edin and Shaefer rounded that up to $2.00.4 This cutoff was between 9 and 13 percent of the official poverty threshold for most American families. For a single mother of two, for example, Edin and Shaefer’s “extreme” poverty threshold was $6 a day while the “official” 2011 threshold came to just under $50 a day. Neither measure included noncash benefits or EITC refunds.

When Shaefer analyzed the SIPP data, he found that 4.3 percent of American households with children reported living on less than $2 a day per person for at least one month during 2011.

More here.