Should Poverty Be Comfortable?

  1. The poverty level in the US is defined by income level.
    "The 2011 HHS Poverty Guidelines

    The following figures are the 2011 HHS poverty guidelines that are scheduled to be published in the Federal Register on January 20, 2011. (Additional information will be posted after the guidelines are published.)

    2011 HHS Poverty Guidelines Persons
    in Family 48 Contiguous
    States and D.C. Alaska Hawaii
    1 $10,890 $13,600 $12,540
    2 14,710 18,380 16,930
    3 18,530 23,160 21,320
    4 22,350 27,940 25,710
    5 26,170 32,720 30,100
    6 29,990 37,500 34,490
    7 33,810 42,280 38,880
    8 37,630 47,060 43,270
    For each additional
    person, add 3,820 4,780 4,390 "

    The chart indicates the poverty level (in the 48 contiguous states) for a family of 4 is now $22,350 in the US - that's $429.81 per week/40 hour week = $10.75 per hour.

    By world standards ($1.25 per day = $8.75 per week = $455 per year) the US standard is quite high.

    "Extreme poverty strikes when household resources prove insufficient to secure the essentials of dignified living. The absence of social safety nets in under-developed economies shuts off potential escape routes. The consequences of persistent poverty include insufficient food, children out of school, diminution of household back-up resources and exclusion from valuable social networks.

    Global Poverty Trends

    Based on World Bank figures which are used for official global poverty statistics, the number of people living below the international poverty line of $1.25 per day fell from 1.8 billion to 1.4 billion between 1990 and 2005."

    To compensate for poverty in the US, the per capita welfare spending is estimated at $2,358 per person of $20,967 of total Government spending per person.

    Has poverty become too comfortable in the US. Is there adequate incentive for individuals to escape the gravity of benefits?
  2. jcsd
  3. No one wants to be poor. There is and always will be a curve. There will always be people that strive to accomplish great things and well.... those that don't. I really don't think it is comfortable to be poor for anyone though. I also don't think welfare should just be a handout to anyone. There needs to be government social workers assigned to a number of welfare recipients and they need to prove that they really need the money. I have definetely seen people at the grocery store pay with foodstamps or the new cards they have, walk out with 2 carraiges full of food with gold chains hanging off of them, brand new clothes and shoes and then climb into lexus. Ahh.. yea I don't think so, that absolutely can't happen, ever. But I do believe that a government should provide for people that can't provide for themselves without a doubt. It is only right.

    Yea now they make $1.75! I'm sure the rise in inflation eventually gave way to a well deserved raise. The World Bank does nothing good for developing countries just as the Fed has done nothing good for the U.S.. Sounds like propaganda to me.
  4. Evo

    Staff: Mentor

    So what is your answer? What will fix this?
  5. Imo, the big problem is that it seems very difficult to be relatively poor but stable compared to the impression I have of how it once was. People without money and/or income should be able to get access to very basic shelter, healthy food, adequate clothes, etc. They should not have to go into debt or work bad jobs with bad schedules just to barely keep up with the bills. They should also have the choice to live away from crime, substance abuse, domestic violence, etc. It seems like the only way to do this nowadays is to be middle class or at least find a very good working class area to live in.

    I think lower mortgage rates have helped make that possible for many people, but lower mortgage rates have the double-edged effect of promoting higher sales prices (since the same monthly payment can afford more) and this makes banks more weary to take risks and certainly makes it harder for people to save up and buy houses outright. The problem is that over a half-century of gradual real-estate inflation has led to an economic dead-end where many people get either stuck in debt or cannot own property at all - and the people who do own property outright and could reduce the price to a level that a poor person could afford are under pressure to make their investment pay to keep up with corporate and public salary levels, insurance costs, etc.
  6. Is it possible the barrier to home ownership isn't inflation, but trying to live beyond one's means? The term "McMansion" is relatively new - and denotes the desire to live in larger homes than necessary. Is it possible this behavior occurs at every income level?
  7. People trying to live beyond their means STIMULATES inflation. McMansions add a class-tier to the upper echelons of real-estate and give investors that much more motivation to milk more money out of low-end properties to pay for higher-end ones. The size of a house doesn't really matter as much as the cost of producing it. If you wanted to build a 5000sf enclosure with the cheapest materials using your own labor, how would that compare with Mansion-building in terms of cost and resource-waste?

    The barrier to home-ownership, imo, is a gap between wage-labor income and the labor that goes into building a house. If people could build their own houses using their own labor and get very cheap but effective materials, everyone could have a house regardless of employment. As it is, people can do this with tents but they're usually camping on land that's not their own and they can barely afford to develop their tent into a shanty house.
  8. On the other hand, when the Government officials spoke of the dream of homeownership - do you think they thought people would try to purchase homes they couldn't afford? If a 4 bedroom home can be found for $40,000 - that they can afford - why would they instead purchase a $100,000 home (they can't afford) - just because the funds were available from a lender?
  9. No, because they see property as an investment instead of just as a place to live. I have been playing the board game, Life, lately and the more expensive "starter houses" make more profit when you resell them than the mobile home or less expensive houses. So there is a general cultural assumption that one property is a better investment than another, so people try to get the best investment they can. This mentality is what drives speculation-driven investment and it is a cause of inflation. The funds-availability is just part of the problem, which is generally that everyone wants to get in on a bubble when it's growing.
  10. We're not analyzing speculative investors in this example. The politicians said affordable home ownership was a right. There were plenty of nothing down and no doc loans available + quite a few agencies to provide assistance.
  11. We are moving off-topic. The OP is focused on the level of poverty in the US and asks the question - "Has poverty become too comfortable in the US. Is there adequate incentive for individuals to escape the gravity of benefits?"

    Do we, as Americans, expect too much?
  12. Home-ownership is a right in the sense that people have the right not to be excluded from owning some form of property that they have the means to develop into a livable domicile. That isn't the same thing as lenders using people as a means to invest in potential foreclosures when the belief was that foreclosed property would be worth more than the mortgage when/if they would default. Nobody seems to remember how lucrative property-investment appeared @2006.
  13. Again, a person trying to buy an affordable house is not a speculator. If they can find a foreclosed property that is affordable to live in - that's great!
  14. It's hard to discuss with you. You state assumptions without stating grounds or reasons. In what sense is a person trying to buy an affordable house not speculating? People get excited about buying a domicile because they see it as a nest egg.

    But that wasn't my point with the last post. It was that lenders were using home-buyers as a means of making profit when/if they defaulted on property that they expected to appreciate beyond its loan value. In 2006, people thought it was impossible for property to depreciate.
  15. To go back to the OP - "...the poverty level (in the 48 contiguous states) for a family of 4 is now $22,350 in the US - that's $429.81 per week/40 hour week = $10.75 per hour. "

    If the acceptable percentage of income for a mortgage payment is 25% - the maximum payment a person earning $22,350 per year should pay is $465 per month. This will amortize a loan of approximately $72,500 over 30 years @ 5%.

    This is with nothing down and doesn't include taxes, insurance, maintenance, furnishings or improvements. Given this information, how much should they pay for a house? Would it be wise to buy a house for $72,500 because the money is available or perhaps $50,000 and have enough credit left over to be comfortable and secure?

    Remember - this purchaser is at the US poverty level.
  16. russ_watters

    Staff: Mentor

    My answer to this is simply my usual refrain about definitions:

    Definitions are only useful when they are clear. For most words, that means one accepted definition, but if a word has more than one, that's ok as long as those definitions are clear and faithfully adhered to. It's fine to define "poverty" in any way that is useful for the purpose the word is used for as long as people clearly understand and accept that there are multiple definitions in order to hold a proper conversation on the subject. The counterexample is the word "terrorist" where some people intentionally manipulate the definition for political purposes and never accept any consistency, making discussion impossible. Yes, the same thing can also happen with "poverty".

    Too often I see conversations where people lament about the high poverty rate in the US, while not recognizing that our poverty rate is not comparable to poverty rates in a lot of other countries. Most of the poor in many countries (we're talking a large fraction of the global population - 10%ish) have living standards on par with medival peasants while most of the poor in the US and many European countries have standards of living that would make medival kings envious enough to start wars.

    What "poverty" in the US means is very simple: the poverty line is the line above which the standard of living is deemed acceptable by American standards. Anyone below the line has a standard of living below the minimum of what is considered acceptable.

    Now regarding the specific question, there are many different types of "comfort". You can drive by a trailer park and see a rediculous fraction of trailers with satellite tv dishes. That's a luxury item that the poor choose to buy which puts their basic needs in jeaporady. They must have a certain level of "comfort" otherwise they wouldn't do that. If you really aren't sure where your next meal is coming from, you'll let go of your satellite TV to make sure you get it. But the downside of having your car reposessed isn't severe enough to give up certain luxuries: hence, people with a lot of debt and satellite TV. IMO, that's because we provide the poor with financial crutches that enable them to continue making poor decisions without consequences, thus perpetuating their poverty and dependence on government aid. That's leaing us in a direction I'm not sure the OP intended, though...
  17. Pengwuino

    Pengwuino 7,119
    Gold Member

    How? Aside from the fact that domestic violence and substance abuse is not confined to the poor in the first place, I don't see how that's possible. There WILL be bad jobs out there, bad schedules, low wages, and poor benefits. There will always be people who have piss poor financial control. I know MULTIPLE people who have spent their early 20s and late teens getting jobs, spending their paycheck on beer (LITERALLY!), and getting fired the next week. Crime and everything considered "bad" about living in poverty will always follow the lowest segments of society. There will always be a segment of the population whom, if westernized societies hadn't effectively fought off the forces of natural selection, would never have made it to today.
  18. This description of "bad jobs", tied to Russ's observation of world wide poverty levels, leads to another point - there are jobs Americans (living in poverty) are not willing to accept - largely because the pay rate for the jobs would not exceed their Government benefits. Domestically, this creates an opportunity for migrant workers from Mexico and Central/S America. In China (and elsewhere) low paying manufacturing jobs abound. These jobs raise their local standard of living - but are below the US comfort standard and Government benefits - correct? The question of do Americans expect too much is valid - in as much as how long should we wait (decades?) for the standard of living in the world to catch up - before our "poor" re-engage? Or, should we re-evaluate our own poverty rates and strive for full employment and maximization of production capacities?
  19. What about buying a land-parcel for $5000 and getting a used mobile home or getting a kit-house for another $10,000? That would be better for the poor person but it would have a negative effect on an economy fiscally stimulated by long-term mortgage funding of $50,000+ properties. The ethical issue is whether the working poor should be held hostage in bad service jobs for 30 years to fund the economy that exploits their labor 24/7 for every possible type of service.
  20. That is a great point. There are plenty of "Green" SIP kits available now. Some designs are very affordable and quite energy efficient. As for building sites - look to reclaimed inner city locations - where the utilities are already available.

    I don't have specific figures for this post, but if you consider the cost of HUD and HEAP/PIPP subsidies over a 20 or 30 year period compared to a specific cost for a new energy efficient house on re-claimed land - there has to be savings - plus the reward of home ownership.

    The only problem is the houses would need to be smaller and more affordable. A 600 to 800 square foot design - similar to an apartment - not a $100,000+ and 1,500 sq ft + luxury home.
  21. Right, but one of the things I was trying to point out with this poverty thread is that the reason a 1500sf house costs @$100,000+ is because there is an economy built up to receive the money from the bank. In other words, the middle class would lose income if the poor would build their own houses for $15,000. A middle-class income relies on an economy where poor people borrow $50,000 and spend the next 30 years working in crappy service jobs to pay off the mortgage.

    I'm for liberating people from a life of crappy dead-end service jobs, but I think you have to be clear that this is not separate from the middle-class culture of investment in $100,000+ suburban property (and other price property not located in suburbs.) Middle-class income and GDP will continue to decrease as the poor become less restricted to paying either long-term mortgage payment or rent for their domicile.

    Maybe a more gradual compromise would be for crappy service-jobs to be made less crappy by shortening the opening times of businesses and reducing full-time work from 40 to 30 or less, while expanding the pool of people available to work in these kinds of jobs. Yes, it is many middle-class people's nightmare or biggest sense of failure to have to get a job in food service, cleaning, etc. But as long as the economy continues to patronize businesses that require such labor, there have to be people to perform it. So it makes sense to me that more of the people who consume such services spend at least part of their careers working to provide them.
    Last edited: Jan 22, 2011
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