Working Poor Are Nation's New Norm

When the U.S. Census Bureau released its newest poverty data, one of its most disturbing findings received little attention: 103.6 million people, one-third of all Americans, are part of the working poor. Far more than any other statistic, this shows our economy systemically failing many members of our community, but it would be dishonest to attribute this situation solely to the Great Recession. If we want to reverse this trend, we will not only have to re-examine our policies but also our own perceptions of the problem.

So what’s so chilling about this data? One first needs to understand the Census Bureau’s flawed definition of poverty. Our current poverty metrics were defined in the 1960s when research showed families spent one-third of their income on food. The official poverty level was set through multiplying food costs by three. Since then, the figures have been updated annually for inflation; but a huge change has occurred in the meantime — food now only makes up one-seventh of the average family’s income, as housing, childcare, and medical expenses have increased considerably.

To put this into perspective, the federal government only counts a family of four as poor if they make around $22,000 a year, assuming that below this point they would struggle to cover their basic needs. However, most experts agree that families must reach twice the poverty level to make ends meet. Last week, the Census Bureau calculated that one-third of all Americans fall below this mark, but most news outlets didn’t report this, focusing instead on how we have the highest number of people in poverty since this data was first tracked.

The Center on Budget and Policy Priorities has revealed that the period from 2001 to 2007 was the first economic expansion on record where the level of poverty was deeper and median income of working-age people was lower at the end than at the beginning. What this data shows is that for the first time in our history, a period of prosperity was not widely shared among all socioeconomic groups.

We like to tell ourselves that each generation of Americans has it better, but the census data contradicts this assumption. This year, the median household income is actually worse than it was in the 1990s — the slide between being middle-class and working-poor is becoming shorter. There is only one group for which this is an exception: the rich. For them, this past decade was the best on record; they not only raked in unprecedented amounts of wealth, but they also benefited greatly from the Bush tax cuts.

Unfortunately, there are a lot of myths and misperceptions circulating, not just about the working poor, but also about our own economic standings. As the chart displays above, when asked what they think the distribution of wealth is in our country, a study found that most Americans grossly miscalculated it. The top quintile of Americans, those who make over roughly $150,000, actually have 85% of the nation’s wealth. The four-fifths of us not in that bracket share the remaining 15%, but the bottom two quintiles don’t even have 1% of the wealth. In fact, the 400 richest families have the same net-worth as the bottom 50% of our country. It appears that not only our Census Bureau is out-of-date with its calculations of poverty, but also we as a nation are out-of-touch with the income inequality in our country.

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