Part 1

As we examine and comprehend poverty, we often think of underdeveloped nations in which a large fraction of the population lives under the bleakest of conditions—on less than $2.15 per person per day.  But, what about developed nations such as the United States?   The US has the largest GDP (Gross Domestic Product) of any country in the world at 25.44 trillion dollars (2022), the 6^th largest GDP per person (per capita) at $85,373 (IMF, 2024), the 8^th largest GDP PPP (Purchasing Power Parity) per capita—in which cost of living within the country is taken in account.

How does such a wealthy country like the US have poor people and what are their lives like?  The US uses a poverty line (costs for nutrition, rent, clothing, etc) to determine who qualifies for government assistance programs.  Currently, the poverty line in the US is $15,060 annually for an individual and $31,200 annually for a family of four. 

According to 2022 US Census data, the poverty rate is 11.5% with 37.9 million people living at or below the poverty line.  This rate has remained relatively steady since 1966 undulating from as high as 15% and as low as 10%. 

There are a number of associated factors with poverty.  Married two parent families had the lowest poverty rate of 5.8%, single parent families at 26.6%, individuals living alone 19.1%.   

In the table above, we see that both Black and Hispanic persons have a higher rate of poverty when compared to White persons.  Additionally, raising a family as a single parent is associated with poverty regardless of race.  However, being a Black single parent family places you at 44% risk of living in poverty—which is 8x greater than a White married couple family.

Among the indigenous population, greater than 25% of American Indian and Alaska Native population lives in poverty–double that of the general population.

How does the US compared to other developed countries in terms of poverty.  According to ConfrontingPoverty.org, a comparison of poverty rates is examined among developed nations.  The group of countries are from OECD (Organization of Economic Cooperation and Development) and the data is from 2019.  It uses ½ of the median household income of the said country as the indicator line of poverty—this is different than the poverty line determined by the US government.   Among the 26 members, the US ranked last in the percentage of its citizens considered poor (17.8% vs median of 10.7%), percent of children living in poverty (20.9% vs median of 11.7%).  Additionally, the data measures poverty gap—the distance between the average income the country’s poor and its poverty line.  The US comes near dead last at 40%–meaning the average income of the poor is 60% of the poverty line. 

How is this possible in such a wealthy country?  First, the US has the highest standard of living for middle and upper ends of the income scale—thus indicating there is tremendous income inequality.  The reason for this is that the safety net or welfare system is much weaker in the US compared to other countries and the those at the bottom of the income scale are paid significantly less compared to other developed countries.

Poverty is Understated

According to a 2012 study, about 38% of Americans live paycheck to paycheck.  This number seems to have risen since then.  Statistics vary but somewhere between 55% to 78% of Americans report living paycheck to paycheck and are unable to save or invest after paying bills.  Reasons cited include increasing cost of living, low income, poor financial planning, credit card debt, student loans, and medical expenses.

Geography and Poverty

Poverty is highest in rundown areas of large cities where industry has moved away and the rural areas of the south where industry never got started.  The three states with the greatest poverty rates include New Mexico (18.2%), Mississippi (17.8%), and Louisiana (16.9%).

Ashna Dagam