In Suburban Slide, the Better Life Lab explores the changing face of poverty in the United States and how the symbol of American prosperity became the new place of poverty. In a six-part series, we explore what this means for Americans’ work-life conflicts and American identity in general.
“Increasingly there are two Americas: one is secure, one is insecure,” argues Jonathan Morduch, co-author of The Financial Diaries.
In our six-part series on the decline of America’s suburbs, we’ve explored the complexity of work-life stress in the suburbs when it comes to income volatility, housing insecurity, access to social services, and transportation. In much of the existing policy conversation about these issues, they fall under the framework of the “suburbanization of poverty.” But framing these problems as causes and symptoms of suburban poverty is misleading. What Americans are facing almost universally, in and out of the suburbs, is a new norm of persistent economic insecurity—a sense that they are one bad event from devastation. That’s a problem, whether people qualify as poor.
We used to think we could look around and “see” poverty, in a poor city neighborhood across the proverbial railroad tracks, or a poor town, and that’s how we knew it was there and a problem. Or because being black and being poor were conflated, which was how policymakers and the wider public often “identified” poverty in America. Think, for instance, about Donald Trump responding to a question about U.S. racial divisions by characterizing those living in our “inner cities” as “living in hell.” But, if there ever was, there’s no longer such a thing as middle-class, poverty-free places. And the current economic indicators policymakers rely on aren’t helping to make this any clearer.
Most people will experience poverty in their lifetimes temporarily due to job loss, illness, family splitting up, to name a few causes. But just because you’re not poor, that is to say falling below the official poverty line, doesn’t mean you don’t struggle; the technical measure doesn’t capture experiences of insecurity. We need to stop focusing on who is and isn’t poor at a given point in time and start thinking about economic insecurity as a new normal, in the suburbs and elsewhere.
Why? Our current measures lead us to treat poverty as a minority problem, with anti-poverty programs targeted just at that minority. According to the U.S. Official Poverty Measure (OPM), in 2016, approximately 12.7 percent of the U.S. population was living in poverty, and almost half were those living in extreme poverty. Authored by Mollie Orshansky, the OPM stems from President Johnson’s War on Poverty, which began in 1964 with the Economic Opportunity Act and culminated in the Social Security Act amendments of 1965.
But poverty was calculated based on how much an average family consumes, i.e. a “basket of goods” defined by a 1963 family food budget. Though indexed for inflation, the official poverty measure hasn’t changed, and determining whether a family is poor based on a family’s food budget fails to recognize just how their budget has changed in the past five decades—with income volatility and stagnation, the increased cost of housing, the increased need for and often staggering cost of child care as women enter the workforce, and a shrinking social safety net.
More recently, researchers have tried to come up with measurements that better capture the scope of poverty and the complexity of modern financial life in America. In 2009, experts finalized a nuanced, comprehensive supplemental poverty measure (SPM) for the U.S. Census Bureau that expanded how we understand income, the value of government supports, and household spending to include shelter, clothing, out of pocket medical expenses, and utilities.
However, even the more comprehensive Census measure excludes issues of wealth or asset poverty, i.e., whether you have savings or home equity you can tap into in an emergency. (Half of all Americans don’t have $400 for an emergency.) Given the racial and gendered wealth gaps in the U.S. that have worsened in recent decades (according to the Urban Institute, the average wealth of white families is more than $700,000 greater than the average wealth of black and Hispanic families), even the much improved measures don’t capture the insecurity of most American families whose incomes are above the official or supplemental threshold.
However, U.S. Census experts are actively working toward improving and incorporating SPM into other survey instruments at the state (California and New York have such measures) and federal levels (such as the survey of income program participation), which would allow them to provide a more granular picture of how assets and local circumstances affect poverty thresholds in different places. That’s important, because the cost of living varies so widely across the U.S. And this would allow researchers and policymakers to see how a $10,000 drop in income for a family making $40,000 (25 percent of their income) is different for a family with savings than one without, and tailor benefits accordingly.
The problem with this supplemental measure is a problem endemic to measures of poverty in general: They only look at one point in time and don’t account for income volatility across weeks or months. The official poverty measure only really captures people who are extremely insecure and unwell in a short window of time. But today, it’s clear that families who aren’t officially poor according to U.S. thresholds aren’t necessarily economically secure with regard to rent, child care, transportation, and food. Nor do these measures include debt, which is important given the high levels of college, credit card, auto loan, payday loan, or other types of debt many individuals carry. Americans are more in debt today than at any other point since World War II (with the exception of the Great Recession). Limited calculations give a misleading picture of how families balance work, care, and family expenses, which is made more difficult by our disappearing safety net.
Additionally, these measures don’t account for growing inequality, which means as some become increasingly rich, they drive up prices of all goods and services at the same time, meaning less wealthy people feel less wealthy all the time, even if their income stays the same. In thinking about where economic insecurity and inequality overlap, the U.S. should consider relative measures: How does your income compare to your neighbor’s and the larger U.S. income distribution? Many European countries define poverty as the number of people who fall below 50 percent of median income. (In the U.S., 50 percent of median income is $29,520, higher than the current poverty line for a two-parent, two-child household of $24,424.) If we counted poverty relatively in the U.S., the poverty figure would be much higher—about 20 percent of the population.
Another way to better capture this range of experiences is to more accurately account for whether the family assets—income and wealth—are enough to let families live stably and comfortably or whether they’re unable to absorb occasional crises and shocks. If a person lost a job or faced high medical bills, how long could they support themselves given their access to other wealth resources? Most households—including middle-class households—don’t have enough money to weather the storm. This is why an increasing number of researchers find the experience of crisis and instability a more meaningful measure than actual poverty. A $10,000 loss is devastating for a family making $40,000 (a 25 percent loss), much less so for one making $70,000 (a 14.3 percent loss). Neither family experiencing such a shock would have fallen below the poverty line with this loss, but the effects on that family expecting to make $40,000 would be profound and incredibly stressful and disruptive.
Jacob S. Hacker, a Yale political science professor who led a team that developed the Economic Security Index to better identify and quantify experiences of economic insecurity—how often do American families see their income and wealth dip 25 percent—finds economic insecurity has been on the rise for decades, long before the recession, with more dire consequences for racial minorities, those with less education, and younger workers. And because of data constraints, he’s unable to include the cost of something as significant as child care, so the story is probably even worse. Other researchers like poverty expert Mark Rank calculate that between the ages of 25–49, 67 percent of Americans will experience asset poverty.
If the point of measuring poverty is to capture well-being, we should reframe poverty as a form of social exclusion and deprivation. “Poverty has a wider meaning than lack of income. It’s not being able to participate in things we take for granted in terms of connection to society, but also crime, and life expectancy,” argues Rank. In an era when most deaths by guns are suicides, addiction rates are rising, and U.S. life expectancy is dropping and increasingly unequal by race and education level, capturing people’s well-being and designing solutions beyond material hardship is paramount.
“At the end of the day … the persistence of extreme poverty is a choice made by those in power,” said Philip Alston, U.N. special rapporteur on extreme poverty and human rights, in his 2017 address on U.S. poverty. The U.S. has the economic resources necessary to alleviate both poverty and broader economic insecurity, but until policymakers at every level actively commit to the fight, poverty will persist. And, as this series has shown, insecurity will not only persist in the urban cores but also in the suburbs. American identity and our sense of who we are—this includes the suburbs as the site of the American dream and the sense that we’re generally prosperous and secure people—has to change, when we look at the suburbs to accommodate better work, better care, and a better life.