How Rich Are Poor People?

The Census Bureau says there are more Americans in poverty than ever. Are the poor better off today than they used to be?

How many amenities do people below the poverty line tend to have?

More than 46 million Americans are now living below the poverty threshold, according to numbers released by the Census Bureau on Tuesday. That’s the highest number since the Bureau started keeping track of the statistic in 1959. Are poor people better off now than they were 52 years ago?

Much better, in absolute material terms. Robert Rector of the Heritage Foundation recently published an analysis of the lifestyle of people below the poverty line in 21st-century America. He found that many poor people have amenities that were available only to the wealthy (if they existed at all) in 1959. The typical household at the poverty line includes air conditioning, two color televisions with a cable or satellite feed, a DVD player, and a microwave. Poor children usually have a video game system. More than 38 percent of poor people have a personal computer.

In the late 1950s, annual per capita caloric consumption reached a low point (PDF) for the 20th century. While food choices and the availability of fresh food in certain areas are major concerns, u ndernourishment is rare in the United States today. More than 92 percent of poor households always have enough food to eat, and poor children get about the same quantity of nutrients as middle-class children. Rector points out that poor children now “grow up to be, on average, one inch taller and 10 pounds heavier than the GIs who stormed the beaches of Normandy in World War II.”

Much of the improvement in the quality of life among the poor comes down to increased government assistance. The Census Bureau’s poverty threshold—based on the cost of a bare minimum diet multiplied by three—is adjusted for yearly inflation, but it doesn’t account for the expansion of noncash income sources like Medicaid or Medicare, which didn’t exist until 1965. It also ignores tax credits that can increase a poor family’s income. Nor are food stamps, which have expanded significantly since 1959, taken into account. Public housing is more widely available today than 50 years ago. There are also a range of less obvious government programs that bolster the lives of people living at or below the poverty line like Head Start, subsidized school lunches, energy assistance, and Pell Grants for college tuition. All of these free up money for other uses. A general decline in the relative price of food has also helped the poor, although costs have drifted upward over the last four years.

Despite the many luxuries now enjoyed by many below the poverty line, Rector’s argument that the Census Bureau overstates the number of poor in America is controversial. Many economists believe that poverty should be measured relative to the wealth of a society (PDF), not in terms of absolute deprivation, as Rector suggests. This isn’t some bleeding-heart liberal view. Adam Smith made the same point in The Wealth of Nations: “A linen shirt, for example, is, strictly speaking, not a necessary of life. The Greeks and Romans lived, I suppose, very comfortably, though they had no linen. But in the present times, through the greater part of Europe, a creditable day-labourer would be ashamed to appear in public without a linen shirt, the want of which would be supposed to denote that disgraceful degree of poverty which, it is presumed, nobody can well fall into without extreme bad conduct.”

Some economists argue that the Internet, mobile phones, and air conditioning are the linen shirts of the 21st century. Even manual labor jobs now sometimes require a candidate to access the Internet to either find a listing or apply. Less than 30 percent of families living in poverty have Internet service in the home.

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Explainer thanks Sheldon Danziger of the University of Michigan and Sonya Michel of the University of Maryland and the Woodrow Wilson International Center for Scholars.