A simple definition of poverty is a lack of basic resources that leads to insecurity about the future. In her classic book, A Framework for Understanding Poverty, Dr. Ruby Payne lists 8 resources people in poverty lack. Resource #1 is a lack of financial resources.
People in poverty lack the finances necessary to care for themselves in an adequate way. They continually struggle meeting basic needs like food, clothing, and shelter. Because of this lack any unexpected financial crisis pushes them farther and farther behind. For families in poverty, financial lack is more than a simple budgeting and priority problem. It is a lack of enough resources to meet daily needs no matter how hard they try or how hard they work.
While a lack of financial resources is the most obvious and visible form of poverty, it is not the most important. Dr. Payne writes, “…the reality is, that financial resources, while extremely important, do not explain the differences in the success with which individuals leave poverty nor the reasons that many stay in poverty. The ability to leave poverty is more dependent upon other resources than it is upon financial resources.” In other words, if all it took to get people out of poverty was more money, the solution would be simple.
For example, by some estimates our government spends $1 trillion a year on all the various welfare programs. There are approximately 45 million people in poverty. You do the math. We are spending more than enough money to combat poverty but the problem goes beyond finances. In future posts I will discuss the other 7 resources that people in poverty lack. The rest of this post will give an overview of poverty from a financial standpoint.
Each year the government uses a formula to calculate the poverty line. In 2010, that line was set at $22,025.00 total household income for a family of 4. If a family’s total income was below that amount, then that family lived in poverty. In 2010, depending on the formula used, the poverty rate in the United States was between 15-16% of the population, or approximately, 46.2 million people. By percentage, this was not the highest in U.S. history (in the 1950s th poverty rate was over 20%); but by shear numbers, 46.2 million is the highest. However, while the poverty line is $22,025.00, 60% of the families living in poverty survive on less than $12,000.00 a year.
In addition, 19% of all the poor in the U.S. are under 18 years of age (35% of African-American children are in poverty, 31% of Hispanic children, and 11% of non-white hispanic children). Another large percentage are the elderly. Furthermore, while 70% of all poor are white, only about 9% of all whites live in poverty compared to 26% of all African-Americans and 28% of all Native Americans. When it comes to gender, 59% of those in poverty are women while only 41% are men; 48% of all poor families are headed by a single mom.
In global terms, 77% of the world’s income is in the hands of 20% of the world’s population; 90% of the world’s wealth is controlled by only 20% of the world’s population. Financially, the world is divided into high-income countries, middle-income countries, and low-income countries. In the U.S., a family of 4 living on $12,000.00 total anual income is in severe poverty. However, if you live in a country where the average yearly income for a family of 4 is $12,000.00, you live in a middle-income country.
The above is simply an overview of poverty based on financial lack. But let me repeat, while the most obvious and visible form of poverty is financial lack, is it not the most important component of poverty. If it were, it would be easy to fix. Over the next several posts I will discuss the other resources people in poverty lack, and then I will talk about some possible solutions.
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