How Poor Is Poor?

By Joe Cereola

A family living at the poverty level faces considerable challenges. All income is consumed by necessities, leaving little, if anything, to spend on even the small things that make life more enjoyable. But poverty is not about forgoing movies and popcorn; poverty is a life on the precipice of financial ruin. Without health insurance, a serious illness is catastrophic; a car repair, a broken refrigerator, or a traffic ticket becomes a crisis. Money for a rainy-day fund is nonexistent, and saving for retirement is an unaffordable luxury. Poverty means having to survive one's golden years on Social Security and Medicaid. 

What constitutes poverty in this country? The Census Bureau publishes poverty thresholds, dollar amounts that are used to determine a family's poverty status and calculate poverty statistics. Different thresholds are established based upon the size and composition of the household. For a family of four with two children under 18 years, the poverty threshold is $23,624. Table 1 at the bottom of this post lists the poverty thresholds for other family configurations. In the U.S., there were 46.5 million people living at or below the poverty level in 2012.

What is the hourly wage one needs just to reach the poverty threshold? Assuming a 40-hour for 50 weeks per year, it takes a wage of $11.81 per hour to reach the poverty threshold for our family of four. From my perspective, and here's where people have differing opinions, there is no job so menial that it doesn't merit paying a person at least $11.81 for an hour of their time. Congress does not agree and neither does any state. The federal minimum wage is only $7.75, and the most generous state, Washington, has a minimum wage of $9.19 per hour. 

How long would the wage earner in our family of four have to toil away at the minimum wage to reach the poverty threshold. In Alaska, Hawaii, or Rhode Island, three states where the minimum wage is $7.75, the head of household would need to work 3,068 hours, over 60 hours per week, equivalent to one and one-half full time jobs. In Washington, the state with the highest minimum, the head of household would need to work a little over 50 hours per week. 

I can hear some of you yelling already: "You're ignoring overtime." Overtime pay is not a given and many companies, especially those paying the lowest wages, use part-time workers to avoid overtime. It's not unusual for workers to have two part-time jobs. Let me provide a personal anecdotal example that seems particularly egregious. My daughter worked for a company that had restaurants in two locations. Staff hours were split between the two locations so that no one worked more than 40 hours per week at either restaurant. Even when my daughter exceeded 40 hours per week, she didn't receive overtime pay, despite the fact that a single manager assigned the shifts for both restaurants and both restaurants shared a single employer identification number. I'm fairly certain this practice is illegal, and I've encouraged my daughter to file a complaint with the state. 

I'm not trying to imply that the minimum wage is responsible for poverty, but it's certainly not much help in preventing it either. And even jobs that pay more than minimum are still poverty level wages. As noted above, there are 46.5 million people in this country living in poverty. Another 59.9 million people get by on incomes that are no more that twice the poverty threshold.

Low wages may not be the cause of poverty, but they keep a lot of families within striking distance.
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In this post, I used a family of four with two children under 18 as an example. The tables below contain similar data for other family configurations.

Table 1. Poverty Thresholds for 2013 by Size of Family and Number of Related Children Under 18 Years (dollars)

Size of family unit	Related children under 18 years
	None	One	Two	Three	Four	Five	Six	Seven	Eight  or more
One person
Under 65	12,119
65 and over	11,173
Two people
Householder over 65	15,600	16,057
Householder under 65	14,081	15,996
Three people	18,222	18,751	18,769
Four people	24,028	24,421	23,624	23,707
Five people	28,977	29,398	28,498	27,901	27,375
Six people	33,329	33,461	32,771	32,110	31,128	30,545
Seven people	38,349	38,588	37,763	37,187	36,115	34,865	33,493
Eight people	42,890	43,629	42,490	41,807	40,839	39,610	38,331	38,006
Nine or more people	51,594	51,884	51,154	50,575	49,625	48,317	47,134	46,842	45,037

Source: U.S.Census Bureau

Table 2. Wage Needed to Reach Poverty Thresholds Working 50 Weeks at 40 Hours Per Week. (dollars per hour)

Size of family unit	Related children under 18 years
	None	One	Two	Three	Four	Five	Six	Seven	Eight  or more
One person
Under 65	6.06
65 and over	5.59
Two people
Householder over 65	7.80	8.03
Householder under 65	7.04	8.00
Three people	9.11	9.38	9.38
Four people	12.01	12.21	11.81	11.85
Five people	14.49	14.70	14.25	13.90	13.69
Six people	16.66	16.73	16.39	16.06	15.56	15.27
Seven people	19.17	19.29	18.88	18.59	18.06	17.43	16.75
Eight people	21.45	21.63	21.25	20.90	20.42	19.81	19.17	19.00
Nine or more people	25.80	25.92	25.58	25.29	24.81	24.16	23.57	23.42	22.52

Table 3. Hours at the Minimum Wage to Reach Poverty Thresholds (hours)

Size of family unit	Related children under 18 years
	None	One	Two	Three	Four	Five	Six	Seven	Eight  or more
One person
Under 65	1,564
65 and over	1,442
Two people
Householder over 65	2,013	2,072
Householder under 65	1,817	2,064
Three people	2,351	2,419	2,422
Four people	3,100	3,151	3,048	3,059
Five people	3,739	3,793	3,677	3,587	3,532
Six people	4,301	4,318	4,229	4,143	4,017	3,941
Seven people	4,948	4,979	4,873	4,798	4,660	4,499	4,322
Eight people	5,534	5,583	5,483	5,394	5,270	5,111	4,946	4,904
Nine or more people	6,657	6,690	6,601	6,626	6,403	6,234	6,082	6,044	5,811

Post mage courtesy of Graur Razvan Ionutgraur/ FreeDigitalPhotos.net.