The Big Squeeze

Understandably, jobs, or the lack of them, is a big topic of conversation.  But, times are hard even for those with jobs.  Simply put, more and more working people are finding it increasingly difficult to make ends meet.

Thanks to a study commissioned by the non-profit group Wider Opportunities for Women, we now have a new set of income standards that are far more useful than the poverty line or minimum wage for gauging how well working people are faring.  The authors of the study created “thresholds for economic stability.”  In other words they actually estimated how much different households needed to secure a minimum but meaningful standard of living, one that included some savings for retirement and emergencies.   A summary of their work is highlighted in the table below.


As the New York Times explains:

According to the report, a single worker needs an income of $30,012 a year — or just above $14 an hour — to cover basic expenses and save for retirement and emergencies. That is close to three times the 2010 national poverty level of $10,830 for a single person, and nearly twice the federal minimum wage of $7.25 an hour.

A single worker with two young children needs an annual income of $57,756, or just over $27 an hour, to attain economic stability, and a family with two working parents and two young children needs to earn $67,920 a year, or about $16 an hour per worker.

That compares with the national poverty level of $22,050 for a family of four. The most recent data from the Census Bureau found that 14.3 percent of Americans were living below the poverty line in 2009. 

To develop its thresholds, the authors of the study used a variety of public data.  For example:

For housing, which along with utilities is usually a family’s largest expense, the authors came up with “a decent standard of shelter which is accessible to those with limited income” by averaging data from the Department of Housing and Urban Developmentthat identified a monthly cost equivalent for rent at the fortieth percentile among all rents paid in each metropolitan area across the country.

They chose a “low cost” food plan from the nutritional guidelines of the Department of Agriculture, and calculated commuting costs “assuming the ownership of a small sedan.” For health care, they calculated expenses for workers both with and without employer-based benefits.

Given that the poverty lines fall far short of the thresholds established by the report, and these thresholds are themselves bare-bones, there can be little doubt that the actual U.S. poverty rate far exceeds the official estimate of 14.3 percent.     

Faced with this reality, the current moves to cut social programs and break unions seems down right criminal. 


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