Sunday, April 1, 2012

Some Mathematical FACTS about poverty in the U.S.

According to the Dept of health and human services, the poverty threshold in the U.S is as follows.
 2012 Poverty Guidelines for the 48 Contiguous States and the District of Columbia Persons in family/household Poverty guideline 1 \$11,170 2 15,130 3 19,090 4 23,050 5 27,010 6 30,970 7 34,930 8 38,890 For families/households with more than 8 persons, add \$3,960 for each additional person.

LET'S DO THE MATH

Let’s break this down a little bit.   For the family of 3 the chart indicates that to be considered in poverty you have to make less than \$19,090 annually.   The National housing Conference gives the fair market average price of rent on a 2 bedroom as \$960 monthly which is \$11,520 annually.  The U.S. dept. of Agriculture gives the cost of food for a family of 3 as \$439 monthly which is \$5,268 annually. The average cost of utilities (natural gas, water, electricity) varies widely but sits around \$250 monthly for most families. This is \$3,000 annually.
Now to add all of this data up we get a base cost of \$19,788 that puts us close to the poverty threshold.   This base cost does not include
Average fuel costs as reported by CNN are about \$368 monthly which adds another \$4,416 to the annual cost of living. Our total is now \$24,204 annually
Let’s stop at this number for now and see how it compares to wages.   The current minimum wage is \$7.25/hour At 40 hours a week that is \$290.00 weekly( \$15,080 annually  before taxes)   Now if both parents were to be working 40 hours a week we double this to get \$30,160 before taxes.(this puts you above the poverty level and makes public assistance unavailable)   Now this is \$5,956 more than the annual cost we have above, but with this situation we have a new problem(child care) Which makes a new expense.
USA TODAY reports that child day care ranges from \$3,803 to \$13,480 annually, for those lucky enough to live in an area on the low average that will still leave you with \$2,153 a year. However we are talking about a family of 3 here with a child. Nowhere in our expenses did we include the other basics such as clothing and toys(yes toys they are essential for a child’s cognitive development)
If your child is in diapers and you shop wisely you will spend around \$30 a week \$1,560 annually on diapers (this number can vary slightly depending on special needs… sensitive skin allergies etc. )   Subtract this from the \$2,153 we had left above we are now down to \$593 However, with diapers we also need diaper wipes. A person could bargain shop and get away with around \$12 month on those. That is only \$144 annually, and when subtracted from \$593 leaves us with \$449 clothes, shoes, toys etc….
Another expense I left out is motor vehicle insurance which is now a legal requirement in most states. The average costs varies greatly but is around \$1,500 annually leaving our money left over -\$1051   There are more expenses that are “necessary expenses” That I have not included, but the fact remains It is impossible to live on minimum wage with a family of 3 and both parents working full time. This is why many people get caught up in major credit card debt, have poor credit and stay in a cycle of survival by destroying their financial future. Bad credit means higher interest and high payments on any loan they try to get, which keeps them always broke. .
For those that do manage to survive by whatever means they can are on a slippery slope. One emergency (car problems, health issues preventing work, cut in hours etc…) can completely devastate a family living off minimum wage.