Feds Keep the Poverty Line Artificially Low ($15,060 for 1 adult in 2024) to Conceal at Least 36 Million Households who Earn Too Much to Qualify for Welfare and Not Enough to Afford the Basics

From [HERE] Some of the country’s savviest economic trend predictors spend all day answering call-center phones. 

Operators at 211 emergency helplines raised alarm bells about a baby formula shortage ahead of the headlines about empty shelves. And they knew that families were defaulting on their mortgages before the subprime collapse in 2008.    

Now, even as the economy looks healthy by many measures, 211 workers say they are hearing something concerning: more people living very close to poverty than the federal poverty line might suggest. The disparity aligns with polls showing high levels of consumer malaise despite recent good news like cooling inflation, low unemployment and strong hiring in March.

United Way, the nonprofit that operates about half of the country’s 200-plus 211 centers, and other poverty researchers blame that disconnect partly on the federal poverty line, which they say hasn’t kept up with the real cost of living. 

The share of households below the census-designated federal poverty line has barely budged since 2010. Meanwhile, poverty researchers say a large and fast-growing group of people are earning too much to qualify for social services and not enough to afford the basics where they live.

“We wonder why there’s so much anger in public discourse today, and it’s in part because of the stress people feel to just keep themselves and their families afloat,” says Lisa Tepper Bates, president of United Way of Connecticut. “People feel like the system is not serving them.” 

United Way calls this population ALICE, or Asset Limited, Income Constrained, Employed. The organization says about 36 million American households, or 29%, met the criteria in 2021, the most recent year for which data is available. That is up 18% from 2010. Preliminary data show the same trend continuing through 2022.

In nearby Hartford, where the cost of living outpaces the national average, 38% of households fit that description. Call centers operate locally, and Connecticut’s center hears from residents all over the state. 

Not many answers

During years of underemployment as a single parent, Theo Bonet got help from services—and later applied to work as a United Way contact specialist to help families who also needed assistance. The 42-year-old didn’t expect to tell so many callers that they earn too much for assistance. 

“It’s heart-wrenching to have to say to someone who’s struggling, ‘I’m sorry, you’re not eligible,’ ” says Bonet, adding that the frequency of these calls has risen sharply. 

Callers tell Bonet that they are embarrassed to ask for help and that they are often doing so for the first time after working throughout adulthood. “I always remind them it takes strength to make a call,” Bonet says. 

Trained to route callers to thousands of outside resources and service providers, United Way operators say those available to ALICE families struggling to pay their bills are often limited to food pantries and a smattering of religious and government programs without income restrictions. 

The federal poverty level for a family of four stands at $31,200. United Way of Connecticut estimates the bare-minimum survival budget for a family of four with two young children in the state to be as high as $126,000. United Way uses the local cost of housing, groceries, child care, healthcare, transportation, technology and taxes to come up with ALICE survival budgets for every U.S. county. 

Bonet recently spoke with a man who said he earned $10,000 a month and was looking for low-cost medical facilities because he couldn’t afford health insurance. 

“I just was kind of in disbelief to hear someone who makes that much struggling,” Bonet says. 

Defining poverty

United Way of Connecticut President Tepper Bates doesn’t mince words: “The federal poverty line is garbage.”

Although the Census Bureau raises the poverty line each year in step with the Labor Department’s consumer-price index, some poverty experts say the underlying math doesn’t reflect many financial realities. The core assumption that families spend a third of their total income on food, they say, is inconsistent with the fact that on average, housing consumes the largest share of household budgets. And the metric doesn’t adjust for differences in the cost of living across the U.S., which hurts residents of high-cost states such as Connecticut.  

The Census Bureau released its own supplemental poverty measure in 2011 that provides a more nuanced calculation. The official poverty line of $15,060 for one adult in 2024, however, remains the baseline for determining most public assistance. Among the benefits: Medicaid and the Children’s Health Insurance Program (CHIP), the Supplemental Nutrition Assistance Program (SNAP) and the National School Lunch Program. 

A group of Democratic congressmen introduced a bill in December that would change the poverty line calculation more drastically than the supplemental measure and likely qualify more families for benefits. It hasn’t received a vote.   

Pandemic-era benefits cushioned families during the early period of rapid inflation, says Marianne Page, director of the Center for Poverty and Inequality Research and an economics professor at the University of California, Davis. Without those programs, more families are struggling, she says. 

“People are worse off now,” Page says. “There are a lot of other measures by which we might think the economy is doing OK. But at the end of the day, things like inflation and benefits being clawed back have an impact on a family’s ability to purchase the goods and services that it needs.” 

The Department of Health and Human Services and Commerce Department, which both play roles in federal poverty calculations and benefit allocation, directed the Journal to each other or to publicly available information. [MORE]