Hidden US Poverty: 43% of the US is $400 from living in their car

This surprising economic fact is presented in the 2024 book White Poverty by Rev. William Barber II, who estimated that in 2017 some 140 million people in the US are in this situation (140 million out of the 2017 population of 325 million is 43%). The beginning of the explanation for the high rate of poverty in the US, lies in the continued use of the obsolete US OPM (Official Poverty Measure), which even with corrections underestimates the level of US Poverty.

Barber knew many people who were working jobs at minimum wages but needed to ask for the charity of his church in order to pay for common emergencies of approximately $400 dollars in order to pay their yearly expenses. He often travelled to many other churches across the country and noticed the same problem. On this basis he estimated the more realistic number of people in dire poverty as those who could not weather a $400 emergency expense in a year. Based on his calculations he estimated approximately 140 million people in the US were in this situation. pdf Ch.1 of Book White Poverty

In 2024 the Official Poverty Measure assumed $28,000/yr for a family of four WAS NOT POVERTY.

A family of four cannot possibly survive in 2024 even on twice $28,000/year as confirmed by some analysts. The fact that this unrealistic figure can even be considered, shows how obsolete the US OPM (Official Poverty Measure) has become.

In 1964 when President Johnson declared the war on poverty, Economist Mollie Orshansky came up with the OPM (Official Poverty Measure). She measured the cost of a minimally adequate basket of food and noticed that the minimal cost of housing, transportation and health costs were 3X the cost of the food. The whole cost for a family of four was then $3,128/year. Orshansky drew the poverty line starting from that level and lower.

As time went by the government used the same 3X (basket of food) to determine the poverty line of the OPM (Official Poverty Measure). Since the base was the same minimal basket of foods it was felt the poverty measure would automatically adjust for inflation. It did, but only for the basket of food. By 2024 the cost of the basket of food had increased only 4 times while the cost of rent had increased 12 times. This meant the OPM (Official Poverty Measure), was severely underestimating the amount of people suffering poverty in the US. In 2024 a family of four cannot possibly survive on $28,000/yr (more realistically some analysts suggest that with even double that figure a family of four cannot survive). Yet that is approximately where the OPM draws the poverty line in 2024. Professor Mark Rank's article on the problem with the OPM

How does the US poverty rate compare to the 25 other developed countries of the OECD (Organization for Economic Cooperation and Development)?

That the high rate of poverty of the US is being hidden by the obsolete OPM (Official Poverty Measure) has created the paradox that the richest country in the world also has the highest rate of poverty of all the 26 countries in the OECD (Organization for Economic Development - the world's most developed countries). Since one does not fix what one does not know is broken, the poverty problem in the US remains unknown and unattended year after year.Professor Mark Rank's comparison of the poverty of the US against the other developed OECD Countries

At least it does not affect me directly - does it?

Professor Mark Rank of Washington University in St Louis, who has spent 20 years studying this problem, has a website which analyzes the paradox of US high poverty. To people in the US who think that this sad fact does not affect them, Professor Rank suggests that according to his estimate, the drag on the economy of the US of carrying this many poor is costing the whole country approximately $1 trillion a year. Can We Estimate the Overall Costs of Poverty in the US

Signs of the effects of poverty in the election of 2024

The election of 2024 showed some signs of this hidden segment of voters who expressed their personal financial hardship in their vote. The ABC Analysis after the election of 2024 concluded that:

"how voters felt about their personal financial situation and the national economy were strong indicators of whether they supported Harris or Trump, per this year's exit polls: For example, around 90 percent who said the economy was "excellent" or "good" supported Harris, while strong majorities of the larger share who said the economy was "not so good" or "poor" supported Trump."

It appears that many supporters for Trump might have come from among the hidden 140 million poor of the US who are not doing well financially (43% of the 325 million based on the 2017 population). ABC Analyst's Article of 2024 Exit Polls ABC News Monica Potts November 14, 2024

Is it difficult to fix the US poverty problem?

No, and yes. Every one of the other 25 developed countries has a lower poverty rate than the US which indicates that there is a lot that can be done to diminish poverty in the US. But to eradicate poverty, structural economic changes are needed which are long-term and require paradigm changes. These are needed to create sufficient good paying jobs for the participants in the economy. If we visualize the labor economy as a game of musical chairs, these systemic measures would increase the number of available chairs.

The US Government and US Businesses cooperated to create the American Economic Miracle from 1946-1970 and could do so again. The model originated in the US, and China has been using it to create many better paying jobs in their economy in the 2000's. The US could certainly restart using their own 1946-1970 economic model to fix their poverty problem, but some sticky US political misconceptions discrediting the role of governments in the economy have impeded this possibility. We explore this in the next section about Development Economics. Professor Mark Rank's analysis of the causes of US Poverty

Professor RANK mentions the importance of good paying jobs but does not suggest concrete examples

This is a problem of Development Economics that has been studied and for which there exist long-term solutions. The example of South Korea shows that it took them two decades and much sacrifice to improve their economy. But they were successful and created a large number of good paying jobs in the Electronic and Automobile industries which catapulted them into becoming an industrialized economy. These ideas are briefly discussed in the following link on Development Economics. Development Economics and the US Economic Miracle after WWII

References for additional information:

Presentation of Professor Rank on his book: The Poverty Paradox: Understanding Economic Hardship Amid American Prosperity>

Also Professor Rank's excellent website about the subject which was quoted extensively above is a great resource https://confrontingpoverty.org/