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The Federal Poverty Level (FPL) is no longer a realistic indicator of poverty. Based on out-of-date assumptions about the costs of living, it fails to address the impact of the increasing costs for housing, health care and child care. As a result, the official poverty rate as defined by the federal government underestimates those who are really poor.
The federal minimum wage of $5.15 an hour is 30 percent lower after inflation than in 1968. Sixty-three percent of U.S. families below the federal poverty line have one or more workers, according to the Census Bureau. Nearly 60 percent are white. The majority have high school diplomas and even some college.
Women, especially single ones, have the most difficulty. Often their wages barely cover the cost of child care. Low-income women’s pay is up since 1973, but they still average just $7.94 an hour, much less than their male counterparts. That’s one reason the United States has the highest child poverty rate in the industrialized world.
Due to rising tuition costs of higher education, many low-income families cannot afford to send their children to college. Tuition to public four-year colleges has increased 47 percent over the past decade, and tuition at private four-year colleges has gone up 42 percent (“Working and Poor,” Business Week, May 31, 2004). Of college-qualified high school graduates who completed a bachelor’s degree in 2002, 62 percent were from families with a household income of $75,000 and above; 21 percent came from households making $24,999 and below.
“One in four U.S. workers earns $18,000 a year or less, with few if any benefits. More than 28 million people, about a quarter of the country’s workforce between the ages of 18 and 64, earn less than $9.04 an hour or $18,000 a year – the income that marks the federal poverty line for a family of four.”
Working and Poor
Business Week - May 31, 2004
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