:format(webp)/cdn.vox-cdn.com/uploads/chorus_image/image/40696346/117362056.0.0.jpg)
More than 45 million Americans live under the poverty line, and roughly 30 million more are near-poor (defined as 1 to 1.5 times the poverty line), according to the latest Census Bureau data.
Poverty, of course, is determined simply by figuring out who earns below a certain threshold. Leaving aside the obvious problems with how we calculate that threshold, thinking about poverty in this way also obscures an important dimension of what it means to be low-income: uncertainty.
As author Linda Tirado explained to Vox last week, being poor isn't just about money being tight; it's about an inability to plan for the future. Volatile income wreaks havoc on finances as workers hope each month goes perfectly, both when it comes to money inflows and outflows. In a passage from her upcoming book "Hand to Mouth," she tells about her life among the working poor:
"If I'm saving my spare $5 a week, in the best-case scenario I will have saved $260 a year. ... Of course, you will never manage to actually save it; you'll get sick at least one day and miss work and dip into it for rent," she writes. Or any other litany of misfortunes could strike, she adds: high gas prices, work pants could tear and need replacing. And those sorts of things will almost certainly happen several times per year, which can easily deplete any sort of savings.
In other words, it's not just about how much you'll put on your tax return; it's about how much you'll get in your next paycheck and the one after that, and what emergencies that money might have to cover.
And that sentiment is borne out by recent research. According to the US Financial Diaries Project (whose research on savings circles I highlighted yesterday), which follows the spending and savings habits of 200 low-to-moderate-income households over the course of a year, volatility makes life much harder. One of their reports from 2013 shows just how this looks more specifically for struggling families. Here's a look at two different months' income for one Kentucky family where the mother ("Molly" in the charts below) works in a school cafeteria and doesn't get any income in the summer months.
:format(webp):no_upscale()/cdn.vox-cdn.com/uploads/chorus_asset/file/2317042/Screen_Shot_2014-10-02_at_11.42.59_AM.0.png)
Source: US Financial Diaries
Molly may in fact be lucky, because her job is at least regular, despite the three-month summer gaps. The real troubles are for the many people who have temporary or seasonal jobs. Up and down the spectrum of one sample of low-to-moderate-income households, the project found that incomes could swing widely for various jobs.
:format(webp):no_upscale()/cdn.vox-cdn.com/uploads/chorus_asset/file/2317048/Screen_Shot_2014-10-02_at_11.44.08_AM.0.png)
Source: US Financial Diaries
This isn't a representative sample of Americans, but it does illustrate that many of these people's jobs leave them guessing each month about how they will fare.
There's other evidence of this as well. Fully 20 percent of Americans in the bottom quintile of earners experienced an income drop of 50 percent or more within a year, according to a 2010 paper from the Urban Institute. That's not a huge share of Americans, but it is a higher share than for any other quintile, and those swings are likely to be more meaningful for a poorer family.
What any of this information means is that poverty is a much more complex phenomenon than it may seem on the surface, and that fixing it might be a question of targeted policies like the EITC and a higher minimum wage, but also simply of boosting the economy to create better, steadier jobs.
