October 25, 2006
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I figured it out!
Okay, not me personally exactly. But here's the thing. In my office we've spent a lot of time trying to figure out WHERE the Federal Government comes up with the figure that they say a family of four can live on.
So I'm reading today and I found it. It comes from a formula the Social Security Administration put together in 1964. It sets the poverty level at three times the cost of a "thrifty food basket." This is because in 1955 (the year for which figures were known when the formula was set) an average family spent 1/3 of it's budget on food.
BUT - here's the rub and it explains why the figures are so off for people struggling to live today on what the government says should be a "good" wage. Food prices have not risen as much as the price of almost every other necessity.
In 1955, milk cost .92 a gallon, eggs were .72 a dozen, a postage stamp was .03, the average cost of a new car was 1,950, gas to drive it was .23, and the average cost of a new home was $22,000. This was at a time when the average income was $4,137.
Today, do you know how much milk costs? That was the question that stumped the first President Bush, he had no idea. Milk prices vary somewhat around the nation but the average is $2.99 per gallon. A postage stamp is .39, the average cost of a new car is $28,481, and a new home will run you $264,540. The average income today is about $43,000.
The Federal Government in all its wisdom says that a family of three that has income below $16,600 is impoverished.
Remember in 1955, a family spent a third of it's money on food. Milk and eggs don't cost 10 times as much today as they did back then, but everything else does. So a formula that assumes a family can live on three times the amount of their grocery budget, is simply a ludicrous proposition.
The American economic landscape is very different today. And the Federal poverty guideline underestimates the numbers whose lives can reasonably be considered impoverished.
Okay, I don't feel a whole lot better now that I've written it all out, but it does help me understand why I've been told that I make too much money to qualify for programs that might help me cover necessities for the boys. The people who figured that out - haven't bothered to notice that we aren't living in 1955 anymore.
Just to put this into numbers that show my personal acquaintance with the problem, my personal income is a hair below $20k. My rent is more than 50% of my gross monthly income. The co-pays for the boys doctor visits and medications are almost 10% of my gross monthly income. Utilities and phone run almost 25%. And my car insurance is 4%. Of GROSS. So you can see why I'm upset about the thought of my employer with-holding taxes and so forth if my status is swtiched from an Independent Contractor to an Employee. If I added that right in my head, my budget is slightly less than 89% of my gross income for fixed expenses. If it weren't for child support, we wouldn't be eating.
Comments (8)
That explains a lot.
Yes...the standard needs to be changed....right along with the rate of inflation....Oh...but that would make sense! *smirk*
I don't know how you manage to save anything!!! You are good. I don't know how a family can live on less then 100 thousand given what you just wrote there.
Thad told me today that Cheryl had to have a stint put in her heart. MY god she is 36!!! How iw she? I didn't even know she had been sick.
Shelly
Trust you to pin down the source figure -- and the fallacy that underpins it. I sure hope that's going in the book AND in the next set of letters to the leaders of the realm . WTG, Lady. If anyone's going to make change happen, you're on the top of my list to actually do it, against all odds.
the powers that be are so far removed from the daily reality of most people.....
yikes. I am shocked that you make less than $20k doing what you do. Ok, I know writers aren't the BEST paid people around
And Independent Contractor status is especially hard. But surely if you went to regular employee status they would have to pay you more... yes, I think you already said they would. Seriously, I would not worry about the withholdings. With two kids on that income, I don't see how you would even owe any income taxes - so don't let them take any out.
Oh, and we make a lot more (as a two-income family), but we still spend 50% of our income on housing/mortgage. I've found that the more money you make, the higher your expenses seem to be!
Politics demands that the standard be kept where it is. You can't announce that the country suddenly has so many more families living below the poverty line if you want to be re-elected.
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