Because poverty looks so different in many other countries, looking from the outside it seems like Americans have so much money. To say that a family making $40,000 a year is poor is very hard for many people to understand.
We also know that if you’re not getting any kinds of government subsidies and you are making $40,000 a year, and it’s two adults and two children, and you’re in an apartment that’s livable, it’s going to cost you much more than that. We are willfully blind to how much our systems hurt our fellow Americans.
I’m not sure it’s possible to be on $40k for 2 adults and 2 kids and not to be getting any form of government help. But OK, suppose it is:
Being in the top 15% of global incomes – yes, adjusted for local prices already – just doesn’t taste like poverty to me.
Can that American family afford a linen shirt each (or two linen shirts and two linen blouses if it’s old-fashioned enough not to wear unisex clothes that don’t fit)?
I’m asking whether they can afford that after paying the rent and real food but *before* paying for the restaurant/fast food meals and computer games and trips to the cinema and the designer/fashion clothes and drugs and …
On the other hand, it doesn’t help if the government is stealing half of your income and wazzing it away on stuff you never asked for.
What’s more, in the UK, for someone on NAE circa 4 days pay out of 5 goes to pay tax and rent (same thing really – well at least the location component of the rent). And you need to add back into that $40K the value of all the entitlements etc.
Wow! Just popped me and the wife’s income into that calculator and we. are. frigging. loaded. Get in!
Oh wait, it says post tax income. We are frigging skint.
https://www.brookings.edu/testimonies/why-the-united-states-needs-an-improved-measure-of-poverty/
US poverty measure is wacky. The household with 40K is above the US poverty threshold.
The original salon article is very stupid. There’s a lot of whinging about low wages for unskilled or low skill jobs, but fails to note that the solution would be to prevent migration into the US. Instead there’s a lot of stuff about “help”, otherwise known as taxpayer handouts.
From a tax standpoint, MFJ Standard Deduction is $25,100, so taxable income would be $14,900. Well within the 10% bracket so $1,490 federal income tax. However, 2 kids get at worse $6,000 and at best $7,200 credit. So, they’re at least $4,510 ahead.
They would also potentially qualify for EITC.
FICA tax would be $3,060.
Kids would definitely qualify for free breakfast and lunch at school, plus food bags for the weekend.
Depending on the state of residence, the family either qualifies for free healthcare via Medicaid, or pennies per month insurance under ACA.
Most likely Section 8 housing vouchers too.
No exaggeration, but that family probably has the same consumption as a family earning $80k.
Henry,
But how many PhDs in accounting do you need to work out how to reclaim all that money you are paying in taxes in the form of those 1001 benefits?
That would really depend on where you live and what your lifestyle is though.
America is a country with massive differences in costs of living moving only a hundred or so miles.
I can live comfortably supporting 2 people on 40 where I live (Yuma) – move to San Diego and yes, that’s poverty wages unless you live deep inland. And you can’t even rent a studio apartment in Palo Alto for 40k a year.