The poverty line in the U.S., according to the federal government, is just under $24,000.
But most Americans say even if you make twice that, you won’t be very comfortable in their hometown.
A recent survey by Gallup lays bare this stark financial reality, with the pollsters’ findings headlined: “Americans Say Family of Four Needs Nearly $60K to ‘Get By.’ “
So is this a question of perception vs. reality, with poll respondents being too materialistic or confusing wants with needs? Or is this really what it means to be “poor” in America in 2013?
A little bit of both.
This week the Brookings Institution released a book titled, Confronting Suburban Poverty in America. It lays out how a push into the suburbs over the last several decades has been ignored by poverty groups that largely focus on the dichotomy of poor urban dwellers and those in need who live far outside the cities in remote rural towns with no support systems at all.
But the suburbs present a new dimension of poverty. In rural areas, the cost of living is dirt cheap even if there is no infrastructure or social support; in urban areas, there are a host of charities and prospective jobs and public transportation that groups can use to fight poverty.
But what if you live in a nice suburb with lots of McMansions but little affordable housing? What if you can’t afford a car but your suburban hamlet has few public transportation options? What if you need work but the only employers within 10 miles of your suburban home are restaurants that pay minimum wage?
This is the new dynamic of poverty in America. While $24,000 may get you by in some communities, in other parts of the nation that money doesn’t go very far at all.
As Lydia Saad of Gallup put it:
“Having enough to get by appears to be particularly challenging in the East, whose residents give a significantly higher average estimate of what it takes to survive. And while people may gravitate to areas that provide the lifestyle they can best afford, suburban life — with its heavy emphasis on single-occupancy detached homes, auto-based transportation, and relatively well-off residents — may also be less hospitable for those whose incomes fall into the $30,000 to $60,000 category.”
For a practical example, imagine you were a head of a household working construction in the early 2000s. You found work in the suburbs building single family homes in a booming bedroom community about 30 minutes outside a major city, and put down roots there. But the Great Recession gutted your business and you were laid off. You don’t have the skills to work in technology or medicine, and even if you wanted to there aren’t any jobs nearby.
What do you do?
The callous answer is to take whatever jobs are left, or to pack up and move. But the high demand for the remaining unskilled jobs means a race to the bottom in salary, and the idea of uprooting their families to chase the hope (and not the guarantee) of work is not appealing to many.
For many families in this scenario, they simply stay in the suburbs which were once thriving and struggle to make ends meet.
Minimum income requirements are certainly a slippery thing, coloured by our aspirations for a better life and perhaps an unwillingness to truly confront what’s “necessary” and what’s “nice.”
But there’s a reason why consumer spending remains weak and many investors are very leery about the state of the recovery. Yes, corporate profits are up but a persistently high unemployment rate of 7.6% and a lack of growth in skilled, well-paid jobs is disturbing.
Mid-wage, mid-skill jobs have been eliminated and the workers instead are opting for bartending jobs for a fraction of the pay instead.
I’m not just waxing hyperbole here either. In 2012, the job growth rate for restaurants hit a 17-year high. You think that’s because of booming consumer spending, or simply a massive influx of workers desperate for any kind of employment … even restaurant jobs at minimum wage or less if they are dependent on tips?
This recovery won’t get very far without consumers. And consumers won’t get very far without decent paying jobs.
Just something to consider while the market continues to make new highs.
Jeff Reeves is the editor of InvestorPlace.com and the author of “The Frugal Investor’s Guide to Finding Great Stocks.” Write him at [email protected] or follow him on Twitter via @JeffReevesIP.