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41 Million in U.S. Can’t Afford Basics

By JLP | October 11, 2007

I saw this Marketwatch article on the front page of MSN.com: Study: 41 million in U.S. can’t afford basics

The article highlights a study (PDF) released yesterday about the working poor. A couple of quotes from the article stood out to me:

About 41 million people in working families can’t afford such basic necessities as health care and housing, according to the report. The study, which examined conditions in nine states and the District of Columbia, found that government programs close about two-fifths of the “hardships gap” — a measure of the difference between a family’s income, including all aid programs, and the local costs of goods and services.

What exactly are basic necessities? Neither the article nor the report really give a lot of details. I know that one can eat really cheaply if they really want to. No, it’s not fun but it can be done. I thought the table on page 10 of the study was interesting. A family of one adult and two children living in Washington D.C., “needs” nearly $57,000 to meet basic needs. That’s a lot of money!

I think the real issue here is HEALTH CARE IS TOO EXPENSIVE! Instead of trying to come up with ways to pay for health care, why don’t we figure out how to make health care less expensive for everyone? There’s so much wasteful spending in health care.

I downloaded the study and read through it briefly. Basically, here’s the authors’ summary of what needs to be done:

Our findings are clear. To fill in the gaps, we need to focus on better wages, mandates for employers to provide employment-based benefits, and work supports—or some combination of the three. Better wages and improved employment-based benefits for health care, retirement, and paid time off could make every job a good job. But there is a critical role for public work supports. Work supports must reach all families who need them. Despite low incomes, many families with low-wage workers do not have access to work supports because they are either ineligible or not receiving supports to which they are entitled. This problem is not unique to one locality, but is common across all of the states in our study. The work support that is most effective at reaching families is the EITC, and we should use this as a model to simplify the eligibility criteria and application requirements for other work supports.

I don’t have an answer for this. All I can say is that I’m leery of programs that make families MORE dependent on the government.

Topics: Budgeting | 16 Comments »


16 Responses to “41 Million in U.S. Can’t Afford Basics”

  1. Christina Says:
    October 11th, 2007 at 11:04 am

    I have to say – growing up and now living in DC, it does not surprise me that a family of one adult and two children needs $57,000 to meet basic needs. On that income you can forget any chance at funding an emergency fund to keep you out of financial crisis nevermind all the other things needed to raise children in a stable home (childcare, rent/mortgage, etc). Obviously healthcare is a portion of this, too – and the big problem here is lack of health insurance. One illness can send an uninsured family into financial ruin. My husband and I do pretty well and we still sometimes feel the pressure – which is crazy because we are quite lucky to have good jobs and health insurance.

  2. Meg Says:
    October 11th, 2007 at 1:24 pm

    I was skeptical when i read that article. I have very little patience for these types of studies and their skewed findings which average the stats of millions of Americans in hundreds of different locations. I wonder which 7 states they studied–and I wonder if they included “workers” under age 25 who are likely to be working temporary low-wage jobs and who are being subsidized by their parents, student loans, etc.?

    It doesn’t take a genious to know that it’s tough to get by on minimum wage in a high COL urban area. But these people are being given $8,000+ a year from the government in the form of food stamps, etc., and they are still need over $800 a month just to meet “basic needs?!” Handing out even more money to them (which was the terrible suggestion of the researchers/writers) is not the answer.

    I have a better solution. If that’s really your situation then it’s time to freaking MOVE. If you are working a minimum wage, low skilled job–and you fully expect to continue to do so for whatever reason–then why don’t you move to a lower cost of living area?!?!?!?

    Why do people in LA, NY, DC, etc. insist on living in a cramped, dirty apartment living off food stamps and neglecting your health when you can move to the Midwest–or the South–or the Southwest–or a more rural area in any state in our nation–and more comfortably afford food, shelter, and maybe even health care?!?!?

    Everyone loves to feel sorry for minimum wage workers. But there’s nothing wrong with working a lower paying job. The fact is that you CAN live off minimum wage and have a perfectly comfortable life. YOU JUST CAN’T DO IT IN ONE OF THE MOST EXPENSIVE CITIES IN AMERICA.

  3. FinanceAndFat Says:
    October 11th, 2007 at 2:22 pm

    I’m definitely not for more government handouts, but I strongly agree that health care is a HUGE problem in the U.S. And don’t think that we aren’t already picking up the tab for the un-or-under insured in America. It’s time we make a plan for how to handle it well.

  4. plonkee Says:
    October 11th, 2007 at 2:59 pm

    My favourite factoid about US healthcare is that the US government spends more on healthcare than the UK government. And we have the most comprehensive universal free healthcare system in the world.

    I imagine that the 1 adult and 2 kids need a lot of money because child care does not come free. Of course some people can get help from family and friends and so on, but I imagine that they are assuming that you have to pay for everything.

    Moving costs money which you may not have. And if you’re moving with kids it’ll cost a lot of money.

  5. Christina Says:
    October 11th, 2007 at 3:47 pm

    There are many reasons why people born and raised in poverty in the nation’s most expensive cities don’t move including moving costs (much higher than a minimum wage worker can afford), job market stability (markets in urban areas tend to be more stable and resilient and jobs tend to be more plentiful), need for public transportation (car ownership is expensive) and support of friends and family (which reduces the cost of childcare and potentially other expenses).

    I am definitely not in support of the current government support system nor am I in support of handing out more money as it does not provide the proper incentives, but I don’t think the answer is to tell people who are struggling to up and move. It is important to understand why people live the way they do and create program that offer the proper incentives.

    I think there are many challenges that we don’t consider when we look at these things – and only because we have been lucky in our own lives to have not experienced them.

  6. Christina Says:
    October 11th, 2007 at 4:12 pm

    There are many reasons why people born and raised in poverty in the nation’s most expensive cities don’t move including moving costs (much higher than a minimum wage worker can afford), job market stability (markets in urban areas tend to be more stable and resilient), need for public transportation (car ownership is expensive) and support of friends and family (which reduces the cost of childcare).

    I am definitely not in support of the current government support system nor am I in support of handing out more money as it does not provide the proper incentives, but I don’t think the answer is to tell people who are struggling to up and move. It is important to understand why people live the way they do and create program that offer the proper incentives.

    There are many things we don’t take into consideration because we have been lucky enough to have not experienced them. Also – a single mother with two children making $57,000 in DC is not eligible for food stamps (Source: Food Stamp Website calculator)

  7. sam Says:
    October 11th, 2007 at 5:11 pm

    When I see these sorts of studies, I am pretty skeptical of the results. The reports are usually done to promote the agenda of group that sponsored the study. In this case, the organizations sponsoring this study (see http://www.bridgingthegaps.org/aboutus.html)appear to be non-profit organizations, lobbying groups, and/or governmental groups promoting increased government involvement in solving social problems. So no surprise that their report recommends increased government involvement in solving social problems.

    When people see a study sponsored by corporation, they are understandably skeptical of the results being biased by the sponsorship. Likewise, studies sponsored by lobbying and non-profit groups should be subject to the same skepticism.

  8. www.influenzaadvice.info » 41 Million in US Can’t Afford Basics Says:
    October 12th, 2007 at 1:09 am

    [...] JLP wrote a fantastic post today on “41 Million in US Canât Afford Basics”Here’s ONLY a quick extractBetter wages and improved employment-based benefits for health care, retirement, and paid time off could make every job a good job. But there is a critical role for public work supports. Work supports must reach all families who need … [...]

  9. Adam Says:
    October 12th, 2007 at 3:04 am

    I never understood the logic of someone working a string a fast food jobs and wondering why they can never get ahead. It just amazes me that some of these people never figure out they were never going anywhere to being with. If someone isn’t happy in a capitalistic society, they are either overly complacent or lazy.

    I do agree that something is wrong with health care, but the solution is more capitalism, not less and more government. Something in which prices are not advertised, every provider nearby is likely owned by the same company, you have no say so and are simply billed for whatever they want, and if they don’t run every test (and of course on your dime) they might get sued out of business… well, that sounds more like the mob to me, definitely not the way it’s supposed to work.

    Good start of a simple soultion: put all the lawyers on a boat, sink it, then…. well, that’s all I’ve got right now.

  10. Aaron Says:
    October 12th, 2007 at 11:38 am

    Healthcare is probably the most overpriced necessity in America. Sure it seems like everything is overpriced, but nothing hurts the overall health of our economy and our people more than the healthcare sector.

  11. Lisa Says:
    October 12th, 2007 at 1:05 pm

    Every year, a number of my coworkers used to “adopt” a poor family for the holidays. They would cook a full holiday dinner, buy gifts for the entire family, and deliver them to the family’s home. They eventually stopped because these poor families had nicer cars, bigger TVs and more electronics and toys than my coworkers.

    I’m sure these families were counted as part of the 41 million because they’re on food stamps and Medicaid. Maybe there are many families that can’t afford the basics, but it doesn’t mean they’re living all that poorly.

  12. DK Says:
    October 12th, 2007 at 10:41 pm

    I am very sure that our family would be part of this study.

    The answer is not more government programs.

    The answer is stop taxing my husband so much from his paycheck. While we don’t pay taxes on the $167.00 EBT/food stamps per month, we do pay taxes on everything else.

    We pay over $500.00 a month for medical, dental and vision for two adults and the children. Co-pay for medical is $20.00. $10.00 for prescriptions. The insurance premiums go up every January.

    My teen son recently was thought to have a genetic disorder. He does not have it, but it was $8000.00 in tests and specialists. (His doctor gave me a ball park figure).

    As for Lisa observation – I would bet those folks did not “own” there cars or big TV’s. They bought them on credit. Then they pay sky high interest rates because of poor money management. Don’t be fooled by their false wealth.

  13. Pierluigi Rotundo Says:
    October 15th, 2007 at 8:13 am

    What I really think is that we have to do a mea culpa. I’m not against capitalism, but sometimes it has conducted to “lookin for profit at all costs”. Rising prices are an effect of this. Houses in cities are really expensive. But a charity program is not enough to save these people from poverty. We have to help them grow by themselves.

  14. Pierluigi Rotundo Says:
    October 15th, 2007 at 8:15 am

    I want to add also…the number of rich people is only a few % of all people in the world. Why not invest in Africa? Why not bet on poor people, helping them grow and succeed?
    Government programs have to focus on long term, not in just keeping them away from harversting for just 1,2 or 7 days.

    Thanks for your attention.

    Pierluigi Rotundo

  15. Craig Says:
    October 17th, 2007 at 12:31 am

    I live in Washington DC. I am sick and tired of sanctimonious lies saying drivel like “one needs $57,000 a year to live with 2 children in Washington DC and afford basic needs”. That is a completely unrestrained and ridiculous lie. Basic needs are heating, electricity, water, and transportation. They can be met in Washington DC rather affordably. You wont be living like a king, and it WILL be more expensive than the rest of the country, but you are not dying.

    The people who are suffering are spending money on ridiculous crap like Jordan’s for their sons and designer clothes for their daughters. My parents are well off and they STILL encouraged me to be frugal. I bought all of the clothing that I wore in highschool at thrift stores. Why? Because in Washington DC, thrift stores have some of the nicest clothes I’ve ever seen.

    People need to stop attacking capitalism. Profit leads to lower prices, not higher. If you seek higher prices through “price gouging” you lose, because people will not buy it.

  16. Stephen Says:
    October 6th, 2010 at 8:17 pm

    I thought I would comment although I am 3 yrs late. I lost my job in 2009. House went into foreclosure and then sheriff’s sale. I am not living in someones basement without heat. I have AIDS. Been living with AIDS for 12 yrs. I sold my car for money for healthcare and food and will be out of healthcare at the end of the month (also, out of medications)

    I applied for social services. I was turned down for unemployment, medicaid and food stamps. Yeas, our government turned down an unemployed tax-paying American citizen living with AIDS for food stamps.

    I have been getting some food donations from family and friends but it is few and far between. Someone gives me 10.00 per week and I go and buy soup at the dollar store and live off that.

    I am not trying to get sympathy. I just want to get the word out there that our government only works for certain people and apparently someone unemployed living with AIDS is not one of them.

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