In the United States, the official poverty rate for 2012 stood at 15 percent based on the national poverty line
which is equivalent to around $16 per person per day. Of the 46.5 million Americans living in poverty, 20.4
million live under half the poverty line. This begs the question of just how poor America’s poorest people are.
- There is a dramatic decrease in those reporting no
income and benefits [in the U.S.] when the reporting period is
increased from one month to 12 months.
- Consumption is more difficult
and time-consuming to measure
- If we measured poverty in the U.S. as if it was
a developing country, we would conclude that
no-one falls under the $2 threshold.
- We know least about the top of the distribution in poor countries and least about the bottom of the distribution in rich countries.
Poverty, in one form or other, exists in every country. But the most acute, absolute manifestations of poverty are
assumed to be limited to the developing world. This is reflected in the fact that rich countries tend to set higher
poverty lines than poor countries, and that global poverty estimates have traditionally excluded industrialized
countries and their populations altogether.
An important study on U.S. poverty by Luke Shaefer and Kathryn Edin gently challenges this assumption. Using an alternative dataset from the one employed for the official U.S. poverty measure, Shaefer and Edin
show that millions of Americans live on less than $2 a day—a threshold commonly used to measure poverty
in the developing world. Depending on the exact definitions used, they find that up to 5 percent of American
households with children are shown to fall under this parsimonious poverty line.
Methodologies for measuring poverty differ wildly both within and across countries, so comparisons and their interpretation demand extreme care.
These numbers are intended to shock—and they succeed. The United States is known for having higher inequality
and a less generous social safety net than many affluent countries in Europe, but the acute deprivations that flow
from this are less understood. A crude comparison of Shaefer and Edin’s estimates with the World Bank’s official
$2 a day poverty estimates for developing economies would place the United States level with or behind a large set
of countries, including Russia (0.1 percent), the West Bank and Gaza (0.3 percent), Jordan (1.6 percent), Albania
(1.7 percent), urban Argentina (1.9 percent), urban China (3.5 percent), and Thailand (4.1 percent). Many of these
countries are recipients of American foreign aid. However, methodologies for measuring poverty differ wildly both
within and across countries, so such comparisons and their interpretation demand extreme care.
This brief is organized into two parts. In the first part, we examine the welfare of America’s poorest people
using a variety of different data sources and definitions. These generate estimates of the number of Americans
living under $2 a day that range from 12 million all the way down to zero. This wide spectrum reflects not only
a lack of agreement on how poverty can most reliably be measured, but the particular ways in which poverty is,
and isn’t, manifested in the U.S.. In the second part, we reexamine America’s $2 a day poverty in the context
of global poverty. We begin by identifying the source and definition of poverty that most faithfully replicates the
World Bank’s official poverty measure for the developing world to allow a fairer comparison between the U.S.
and developing nations. We then compare the characteristics of poverty in the U.S. and the developing world
to provide a more complete picture of the nature of poverty in these different settings. Finally, we explain why
comparisons of poverty in the U.S. and the developing world, despite their limitations and pitfalls, are likely to
become more common.