America’s poverty level — despite the country’s enormous wealth, vast resources and human talent — is one of the highest among developed countries.
Dozens of OECD countries have substantially lower poverty levels than America. Some countries, including France, Ireland, Germany, the Netherlands, Sweden and Switzerland, have poverty levels that are less than half the U.S. level.
Among America’s population of 333 million are 724 billionaires and about 37 million people living below the federal poverty level, or 11 percent in 2020. Before COVID-19 and the associated economic fallout, America’s poverty rate in 2019 was slightly less, 10 percent. However, after taking into account government aid, a revised adjusted estimate of the 2020 poverty rate is close to 9 percent, the lowest level since official estimates were first released in 1959.
While the names, wealth, professions, backgrounds, personalities, etc. of the richest billionaire men and women in America are widely known and often highlighted in the popular media, comparatively little is publicized regarding who are the poorest Americans and their incomes.
The magnitude of America’s income differentials can be appreciated by the fact that the wealth of the richest billionaire in the country is close to 14 million times greater than the federal poverty level for an individual American in 2021, i.e., $177 billion versus $12,880.
Such income differentials provide a backdrop to the politically divisive and vital issue of extremely wealthy Americans, in particular billionaires, not paying their fair share of taxes. Recently ProPublica reported that while the median American household earning about $68,000 per year paid 14 percent in federal taxes each year, the 25 richest Americans (by Forbes’ tally) paid a “true tax rate” of 3.4 percent on wealth growth of $401 billion between 2014 and 2018.
America’s poverty levels vary inversely by age. Poverty among children is considerably higher than among the elderly population aged 65 and over, 16 percent versus 9 percent. The poverty level for young children under 5 years is even higher at 18 percent. The rate for those in the working ages 18 to 64 years falls in between at 12 percent.
The current poverty rate of 9 percent among the elderly is one-quarter of the level in 1959. Despite America’s elderly population quadrupling in size since the 1950s, the number of aged persons living in poverty has remained virtually the same, around 5 million, due to declining elderly poverty rates. The elderly’s comparatively low poverty rate is largely due to their long-standing safety net programs, particularly Social Security and Medicare.
In contrast to the elderly, the children’s poverty rate remains relatively high, although it declined somewhat since the 1990s. The children’s poverty rate half a century ago, however, was similar to current levels, i.e., 15 percent in 1970 versus 16 percent in 2020. Again, among developed countries, America’s poverty rate for children is among the highest.
Furthermore, the poverty rates for young children under 5 years are considerably higher in many of America’s large cities. For example, young children’s poverty rates in Cleveland, Detroit, Atlanta and New Orleans are 46 percent, 43 percent, 35 percent and 33 percent, respectively. Also, some large U.S. cities have no less than one-quarter of their resident populations living below the poverty level.
Poverty levels also vary greatly across America’s major social/ethnic groups. The highest poverty rates are those of American Indians and Blacks, 23 percent and 21 percent, respectively. The next highest group consists of Hispanics at 17 percent, followed by lows of 8 percent for Asians and whites.
Also importantly, poverty rates vary considerably by educational attainment. The proportions of adults living in poverty range from a high of 25 percent for those with no high school diploma to a low of 4 percent for those with a bachelor’s degree or higher. Having a high school diploma places the poverty level at 13 percent.
The states having the highest poverty percentages are located largely in the south, including Mississippi at 20 percent, Louisiana and New Mexico at 19 percent, and West Virginia at 18 percent. In contrast, many of the lowest state poverty rates are in the northeast, including New Hampshire, Maryland and Connecticut, with poverty levels at 8 percent, 9 percent and 10 percent, respectively.
Recently, poverty is estimated to have declined following the $1.9 trillion American Rescue Plan. Extended unemployment benefits, stimulus payments to individuals, increased food stamp benefits and expansion of the Child Tax Credit payments to households with children are believed to have reduced child poverty and lifted more than 8 million people above the poverty line.
Over the past 70 years, the United States has made notable achievements with its anti-poverty programs, particularly for elderly Americans. However, poverty in America remains high relative to most other developed countries.
In particular, the poverty rate for young children, unfortunately, continues to be stubbornly high. Children who have grown up in poverty in America are more likely to report lower employment incomes and experience worse health outcomes. The proposed expanded child tax credits are considered an important contribution to lowering the poverty level among young children.
Another consequential path to reducing America’s poverty is through education. Ensuring that every child has options for early childhood education, completes high school and has opportunities for further education and training contributes enormously to reducing poverty levels, especially for those currently struggling at low socioeconomic levels.
America has taken important steps in the past to address poverty. Despite those efforts, the U.S. poverty level remains relatively high. Current efforts need to be strengthened for America to achieve poverty levels consistent with its wealth, resources and goals.
To do otherwise only contributes to limiting America’s progress. As said about America’s future by a person elected to be president four times, “The test of our progress is not whether we add more to the abundance of those who have much; it is whether we provide enough for those who have too little.”
Joseph Chamie is a consulting demographer, a former director of the United Nations Population Division and author of numerous publications on population issues, including his recent book, “Births, Deaths, Migrations and Other Important Population Matters.”