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Good Question: Why Is The Poverty Line Just $11,000?

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(credit: CBS) Jason DeRusha
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MINNEAPOLIS (WCCO) — More Americans than ever before are living below the poverty line, and 544,000 Minnesotans are there too. But how is the poverty line determined?

“It was determined by the money a household spent on food,” said Marcia Fink, Director of Basic Needs at Greater Twin Cities United Way. “It was created on some data from the 1950s and 1960s.”

When the poverty line was first created, Americans spent about 1/3 of their household budget on food. So government officials took the average cost of a year’s spending on basic food needs, and multiplied it by three.

Today, the official federal government poverty threshold, as per the Census Bureau, is $11,344 for a single person, or $22,314 for a family of four.

“Things, lives have changed so dramatically. Food doesn’t make up 1/3 of a household budget,” said Fink.

Housing costs, transportation, childcare expenses have all gone way up in expense, leaving food as a much smaller percentage of household spending.

In modern times, many experts say we spend 1/6 of our budget or 1/7 on food.

That’s why the “poverty line” of $22,314 is so hard to fathom.

“Can you imagine living off that? You can’t, not really,” said Fink.

To make $22,314 in a family of four, both parents would have to work 30 hours a week in minimum wage $7.25/hr jobs. But Fink and other researchers, like those at Jobs Now Minnesota, argue that the real cost of basic needs in Minnesota for a family of four is more like $56,000 – $58,000 a year.

“That’s a much more realistic number,” said Fink.

Federal agencies use various multipliers of the poverty line to determine eligibility for aid. One in four Minnesotans, or 1.3 million, are now living in households that are below 200 percent of the federal poverty level.

But while those people are likely struggling to meet basic needs, that doesn’t mean that they’re all homeless.

“What the poverty line does not incorporate are the benefits people are entitled to when you hit those low levels of income,” said Fink.

According to a report by the Heritage Foundation, using government statistics, 46 percent of those classified as below the poverty line are people who own their own homes.

“For example, more than 70 means-tested welfare programs provide cash, food, housing, medical care, and social services to poor and low-income persons, including Temporary Assistance to Needy Families, Supplemental Security Income, the Earned Income Tax Credit, food stamps, the Women, Infants and Children food program, public housing and Medicaid,” said the report.

They argue, “Poor families clearly struggle to make ends meet, but in most cases, they are struggling to pay for air conditioning and cable TV while putting food on the table.”

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