Define Poverty

From 1973 to 1981 the United States Federal Government made several changes that the Census Bureau classifies as “minor” to the “formula” that defines what poverty is. While the government has no official laws defining poverty or even using poverty as a guide in any legislation, it is a key talking point in daily life for people as well as how the congress-critters push and build their legislation. Not only that, understanding that the formula used to calculate poverty has no real application in our lives really put’s it into perspective that we can’t possibly begin to help those that need help. And I personally believe this core issue is a big reason why you find 500 billion dollar bills being passed and it comes back a year later that 80% of it went to big businesses. Without a clear guideline for poverty firmly established, it opens up these welfare laws to fraud by people who not only shouldn’t qualify but aren’t in any actual need.

But the first thing we should do is visit what is the current “formula” for poverty? Actually, based on a cursory search on the Health and Human Services website (which is where the poverty guidelines actually come from) they don’t provide one. Based on the latest few publications of the guidelines, it seems like it is quite literally a arbitrary number defined by a bunch of suits. For a single person they’ve defined just a hair over $13,000 as “out of poverty”. I think we all know that at less than $1000 a month (once taxes are taken out) there is no way you’re affording rent, electric, running water, and food. Much less any form of entertainment, communications, medicine, transportation, or any of the other services that are essential to daily life.

Before I go making any kind of suggestions to what we should do, I should clarify what we shouldn’t do. We shouldn’t expect anything with this poverty formula idea to change anything directly. We should also realize that the end number that is formulated is simply a benchmark. What really, changes is when we use this formula as a basis for our legislation. A simple example is a minimum wage that dynamically changes based upon this formula. Which in theory sounds great, but we’re only going to try to focus on the first part of this today - the formula for Poverty. What is the formula? There are at least 5, possibly as many as 7, elements that need to go into making this formula accurate.

First is the cost of shelter. Shelter is clearly one of the key elements of living, and isn’t negotiable. One of the themes you’ll see while discussing each of these is a practical approach that doesn’t try to slim down the cost to a nonrealistic number. I’d suggest actually being extremely liberal on the front end of this equation, but being extremely firm in it’s application in laws. We can go over this later in the article. But, for shelter specifically we should look at a 800 square foot home, plenty big enough for a single person, and the cost to build that home. This would include the cost of lumber, copper (for electric wires), glass, textiles, plastics, and all of the raw materials to build the home. And, we should include the labor and processing cost to turn these raw materials into finished products, like turning that raw copper ore into a wire by the drawing and bunching process. It is key to always break down the products used to the raw materials, and include the labor and manufacturing cost to build it back up. So after including those cost of the home, add a reasonable interest rate, then divide by 420 (35 years x 12 months). This is how much home ownership should cost. Add a yearly cost for insurance and property taxes, divided by 12 months. Then include regular repair cost, like roof replacements every 15-20 years, window seal replacements, and others. Then of course, divide each of those items up by their expected life span into a monthly cost. Then you’ll get to a “real cost” of shelter. Once again, this has to be practical, not just the bare minimum cost and the second something goes wrong you’re up the creek without a paddle.

Second is the cost of food. While the cost of food can vary based on several factors, we all must eat to live. Once again, just like with shelter, this has to be practical. Don’t judge the cost of food based on eating out every night, or the cost of the cheapest meals possible. Instead, consider a rolling healthy diet (and even publish the diet plan), which includes the exact lb’s of beef, chicken, seafood, etc that is needed to fill a solid breakfast, lunch, dinner, and even a snack for each day. This shouldn’t include any pre-made foods, but instead whole foods that are prepared by the consumer, this avoids extra cost that shouldn’t be subsidized, but also takes into account a healthy lifestyle and doesn’t force people to choose unhealthy mini-cakes as snacks. Like I said, a practical approach that doesn’t skimp in needed places, but also doesn’t allow for the inflation just to funnel money to a unnecessary destination, for example how we subsidize certain types of farms because it helped buy votes in the 60’s, I wouldn’t want to turn this into some kind of “food service” in our current service based economy that ultimately just takes money from a law because we cut a corner in nutrition, and particularly with this item we need to make sure citizens are clearly lead in a honest way.

Third is the cost of transportation. This is really the first debatable element that some might say isn’t needed to live a basic life. Although I’d argue in favor of this. Transportation really opens up the world for people to allow them to be more independent and potentially earn a better living for them and their family. It also could allow someone to move 5-10 miles out of “town” to a “less desirable” plot of land which can decrease the cost of living. So there are tons of benefits here. Once again, this needs to be considered carefully. We don’t want to just funnel money to Ford and GM, they have plenty of that on their own. We also don’t want to make this some kind of ‘eco-project’ where it skyrockets the price for a political agenda. It also, like shelter, needs to include regular repairs and cost of ownership, like fuel, tires, brakes, etc. It is also important that we also consider alternative transportation, for example biking and public transit. I would like to believe that cost averaging of competent cars would be a great way to go, but often times this just drives the market to a specific product. I’m not sure how we can break this down to raw materials, unless we look at the going rate for the metals used to create a vehicle and some how build a formula that determines what a reasonable cost would be. But once again, it needs to be realistic - and doesn’t just pick some random number that doesn’t have real data behind it.

Fourth is the cost of information. This is another questionable part of this formula that some might say isn’t needed, but I would say is quite possibly the most important. Notices that I say information, but some might say entertainment. I don’t believe entertainment is legitimately needed. But the need for information is essential. If nothing else to learn a new skill, stay informed in political discussions, or to just know the news of the day that people might need to be aware of. Clearly the USA has a decentralized information network, and the internet is the clear favorite way for people to get information. So there is no reason why we shouldn’t embrace that. But it should go back to what is the actual cost to deliver this service, and what is a reasonable profit for this service to the service provider? How much is the cost of the network switches, the lines that have to be ran, the labor cost for maintenance and service. Add all of these raw materials and services up divided up by how often is reasonable to get that service and products replaced, that is the cost of the product. Because once again, we don’t want to be legislating on price gouging profits.

Fifth is the cost of electric. This is the last questionable part of this formula that some might argue against, but in todays world I just don’t find it as good of a argument as others for several reasons, none the less this is our key source of heat in the winter to stay alive. Sure, we could identify cost saving measures, but overall it can’t be ignored as it is so serious today that it is life or death. So I don’t need to spell it out again, needs to be sensible and drives to a raw material cost, versus a advertised price that can just be gouged later on.

Sixth is the cost of clean water. Another requirement, I actually might include this in the cost of food, but you use water for more than just that. So how much is a gallon of clean water worth? It needs to be heated sometimes, it need to be cold others. How much is reasonable to use daily? How much does a shower cost or maybe to brush your teeth? You need it for more than just drinking, its a key ingredient in cooking and is also important in standard home cleaning too. Just like the rest, fair on both sides of the equation.

Seventh is the cost of health. The last cost is also another requirement, the cost of your health. This doesn’t just include the “hot topics” of pills and surgeries, but rather a more holistic approach of what is needed to maintain health overall. Of course we talked about a real balanced diet, which would be beneficial to almost all health, but it should also consider basic health care coverage. And other real out of pocket cost, like giving birth to a child or regular doctor physicals. This could be very elaborate or very basic, and the specifics could be up to debate.

Once again, this whole formula is important to drive a starting point for legislation, it isn’t useful in any really way by itself. And while I really do believe that the formula should be fairly liberal giving everyone the best doubt possible. But, it is also shooting for $1 out of poverty. It should not include things like retirement, savings, name brand items, vacations, or similar - all items that are included are making it month to month. Anything extra should be something that people consider pushing themselves for. But if uncareful, the legislation that might derive from this poverty formula could easily funnel money to bad actors if the formulas aren’t taking potential corruption into account. Without this we have no idea to know what minimum wage might need to be, social welfare programs need to be set to, or even providing people a comfortable goal. It’s just a building block that is essential to actually solving problems instead of kicking the can down the road.