Poor Judgment

MANY AMERICANS seem to think of themselves as poor���even though they don���t come close to meeting the official definition.

Let���s start with some objective measures. One standard official��measure��says that, for 2019, a two-person household is in poverty with annual income of $16,910 or less. According to an��MIT calculator, a two-adult household in��Calhoun County, Alabama,��needs to earn at least $8.54 per hour each���with both working fulltime���to support themselves. In��Bergen County, New Jersey, that hourly rate jumps to $11.43.

Who is in��poverty? The least likely are families headed by married couples, at 4.9%, and the most likely are single women with children, at 25.7%. Single-father families are in the middle, at 12.4%. As you might suspect, the highest poverty rates are among the least educated: 24.5% of those who never graduated high school are in poverty, nearly double the rate for folks with a high school diploma. Poverty is also high among those with disabilities. Overall, 12.3% of Americans are officially in poverty.

But suppose we get away from objective measures���and look at what folks say about themselves. A variety of�� surveys��suggest that 40% to 75% of Americans view themselves as living paycheck to paycheck or say they would struggle financially if they were faced with an unexpected expense of as little as $400.

But here���s the thing with surveys: They rely on individual perceptions. Consider this from the��Pew Research Center: ���The vast majority of Americans���95%���now own a cellphone of some kind. The share of Americans that own smartphones is now 77%, up from just 35% in Pew Research Center���s first survey of smartphone ownership conducted in 2011.���

If as many as 75% of Americans are truly living paycheck to paycheck, why are 77% still springing for a smartphone? Who are the 20 million who visit Disney���s Magic Kingdom every year? Why are so many saying they feel poor, and yet just 12.3% fall below the official poverty level? Something doesn���t jibe.

Let���s talk about this paycheck-to-paycheck thing. There is a big difference between poverty and feeling like you���re in poverty. What makes the difference? It isn���t necessarily income, but rather spending.

My definition of living paycheck to paycheck: Once you pay for basics like food, housing, clothing and health care, you have little or nothing left over. But it seems my definition is wrong���because people with six-figure incomes say they���re barely squeaking by. For instance, a��CareerBuilder found that 9% of those earning $100,000 and above say they live paycheck to paycheck. How can that be?

I recently had a debate with a friend who has a very different view of necessary spending. He made his point by saying, ���Do we expect families to forgo the trappings of living in this society���a computer and broadband service, smart phones, a flat-screen TV���because they are ���non-essential���? Should parents not pay fees associated with youth sports or buy kids equipment necessary to participate in group activities? What���s essential, or at least very important, for mental health and social integration beyond the basics of food and shelter?���

If this is the common view of ���necessities,��� no wonder so many Americans don���t have $400 in the bank. But surely folks would be willing to give up some stuff���if only temporarily���to escape the stress of living on the financial edge? It seems not. Asked what short-term spending sacrifices they would be willing to make, the CareerBuilder survey found that 37% of workers said they wouldn���t give up their pet, 19% wouldn���t give up eating out, 17% travel, 11% alcohol and 53% their mobile device.

For those who are truly poor, more money may indeed be the answer. But for most Americans who say they���re living paycheck to paycheck, I suspect the key is education���in all its forms, from lifestyle to life choices, and especially saving money, budgeting and spending habits.

Richard Quinn blogs at QuinnsCommentary.com. Before retiring in 2010, Dick was a compensation and benefits executive. His previous articles include How to Blow It,��Don’t Call Me That,��Happily Ever After��and��The Office.��Follow Dick on Twitter��@QuinnsComments.

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