Many Americans Survive on $2 a Day

12 million Americans potentially face this struggle.
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NEW YORK (MainStreet) — To measure poverty in the developing world most economists look at how many people survive on $2 per day or less. It's the standard benchmark, compared to America where the official poverty line for one person is worth approximately $32 per day. Recently, a pair of economists from the Brookings Institute decided to turn that lens inward.

According to work by researchers Laurence Chandy and Cory Smith, millions of Americans might fall below even third world definitions of poverty. Calling their results "striking," the researchers said that anywhere up to 12 million Americans could fall below this threshold depending on the definition of personal resources and the data sets used.

"Obtaining a definitive estimate of $2 a day poverty would require an uncontested definition of poverty and a data source with no flaws – neither of which we have," Chandy wrote. "While the estimates we obtain vary, the fact that even some have millions of Americans living under $2 a day is alarming."

It is also noteworthy, the researchers mentioned, that since 1996 the number of people living on $2 per day has fallen worldwide while in the U.S. it has jumped.

Asked why they conducted their research, Chandy and Smith said that they wanted to challenge the idea that desperate poverty only exists in third world countries. Generally economists, such as those at the World Bank, assume that the entire population of wealthy nations is well off relative to the rest of the world, even though that seems not to be the case.

"[G]oing forward, the assumption that extreme poverty does not exist in the developed world is likely to face greater scrutiny," Chandy and Smith wrote.

What does this tell us?

First, as the researchers are careful to note, the data is all over the place. Tweak your starting assumptions a little and you can turn 12 million destitute Americans into six, or even close to none. Most data would seem to agree, however, that somewhere around 2% to 3% of our countrymen live on less than $2 per day.

These conditions, however, aren't universal. While some of Chandy and Smith's data make America's rate of $2 per day poverty comparable with Russia, Albania and Gaza, Chandy also notes that "if we used the exact same criteria to measure poverty in the U.S. as is used by the World Bank to obtain the official poverty estimates for the developing world, we would conclude that no one in the U.S. falls under the $2 threshold."

The difference is access to cash vs. access to services. An American, no matter how poor, has access to social services such as schools, food stamps and emergency hospital care that the desperately poor in developing nations don't. It's worth noting, however, when comparing the American experience of poverty to Thailand's that these are all the same services that face perennial budget cuts and layoffs. It's tough to point to the United States's array of public goods as the difference maker when those are the same services we seek to dismantle year after year.

Living poor in America is different from in the developing world.

While Americans under the $2 ledge may have their basic needs largely met, having no access to cash makes them vulnerable to virtually any form of crisis. It also ensures that they will remain stuck, as they don't have the resources necessary to move, take job training or otherwise pursue advancement.

Is the American experience on less than $2 per day quite so bad as it is in the Philippines? No. Is that the standard we want to set for ourselves? Hopefully not.

--Written for MainStreet by Eric Reed, a freelance journalist who writes frequently on the subjects of career and travel. You can read more of his work at his website