By Stephen Knapp
“Confronted by seemingly insurmountable financial obstacles, psychological paralysis sets in.”
For a year that came out of the gate booming, 2020 is a total bust.
Hundreds of thousands of businesses that were bustling in January have closed their doors, or are about to. Millions of wage earners who had money to burn on candy and flowers on Valentine’s Day are watching their savings, stability and security go up in flames. Economists say we haven’t blundered into such dire straits since the Great Depression, and for the vast army of proud and recently self-sufficient Americans now scrambling to pay for food and gasoline, being forcibly demoted into the ranks of the poor is a bitter pill to swallow. The best most of us can do is to wish them well and hope that the same fumbling policymakers who pulled the financial rug out from under so many hardworking taxpayers can soon restore the economic ground beneath their feet.
And while it may be weak tea at best, maybe we can also offer the abruptly impoverished some small comfort by way of perspective. Yes, it stinks to be poor, particularly through no fault of your own, but “poor” is a peculiarly nonspecific word that means different things to different people. In many ways, poor is a state of mind, and if a little attitude adjustment can’t put Benjamins in the billfold, it may at least help ease the shock of state-mandated want.
According to the U.S. Census Bureau, the threshold for poverty in this land of plenty is an annual income of $12,760 for an individual, and $26,200 for a family of four. For reasons of its own, the Bureau doesn’t include in its calculations the value received from a whole host of federal and state in-kind programs such as food stamps, housing assistance and Medicaid, benefits which cost the public purse about $11,000 per annum for each of the roughly 40 million Americans the government classified as poor in 2019, which would yield a practical poverty threshold of something closer to $24,000 for an individual and $70,000 for a four-top. Curiously enough, the Census Bureau itself admits that the average “poor” American spends about $1.94 per dollar of reported income, which could help to explain why 38 percent of the poor own their own home, 14 percent own two or more cars, and 22,000 poor households have a heated pool in the backyard.
That’s what the government calls poor, anyway. What Merriam-Webster calls it is “lacking a usual or socially acceptable amount of money,” a mushy definition that defies precise application. Sociologists divide poverty into the stark “absolutely poor,” meaning you can’t afford basic needs like food and shelter, and “relatively poor,” meaning you can’t afford certain indefinite things that certain undefined others can. As it happens, relative poverty is far more common than the absolute kind, much harder to address, and causes a whole lot of unnecessary heartache.
Last year, a team of international pollsters asked a sizeable sample of the American hoi polloi what they considered poor. A large percentage of those respondents earning $40,000 a year pegged the poverty line at $30,000 a year. Of those making $30,000 a year, many deemed $20,000 to be the point of privation. No few of those living on a $20,000 paycheck think a person can’t rightly be called poor on an annual income in excess of $10,000, and a surprising number of those getting by on $10,000 per annum and even less simply don’t consider themselves unduly deprived. From this we may deduce that most people of even very limited means don’t count themselves among the poor. Under the principles of relative poverty, it would seem that they take heart in knowing that there’s always somebody out there with less.
Interestingly, it works almost exactly backwards among monied classes. While most of the above respondents considered anyone making $100,000 a year to be more or less “rich,” almost nobody making $100,000 a year did. Indeed, more than half of those banking more than $1 million per year believed themselves inadequately funded, and a solid 40 percent of those with a net worth above $25 million appraised themselves as “financially insecure.” From this we may deduce that the agonies of perceived economic inferiority are often felt most keenly by those with the best personal economies. Their problem, if one can call it that, is that there’s always somebody out there with more. And if so many of both the well-heeled and down-at-the-heels don’t see themselves that way, then we must conclude that socio-economic labels are as often imposed as assumed.
Unfortunately, differing perceptions of “poor” aren’t just academically intriguing. Whatever one’s actual wherewithal, “feeling poor” can have chronic financial and emotional consequences. According to researchers at the University of California at Berkeley, people who “feel” poor are more inclined to make ill-considered spending decisions. For one thing, by obsessively focusing on immediate thrift, they often miss easy opportunities for both direct economic improvement and even greater long-term savings. It’s further observed that folks who identify as poor are more apt to invest their limited stake at long odds, rashly sinking precious funds into dicey short-term gambles in hopes of a fast payday. Most pernicious, though, are the helplessness, hopelessness and dependency common to so many who accept the label. Confronted by seemingly insurmountable financial obstacles, psychological paralysis sets in. The cash-strapped can become, in effect, resigned to poverty, and to a permanent place at the bottom of the socio-economic ladder.
As the black year of 2020 drags on, the legions of those compelled to ruin will continue to expand. No research survey will put food on the tables of the absolute poor, nor university study return to the relative poor their hard-won and swiftly lost security. But they might serve to remind and reassure the involuntarily idle that monetary worth and personal worth aren’t the same thing, that an attitude of optimism can be a powerful economic asset, and that money isn’t the only measure of contentment.