Most conversations about the fiscal cliff revolve around what people can do about it -- Congressional representatives who can compromise, investors who can sell out before the end of the year, or taxpayers who can tweak their personal finances. But what about poor people -- particularly those with kids -- who don't have anything to sell or much in the way of personal finances to adjust? If we go over the fiscal cliff and some government programs are cut, things will only get worse for the poor.
Krissy Clark, a senior reporter with Marketplace's Wealth and Poverty Desk, says the official definition of poverty doesn't even include things like child care and cell phones. She says the federal government started officially defining poverty in the 1960s. Technically, the poverty line was calculated to be the minimal yearly income a family would need to spend one-third of their after-tax income on food. That means, theoretically, that they'd have enough leftover to cover other basic necessities like clothing and shelter as well. As the standard of living has changed over the years, things like transportation to work, child care, computers and a cell phone can be almost as essential for holding down a job and getting by in daily modern life, but they aren't included in the official poverty calculation.
Clark says certain groups are more vulnerable to poverty than others. Poverty rates for African-American and Hispanic children exceed the national average of 22 percent, according to U.S. Census data. About 37 percent of African-American children live in poverty and the poverty rate for Latino children is just over 34 percent. Meanwhile, 12.5 percent of white children live in poverty. Clark says there are many reasons for the difference in numbers.
"Part of the problem is once you're poor, it's hard not to be poor for generation after generation. So if you are a child born to parents in the bottom fifth of the income scale, you're more likely to stay at the bottom in the U.S. then you would be in countries like Canada, Britain, Germany and France," she says.
One reason for the increase in child poverty is that across the country people are facing stagnant wages while the cost of living rises. Because a lot of the well-paying manufacturing jobs are moving overseas, the work available to poor people without a college education tends to be in the service sector for low wages. So even though more people in poverty are working and have jobs, they remain poor.
"What's kind of scary is that... a lot of the programs that poor families rely on are really at stake right now," Clark says.