Hobson's Choice

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Some grim news from CBPP: Hunger in America

December 21, 2004

"Entitlement sustainability" is a phrase your humble correspondent made up refer to the flow of consumption required to maintain access to the same level of future consumption. If an employee makes $80K per year, but lives in a community where $85K per year is required in order to pay for taxes, lodgings, commuting, catastrophic health care, suitable clothing, the requisite visits with clients or coworkers to pricey restaurants, and so on, then we say that that person cannot sustain the current level of entitlements (claims on future consumption). Many of the more ambitious and optimistic people known to me undertook multi-level networking schemes, dreaming of great riches. When they embarked on those projects, they ran up large amounts of credit card debt, assuming in the future their income would catch up. Most of the time, they ultimately got the better of the debt, by slashing back personal spending, ditching the MLM schemes, and consolidation. Other times they did not; bankruptcy followed, sometimes repeatedly.

For this reason, a failure of entitlement sustainability can strike even middle class households. It often comes when a family, confident of future income, buys a house. The economy tanks and so does the price of the home. Within months the household is plunged into urgent financial liabilities. The household has to make difficult choices. This leads us to a recent report from the Center for Budget and Policy Priorities(CBPP): "Hunger, crowding and other hardships common among families in poverty."

the U.S. Department of Agriculture, found that the number of American households ever experiencing hunger during the year rose by nearly one-quarter from 1999 to 2003. Further, the proportion that was either hungry or threatened by hunger—a group the government terms “food insecure”—has edged higher for four straight years. Nearly 13 million households containing 36 million Americans were food insecure in 2003.

Food insecurity, as we've seen, can strike even the employed; in many cases it strikes the unemployed with extreme speed.

The second report, from the U.S. Department of Health and Human Services, took an unusual, more comprehensive look at hardships affecting households with children. Besides hunger and food insecurity, HHS examined difficulties paying bills and meeting other basic needs, as well as housing safety problems.
1.6 million poor households with children (more than one in three such households) experienced hunger in the four months preceding the survey, lived in severely crowded housing, or had their phone or utilities shut off in the previous 12 months. These households contained about 4 million poor children.

Counting near-poor families (below twice the federal poverty line), nearly 8 million low-income children lived in households that experienced hunger or severely crowded conditions or that had their phone or utilities shut off.

Half of poor families face multiple hardships each year: 52 percent faced two or more of 14 distinct hardships examined by HHS relating to basic needs and safe, adequate housing. Thirty-seven percent faced three or more distinct hardships. Only 7 percent of non-poor families with incomes above twice the poverty line faced three or more distinct hardships.
About 8 million children lived in the 3.6 million poor and near-poor households that had 3 or more distinct hardships.

The second survey, with the statistical survey of specific hardships, dates from 1998; since then, all indicators would suggest that conditions of poverty have intensified. Since 1998, most states and several Canadian provinces have experienced severe, repeated budget shortfalls, leading to extreme reductions in support services for working families in low-income families. Since these support services often are the only sustainable employers—the only ones whose wages actually allow their employees to maintain their livelihood without substantial community subsidy—it follows that the hundreds of thousands of health, education, or public service employees laid off in the last few years has exacerbated the problem. The USDA study supports this surmise: food insecurity has indeed worsened.

predictably, higher income households (>2 times poverty level) have low levels of food insecurity; hardships such as having utilities cut off or severe crowding have occurred to only 5% of such households, compared to one third of all households in poverty. Personally I checked the quiz (p.4 here) and suspected—based on a pastiche of other surveys—that there was substantial underreporting of hardships, since there is not only a pride issue—there's also the increasingly common tendency for employers to run credit checks on prospective employees, or otherwise ensure that they aren't so poor that they are unable to fulfill the duties of their job. Also—employers do not like to hire people who have been unemployed for a long time, for any reason.

Usually this is breezed over by economists, whose policy propositions tend to favor further cuts in assistance to the indigent. Today's Ebeneezer Scrooge has a web log and sketches indifference curves to explain intertemporal substitution of labor and leisure. There are far more of him nowadays than there were years ago, too. In a future post I'd like to explain why I think this is the case.