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Sunday, 26 October 2008 17:00


Poverty is something we Americans don't like to think about. We prefer to view ourselves through the rose-colored spectacles of our tag line: land of opportunity.

And that's too bad because, like any other problem, poverty doesn't go away when you ignore it. On the contrary, it is just as likely to get much, much worse.

Observe.

In 2007, the federal government decreed that a family of four with $21,027 in annual household income was to be considered ‘poor.'

In order to earn that much money, a head of household in a single-income family would need to earn an hourly wage of at least $11.37 per hour.

And yet, in 2007, the minimum wage was less than half of that, at $5.15 per hour. Besides, just look at how difficult it was, politically, to increase it even to its current level, which is still less than 60% of the salary needed to escape poverty.

On top of that, our 50-year-old method of measuring poverty is seriously flawed and out of date. In Europe, anything below 60% of median income is considered ‘poor.' If we applied that standard, the 2007 poverty threshold for a family of four would have been $43,761 — more than twice what it was.

This stuff matters to microbusinesses for two reasons.

For one thing, as we have seen in this week's lead story, life is more expensive when you don't have money. And the numbers of Americans who don't have money is steadily increasing, which means that growing poverty is probably depressing entrepreneurship rates and, consequently, depressing economic growth.

The other issue is that infamous word "affordable."

In case you ever wonder why well-paid politicians have ideas about what we "ought" to be able to afford that don't match anybody else's ideas on the subject, one major reason may be that they have no realistic idea of how much it costs to live — especially if their ideas are based on federal poverty guidelines.

As distasteful (and politically hazardous) as it may be for them to watch U.S. poverty rates abruptly shoot up to 40% or so, it's clear that we need to re-think this whole poverty thing — including how income levels impact the degree to which small business support services are not meeting the needs of microbusinesses.

We can't fix it if we don't look at it.

 

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