About those claims that the US has high poverty

Americans are frequently assaulted with amazing claims that our country has one of the highest poverty rates in the entire developed world. We get it from sources like the United Nations International Children’s Emergency Fund (UNICEF, sometimes just the United Nations Children’s Fund), the Organisation for Economic Co-operation and Development (OECD), and a host of others, as well.

For example, the Washington Post reported in April 2013 that the United Nations Children’s Fund had just issued a new report showing the US poverty rate ranked just one off the bottom on a list of countries from “virtually all of Europe plus Canada, Australia, New Zealand and Japan.”

These claims sound really grim, but are they accurate? Can it be that when many poor in the US somehow manage to have cell phones, TV’s, refrigerators and a lot of other things that these Americans still are badly off compared to, say, the poor in some of the former Communist satellite countries?

Actually, the same WaPo article provides clues to what is really going on, and it’s a classic example of why you really need to understand what is behind the numbers people keep passing around.

When you dig further into the Post’s article, it explains that UNICEF defines poor as living in a household that earns less than half of the national median income in their country.

In other words, UNICEF’s dubious statistics use a separate poverty level for each country. UNICEF isn’t keeping all the countries on a level playing field with their numbers.

The WaPo article expands on this, explaining:

“UNICEF is using its own ‘poverty line’ here; the more typical international definition is a family that lives on less than $1.25 or $2 per day. Almost no Americans qualify for this definition. Internally, the United States defines the poverty line as a family living on less than about $22,000 per year, which includes about 15 percent of Americans.”

So, not only does UNICEF measure poverty using unequal standards for each country, but if a common poverty scale accepted by many economic researchers is used, hardly anyone in the US falls under that common poverty level.

For certain, UNICEF’s highly unequal poverty comparisons are guaranteed to unfairly make the US look bad because, as the Heritage Foundation points out:

“The median income in the United States is substantially higher than the median income in most European countries.”

So, the bottom line is, as a really interesting article from the Mises Institute in Austria points out:

“The poor in the US are richer than the middle class in much of Europe.”

Mises, you see, does its own research and doesn’t fall for the unfair comparisons too many folks are flaunting as fact.

To reiterate, Mises points out that the very different income level the OECD uses as a poverty threshold for US citizens is so high compared to other countries that it is actually higher than the actual median incomes in many other countries.

So, the next time someone tries to sell you the notion that the US has more poverty than any other country in the developed world, you will now know they are basing that on a seriously unfair and uneven analysis. Furthermore, any argument based around that biased and flawed analysis is built on a foundation of sand, as well.