The Vulnerable Poor

The Census will release a new crop of poverty data in a few weeks. In anticipation of the release, I have been refining my "life status" approach to categorizing the various types of poor people. Under this approach, I found that "vulnerable populations" make up the vast majority of all poor people in the country.

So much of our understanding of poverty and its "causes" are determined by the various ways we choose to categorize poor people. Those partial to educational policies tend to categorize the poor according to educational attainment. Those with certain family structure agendas tend to categorize them according to family types. The Census itself releases figures according to regions, races, genders, and so on.

These conventional categorization approaches tend to mislead more than illuminate. Before we get into any other poverty discussion, surely we want to know what the relationship of the poor is to the economic system. In a country that relies heavily on the market to distribute the national income, the first question should always be: why isn't the market giving the poor enough income?

In answering that question, the natural first place to look is towards so-called vulnerable populations. These are populations whose circumstances make it difficult or impossible to work and therefore greatly diminish their ability to secure direct income from the market. Vulnerable populations so defined include children, the elderly, the disabled, students, caretakers, and the involuntarily unemployed.

Under my latest identification approach (described below), I found that 82.8% of the officially poor in 2013 belonged to one or more of these vulnerable populations.

Here, each poor person is put into 1 of the 8 categories, depending on which category they first qualify for (going from top to bottom). Children are people below the age of 18. Elderly are people above the age of 64. Disabled people are those who either have one of the six serious disabilities that the ASEC tracks or who were out of a job for some or all of the year because of an illness or disability. Students are those who were out of a job for some or all of the year because they were in school. Carers are those who were out of a job for some or all of the year because they were taking care of a family. Unemployed people are those who were out of a job for some or all of the year (most were only out for some of the year) because they could not find work. Together, these vulnerable populations (which overlap with one another) make up 82.8% of the officially poor.

Although I did not do further analysis, it's worth noting that many of the Fully Employed (those that had a job the entire year) and Others live with people who are vulnerable and, in at least some cases, that is why they are poor. Poverty is defined on the family level, and thus living with children or disabled people or others who have little market income can make your own income inadequate for escaping poverty given your overall family size.

Using this same categorization approach, I produced the following figures for those in poverty under the Supplemental Poverty Metric (SPM).

Thanks to food security programs, the Earned Income Tax Credit, and to a much lesser degree the Child Tax Credit, the children's share is quite a bit smaller under the SPM. Thanks to the way the SPM counts out-of-pocket medical expenses as income reductions, the elderly's share is quite a bit larger. Other than that, there is some shuffling between the disabled, carers, unemployed and the fully employed shares, but overall things look fairly similar. At the final count, even under the SPM (which counts much more of the US welfare state than the OPM), 77.6% of poor people are in one of the identified vulnerable populations.

This pattern of impoverishment tells me that poverty is primarily a consequence of the market's inadequate distributive mechanisms. People whose life circumstances impair their ability to work are, not surprisingly, at heightened risk of poverty in a market society that directly provides such people nothing. It is no coincidence that the six vulnerable populations I've identified are also the populations that receive nearly all of the attention of the welfare states around the world, including our own.