The Poor in the US Are Richer than the Middle Class in Much of Europe

Mises Wire ^ | October 16, 2015 | Ryan McMaken

[expat_panama]

In this week's debate, Bernie Sanders claimed that the United States has the highest rate of childhood poverty. CBS reports that Sanders said: "We should not be the country that has the highest rate of childhood poverty of any major country and more wealth and income inequality than any other country,"

As even CBS notes, according to UNICEF, which is probably the source of Sanders's factoid, the US has lower childhood poverty rates than Greece, Spain, Mexico, Latvia, and Israel, all of which are OECD countries or regarded as peer countries. The US rate (32.2 percent) is also more or less equal to the rate in Turkey, Romania, Lithuania, and Iceland. See page 8 of this report.

So, while Sanders probably doesn't even know what he means by "major country" it's clear that the US is not an outlier among OECD-type countries, even by UNICEF's own analysis.

We get much more insight, though, once we have a look at what UNICEF means by "poverty rate." In this case, UNICEF (and many other organizations) measure the poverty rate as a percentage of the national median household income. UNICEF uses 60% of median as the cut off. So, if you're in Portugal, and your household earns under 60% of the median income in Portugal, you are poor. If you are in the US and you earn under 60% of the US median income, then you are also poor.
The problem here, of course, is that median household incomes — and what they can buy — differs greatly between the US and Portugal. In relation to the cost of living, the median income in the US is much higher than the median income in much of Europe. So, even someone who earns under 60% of the median income in the US will, in many cases, have higher income than someone who earns the median income in, say, Portugal.

Here are all the median incomes (according to the OECD's household income comparison statistic called "median disposable income.") When adjusted for purchasing power parity, the statistic allows us to make incomes comparable across countries that use different currencies and have different costs of living. This takes into account taxes, and social benefits paid to households. So, let's use it to compare (the Y axis is in "international dollars"):

We see immediately that income is higher for US households than most of the other countries. What about that high poverty rate, though? Well, we find that the poverty level in the US is still higher than numerous countries' median income level:

The green bar is the US income at poverty levels. So, this tells us that a person at 60% of median  income in the US still has a larger income than the median household in Chile, Czech Rep., Greece, Hungary, Portugal, and several others. And the poverty income in the US is very close to matching the median income in Italy, Japan, Spain, and the UK.

Keep in mind that we're using median income here, and not GDP per capita, which means this isn't being skewed up by a small number of mega-wealthy households. So while the US may have a rather high poverty rate, we find that being poor in the US is similar to (at least in terms of income) being a median household in many other countries, including the UK and Japan.

[expat_panama]

This article provides more 'fact-checking' for the Dem debates and is for anyone who's not upset yet...

[alloysteel]

To be poor in America is infinitely better than to be poor in Bangladesh. Or even France.

[ClearCase_guy]

Obamaphones and other stuff from his stash.

[MNJohnnie]

The true message of Socialism/Communism is an equality of misery. Pity we cannot ship those Americans who are so enamored of the Socialist societies to live in one for a few years.

[originalbuckeye]

I have been saying this for years. Our poor people, with flatscreen TVs, computers and cell phones, really should thank all the hard working Americans who pay the taxes that allow them to live like the Middle Class in European countries.

[Lera]

We would not have near the poverty rate we do if politicians did not work so hard to destroy the family unit for votes.

[originalbuckeye]

And CAPITALISM is the reason our country has done so well for so long. Hello Socialism? Everyone will be poorer.

[grania]

“The Poor” in the US are better off than most middle-class retirees in the US.

[Trailerpark Badass]

It’s incredibly cynical to whine about poverty in the US, and the “gap” between rich and poor, while importing tens of millions of some of the poorest people on Earth.

[Lexington Green]

America - where poor people are obese

[volunbeer]

@ post 9 - right on the mark. Add in the automation of future tech in robotics/computers that will eliminate many low wage jobs and it becomes even more foolish to import unskilled laborers.

[all the best]

Never before have so many had so much and been less grateful.

[R. Scott]

Don’t forget $200 sneakers,designer clothes and official sports jackets.

[heartwood]

Can you buy a stable loving family with a committed mother and father? No.

Can you buy a safe neighborhood and good schools? Yes.

Should you have to? No.

[SamAdams76]

I've mentioned this before but it seems that most poverty in the world exists in tropical or sub-tropical areas.

Where a colder climate exists and where beer is consumed, the median incomes are much higher.

United States, Ireland, Luxembourg. Switzerland, Australia, Norway, Sweden, Denmark, Canada, Germany, Finland...all of these among the countries with the highest median incomes. All of them where beer is consumed in mass quantities and snow is had in winter.

Colder Climate + Cold Beer = Prosperity.

[Iron Munro]

Our government has passed by the goal of elevating the so-called poor any further to attain equality.

The objective now is to punish anyone who is independent or prosperous, and drag them down.

That excludes the multi-millionaires and billionaires who own the republican and democrat parties.

[ozzymandus]

I like to watch those real-estate shows where Americans buy houses in Europe. I wouldn’t keep hogs in some of those “houses”. Toilet (if there is one) next to the stove? WTF?

[SkyPilot]

[RginTN]

I was doing missionary work in Nuevo Laredo back in the early 1990s. Those people were poor. I’m taking no shoes, no flushing toilet no air conditioning no tv poor

[Terry L Smith]

I have lived in a rated as poor country for nearly three years. The standard income of the populace, at the time, was a total of $300.00 a year in American currency.

This country was a constitutional monarchy with a government modeled after the British ways of doing things.

This, was in a time when the U.S. government was hosted on national airbases and water ports and army posts all across the country, with many American servicemen (American female G.I.’s were not allowed to be assigned there, other than hospital personnel), spending their monies on the local economies.

I would rather live in this country, my home, my nation.

Bernie Sanders, foad!