There's a problem with reports about household food budget spending: They don't reflect the buying power reality facing the poor.
How much of your family budget goes toward the food bill? Twenty, thirty percent? No doubt some budget that much for food, but the average is lower, according to an article in The Atlantic (March 8). But the amount of money budgeted to food by the poorest 20 percent of the populace has remained relatively the same over the last 28 years, while the middle 20 percent and the highest 20 percent spent less. This, of course has a lot to do with wage inequities and the wealth gap, but that is not the point of this article or the other. Near the end of The Atlantic write-up, the writer, Derek Thompson, notes that "we shouldn't rule out the possibility that those accelerating costs [health care, energy, housing] are putting pressure on poor families to spend less on food."
Shouldn't rule it out? It is the cold reality. While prices go up on everything, even if a family spends the same percentage of their budget on food, they're getting less for their money.
In the article, Thompson shares how the average household at one time had to spend upwards of 50 percent of its income on food. With graphs, he compares the household budgets of Americans with those of other countries and how the amount spent on going out to eat has increased while the amount at home decreased. Midway through, he notes that relative food prices have fallen precipitously over the years so that the amount budgeted for food has dropped in the average household in America.
Thompson writes: "But 'average household' doesn't mean much in a country where the top 20 percent earns 15X the bottom 20 percent."
He then shows where the average amount budgeted for food has fallen for the middle 20 percenters and the highest 20 percenters. It has remained unchanged for the bottom 20 percent, stuck at 16.1 percent of their household budget.
So here's the problem: If Thompson's graphs are accurate, and if per capita income has only gone up roughly 8 percent since 1984 (from $46,215 to $50,054 -- adjusted for inflation -- according to US Census figures) in an economy that has seen inflation increase over 100 percent in that same 28-year time span, then that 16.1 percent is buying considerably less food.
It's easy to see when you look at it thusly: Anything the family bought in 1984 that cost a dollar would now, on average, cost $2. For a food example, say they bought two pounds of beans for buck in 1984. By 2011, that bag of beans cost $2 bucks. At the same time, the average income only went up about 8 cents against that same dollar increase. Here's an example: In 1984, a Big Mac at McDonald's cost $1.50; today it costs about $3.70. That's a bit more than 100 percent but prices vary per item (some things will have increased by less than 100 percent and, therefore, average out).
In Thompson's last graph, he breaks down the average household's budget on food for the home and food eaten at restaurants. The poorest 20 percent spends an average of $2,448 on food for home, $1,099 outside the home (for a total of $3,547, or 16.1 percent of the household budget).
In 1984, the average household pulled in $20,935 (US Census). In 2011, the average was $49,103. But those numbers are misleading in that they are average median of all the incomes in the US and where Thompson's point that the richest 20 percent makes 15 times what the poorest 20 percent make really hits home.
The poverty line for 2011 was $22,314. In November, the US Census Bureau reported that the poverty level had risen to $23,050. But the number of people living in poverty at or below the poverty line in the preceding year had increased from by nearly a million people to 49.7 million.
Fifty million people living in poverty where they only spend 16.1 percent of their annual budget on food. And since the population of the United States in 2011 was over 310 million, that would be about one-sixth of the nation, just slightly less than the 20 percent.
And here's the thing. Those almost 20 percent are paying over ten times more for the same food in comparison to 28 years ago. On average. Adjusted for inflation, the 1984 median household would have bought $7,625 worth of food, compared to the $3,547 those dollars buy today. That $4,078 would buy a lot of Big Macs and beans...
The number of people receiving food stamps in America was reportedly nearly 47 million at the end of 2011. The official unemployment rate was 8.6 percent, or just over 13.3 million, only a portion of which received food stamps, many relying on savings and investments to get them through to the next job. So, is there any reason to believe that Thompson's "possibility" of poor families spending less on food is an actuality? And even if they're spending the same proportion of the their household budget (16.1 percent), it certainly isn't buying the same amount of food it once did.
Sure, food is cheaper, relatively speaking, than a century ago. But inflation has raised the cost of everything else to the point where the poor aren't feeling those "cheap" food prices any longer. Americans might not spend 50 percent of the household budgets on food, but they're not spending as much of their household budgets on actual food items, either.
(photo credit: Chuck Kennedy, WhiteHouse.gov, Wikimedia Commons)
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