The World Bank and other international organizations frequently cite incomes of less than $2.00 per person per day as a benchmark for poverty levels in developing countries. Policy experts in this country have also analyzed data on the extremely poor in the United States using this same standard. Next week, the authors of $2 a Day: Living on Almost Nothing in America, will visit Ohio to talk about the plight of Americans living in extreme poverty.
As groups prepare for those events, they asked Community Solutions, “how many people in Ohio live at this level of extreme poverty?” Doing some quick calculations, we estimate that between 184,000 and 198,000 Ohioans live on less than $2.00 per day. Here, we describe our methodology.
Our estimate is based on the U.S. Census Bureau’s American Community Survey (ACS) five-year sample data from 2010 to 2014. We used the Public Use Microdata Sample (PUMS) from those years, as maintained by the Minnesota Population Center (IPUMS-USA, University of Minnesota, www.ipums.org). The ACS counts total household income for the past 12 months from the following sources: wages/salary, self-employment, interest, dividends, rent, royalties, income from estates or trusts; Social Security retirement, survivor, and disability income; Supplemental Security Income (SSI), cash public assistance (TANF), other retirement, survivor, or disability income; unemployment, worker’s compensation, VA payments, alimony and child support, and other periodic income other than earnings. It should be noted that the value of SNAP (food stamp) benefits is not counted as income in the ACS.
In order to derive a household per capita (per-person) income, we divided the total household income by the number of persons in the household. A per-capita income of $2.00 per day is equivalent to an annual income of $730.00. We then aggregated the number of people with annual household per-capita incomes of less than $730.00 (inflation-adjusted to 2014 dollars by the ACS). The resulting estimate is about 191,000 persons in Ohio with incomes less than $2.00 a day (including 105,000 persons in households reporting zero income), with a 90% margin of error of plus-or-minus 7,000 persons.
Some limitations to this method should be mentioned. Since the ACS asks people to recall their income over the past 12 months, it is likely that there is some under-reporting, particularly for income received irregularly. The ACS attempts to correct for this by asking separate questions for each type of income. In addition, our method of calculating household per capita income “averages out” total household income across all household members; this seemed reasonable to us because households are primary consumption units. Finally, this method counts only people in households and not those living in shelters, cars, or who are otherwise homeless. Even with these limitations, we believe that 191,000 persons is the best estimate available of how many Ohioans survive on income less than $2.00 per day.
Although this estimate does not take into account SNAP or other in-kind benefits such as Medicaid or subsidized housing, it demonstrates that a large number of Ohioans face such economic insecurity that seemingly small incremental costs such as medical co-pays, minimum rent standards, and work requirements can pose insurmountable barriers to their wellbeing.