Poverty and living costs

Megan McArdle asks an interesting question "When do you stop being poor?". In other words, what kind of living standard should poor people have (paid from "our" taxes)?

The difference between what Europeans and Americans would answer define the differences between societies. My impression from first months in the USA was that poverty is much more prevalent and much more severe than what I was used to. For example, most people struggle to live off their pension in CR, but they have the pension even if the firm goes bankrupt before they retire. They have free health care, no matter what.

I'm coming from poor (by US measures) or (lower) middle class family (in Czech standards). This means that we were never really poor, but we were always very careful with our money (my parents never had a holiday by the sea, or any holiday outside their home for the last 10 years). It made me conscious about spending money. I know they may not be here in the future. It also made me live rather modestly (by my parents standards, I live in luxury, by standards of my friends with similar income, I live like a monk).

When leave for San Diego, I knew I will get only the minimum stipend. I was curious how much money I will spend and what I will be able to afford. I knew I will spend much more than I'm used to for accommodation (around $700). I also knew I could not afford a car. Fortunately, I live reasonably close to to school, and I wanted to focus on my research anyway.

On other living expenses (food, clothing, and other basic stuff) I spend around $300 a month. For that, I get better food than in CR for the same amount, couple of books (reading is fun for some people, you know), and other things I need. I cook for dinner, but eat in school cafeteria (about $4) and sometimes go to a seminar with free lunch.

It's not trivial to keep expenses that low, but it is possible. I buy things when they are on sale, I have a membership card (for discounts). Since I don't have a car, I have to shop in the local shop, which is not the cheapest, but as you can see, if you pay attention to prices, you can save. I buy (infrequently) clothes in Wal-Mart. I don't go to movies, I don't buy coffee in Starbucks, I choose the cheapest brand when several choice of equal quality are available.

I consider my quality of life higher than in Czech Republic (in material sense). It costs $300 + rent. I could probably save a little more, but this is where I would define the poverty line. If you think every person should have a right to have a car to get to work (bike is way cheaper), then you need to add a couple of hundreds (I think about $300 should be enough). Since I pay probably higher rent than necessary (around $500 is a lower end price for a room), I would put total costs of "reasonable life" to $1000-1100. Note that San Diego is rather expensive region, even though not as expensive as New York as the rent goes.


This sum of money gives a single person a living standard that I consider acceptable for a human. It may seem like a lot, but it's not. For a $7/hour (about minimum wage), it is less than 160 hours a month, which requires 8 hours a working day, standard shift. Minimum wage are plentiful, but not pleasant.

The analysis misses something. First, there is health insurance and pension. I believe that there is Medicaid and Medicare, but this does not cover everything. Moreover, there is no pension like in Czech Republic, where the money you get from the government almost do not depend on your wage before retirement (and thus is relatively higher for poor people). You may not even get anything, just some minimum living standards support (if any, I don't really need to know).

Second part is the non-material life (culture, hobbies, etc.) These things are very often available locally in Europe, and are rather cheap. It seems to me that you have to travel farther and pay more in the USA. But some things are free - library, parks, beach.

To come back to the opening question. I define poverty level as a minimum amount of money I need to live reasonable life. Since I like reading more than drinking and driving car, it is pretty low.