Are Appliances Luxuries?

According to the Heritage Foundation, a well-known and influential conservative think-tank, poor Americans don’t need any government assistance because they’re living pretty good lives, as defined by their ubiquitous ownership of refrigerators, microwave ovens, air conditioners, and cellphones.

It’s actually a pretty common argument: the poor have it better now than they did in the past, or compared to their counterparts elsewhere in the world, and therefore, as many will conclude, they have nothing to complain about and shouldn’t be a concern of public policy. I encounter this line of thinking all the time, and it may even seem intuitive: after all, if the government is broke and we’re all having to work harder than ever to get by, why should the government – and by extension our tax money – be invested in people that aren’t doing so bad in the first place?

The problem is that this report, like the very premise in the first place, is based on flawed data and misleading presumptions. For the record, I read the original when it was first published a couple of months ago in Heritage’s website, but I can’t seem to locate it now (the search engine yields no result). If anyone cares to, feel free to try and find it to judge for yourselves (and share it with me as well).

The first and most glaring problem, as identified in an article by the Center for American Progress, is that the data the report draws from is old, pre-dating the economic troubles that began in 2007. I’m sure I don’t have to elaborate on the severity of the recession and the subsequent damage that was done to the fortunes of millions of households and businesses. Many poor people, and a good number of the middle-class, have been in far worse shape since, and that isn’t accounted for in Heritage’s research.

The second problem, as the article notes, is that appliances alone are hardly a suitable metric from which to judge prosperity.

…the electronic devices that Heritage cites are everyday necessities today. Who has iceboxes anymore? Who doesn’t need a cell phone to find a job or keep one? Fortunately, these appliances are all significantly cheaper these days, but not so the real everyday basics such as quality child care and out-of-pocket medical costs, both of which have risen much faster than inflation, squeezing the budgets of the poor and middle-class alike. In fact, if anything, those who we consider poor today are far more out of the social mainstream in terms of their basic income than when our poverty measure was first set in the 1960s.

The point about the price of some goods and services rising faster than inflation is an important one. The government measures poverty by indexing it to inflation, in order to keep track of the changes in the price of basic items as time goes by. But since the costs of other crucial needs – such as healthcare, education, and rent – are rising more quickly than overall inflation, the real burden of poverty is underestimated. The poor seem to have it better – and indeed do when it comes to some things, like affording basic appliances – but they’re far more financially burdened than statistics let on.

The very notion that appliances signify wealth is a highly spurious one to begin with. For one thing, it takes a lot more than just a fridge and microwave to properly raise a family. In many cities, including my own, the lack of transportation can be a considerable handicap in trying to find a job, much less get one. Many poverty stricken areas are isolated or lack access to good public transportation. And even using PT can present problems as it often takes longer to get to where you need to be, putting a lot of strain on parents who have dependents to take care of (and can’t afford child care since that, too, is becoming more expensive).

And what about healthy food, namely fruits and vegetables, that are also generally more expensive than the unhealthy processed kind? Obesity and malnutrition are serious problems for poorer Americans because of this, and it’s further exacerbated by the expensiveness of medical care, which isn’t generally offered by the minimum-wage paying businesses that low-income people usually work for. The costs of a good education are also daunting, and while grants and scholarships do exists, the former is being threatened by budget cuts (and in some states are already slashed), while the latter is a gamble that leaves a lot of people out.

Indeed, the rising cost of paying for electricity for the very appliances that Heritage thinks are indicators of luxury are eating a bigger and bigger hole into the pockets of the poor. Today struggling families are spending at least 15 percent of their household budget to pay their electric bills, and the poorest of the poor shell out an even higher percentage of their income for this basic expense. Somehow Heritage manages to completely ignore the fact in America, the U.S. Department of Agriculture found in 2008 that half (50.3 percent) of poor households with children said there were days when they didn’t know how or if they could pay for their next meal.

And these families are paying an extraordinary share of their income for basic housing, too. While the average renter makes about $13.52 an hour, the national average wage needed to afford a fair market rent for a two-bedroom apartment is around $18.46 an hour. This problem is exacerbated for minimum wage working parents who earn just $7.25 an hour.

Furthermore, maintaining appliances is actually a means of expediency, rather than a sign of wealth. Without a fridge, how else would a family feed itself properly? Having to dine out regularly would hardly be prudent if you’re poor. Similarly, quickly prepared food is a given for any working class family or indebted student, for which a microwave is a basic requirement. How else will you find the time and energy to feed yourself or your kids? Even cellphones are increasingly vital, especially for job seekers.

The chart below shows that even trying to sell these “luxuries” in order to make money would come to naught, as it would end up costing the family more.

Even if you don’t share CAP’s progressive stance – I can’t say I necessarily do - it’s obvious that poor people are hardly in any privileged position, regardless of the historical context. To argue that they have it better than they would in a third world country, or compared to a few decades ago, misses the point: do we really want to judge our standards of prosperity by looking at poorer countries or time periods? Does it even matter whether or not today’s impoverished have it relatively better, given that we’re living in the here and now?

Would it have been proper to say that blacks in the 1960s shouldn’t fuss about inequality and civil rights since they were better off at the time than before the Civil War? Should we dismiss deteriorating civil liberties since we’re freer than other countries? These would be very callous and cynical arguments.

To be sure, the poor do indeed currently have it good in a lot of ways. The fact that most all of them own appliances that were once rarities is a sign of this. But that doesn’t mean we should dismiss the very real socioeconomic problems that seem to be worsening with time, with negative implications for the viability of our economy. Nor downplay the misery, humiliation, and long-term stagnation that accompanies such hardship, made worse by the sense of political abandonment and social stigmatization (which reports like Heritage’s don’t help).

I’m not saying that growing the government or cranking up spending is the answer. We need smart, cost-effective solutions, the kind that empower the underprivileged to get by, at least until the economy recovers (which will be helped if more people have spending power).

Smart federal investments in nutrition programs stem the degree to which struggling families face hunger and food insecurity. Reasonable investments in affordable housing and community development make it possible for millions to keep a roof over their head. Our economy also depends on countercyclical programs such as food stamps, Medicaid, unemployment insurance, and the earned income tax credit. By putting resources directly in the hands of struggling families, these programs boost consumer demand, keep small businesses humming, and create jobs that strengthen the middle class.

There is no magic bullet to this issue, and most ideas are easier to formulate than implement. But at the very least, we should recognize that we have a problem in the first place.

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2 comments on “Are Appliances Luxuries?

  1. “To argue that they have it better than they would in a third world country, or compared to a few decades ago, misses the point: do we really want to judge our standards of prosperity by looking at poorer countries or time periods?”—I have argued this point so much. It seems that whenever one complains about something, people (at least people I know) always say “well at least you don’t have it as bad as people in a 3rd world country.” Yes, that is certainly true, but that does NOT mean that the situation is right, nor does it make one feel that much better! Great post!

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