Poor or Low-Income?

People in America in our time often use the term low-income when they mean poor. The usage of "low-income" to mean "poor" is a euphemism and is inaccurate; people often avoid the term "poor" out of political correctness, but I think that this confusion leads to a lack of precision when discussing poverty.

I also think that this focus on income, and not wealth, net worth, and support network (which are reflected in the word poor), is associated with an implicit marginalization of the practice and values of financial responsibility, and also, to a degree, with a lack of understanding of how poverty in America exists and occurs. Implicit in the idea that low income can be used to mean poor is the assumption that people generally do not save money, or that saving is not important. These assumptions, and the lack of distinctions between income and net worth, ultimately hold us back from addressing the social problems associated with poverty, and preventing or combating poverty.

Examples demonstrating the distinction of low-income vs poor

• A very wealthy person, or a fairly well-off person or family may have times in their life when they have a low income, or even very little or no income, and yet are still well-off financially. For example, someone with savings of $50,000, even with high income from a very aggressive investment strategy, would not be able to support themselves in most parts of the U.S. on the basis of investment income alone. They would technically be "low income", but with that large a cash cushion, they would not be poor. Similarly, a person with $500,000 in investments, but currently in graduate school in a time of economic downturn, might have a "low income" --but by all standards they would be rich and not even remotely poor.
• Even among people without savings, someone with a strong support network, especially one of relatively wealthy family or friends, willing to support them, would not effectively be poor. Such is the case for many recent unemployed college graduates from upper class and upper-middle-class families in our society.
• A financially secure person, or member of a financially-secure family, may turn to volunteer work or a low-paying job when they feel financially secure, seeking a desire for more interesting work, less stressful work, or work that contributes to society in a more meaningful way. Such a person may be low-income but not poor.
• Many high-income individuals may actually have low (or negative) net worth. People who spend beyond their means often end up with substantial debt. While these people have the illusion of financial security, they actually have very little. When a high-income, high-spending person who is living paycheck to paycheck loses their job, or even if they have any change in their life that increases their expenses or decreases their income, their entire life can fall apart in a brief period of time. If a person has little equity in their home and only owns a car on a loan, these assets can be quickly taken away if their income is cut off. While it does not make sense to describe these people as "poor" so long as their income remains high, their net worth is low and they can become poor very quickly.
• People who are living in communities with a greater degree of self-sufficiency, such as people who generate their own electricity, make their own clothing, and/or grow their own food, may have a lower income than people who spend all their time working in the cash economy, but this lower income does not necessarily correspond to a lower quality of life or standard of material prosperity. These people can thus be low-income but not poor. The failure to include self-sufficiency in assessments of poverty is one factor that can be used by Western cultures to impose their economic system on other countries, as indigenous communities with a subsistence economy are automatically labelled as living in "poverty", regardless of the actual health or prosperity of the people in these communities.
• People who live in areas with a very high cost of living and people shouldered with massive amounts of debt may have moderate incomes but be barely eking by, with little disposable income after all their income goes to cover basic necessities.

Some of these examples are more common than others, but in the recent economic downturn, there are more examples of people who are low-income but not poor, as well as more people who are poor but not low income (especially considering the rising cost of education, coupled with bankruptcy reforms making it harder to eliminate debt).

Poverty and Support Network:

The examples above touch on a very important aspect of poverty, which is the social network or support context. Even if a person has little income and little financial or material wealth of their own, it does not make sense for that person to be considered "poor" if they are being provided for by a family or social network of considerable financial means. True poverty exists when people truly cannot provide for themselves and do not have a support network to rely on, or when their family or support network consists of people who are for the most part poor. These social network aspects of poverty are also not adequately reflected by the use of the term "low-income"; the recent unemployed college grad living at home with well-to-do parents is the biggest example of someone who is low-income and low-net-worth but not living in poverty.

Use the terms "poor" and "low income" deliberately:

When you mean poor, say poor. When you mean low income, say low-income. You will find that, by and large, low-income is not a very important concept, whereas poor is.

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