Poverty Facts and Myths


America’s Poor Are Worse Off Than Elsewhere

The myth that the poor in the United States are not so bad off can be found in a wide range of places. It basically reflects the idea that those in poverty have nothing to complain about – that given the conditions in less developed countries, things could be much worse.

It is certainly true that if we compare the U.S. to countries in sub-Saharan Africa, physical poverty in the U.S. is obviously less extreme. The United States does not have the widespread famine and severe stunting of children that is sometimes found in extremely poor countries.

However, most analysts would argue that the more relevant comparison would be the group of other high economy countries such as those found in the European Union, Canada, Japan, Australia, and so on. In comparing poverty in the U.S. to these OECD countries, we find that American poverty is both more prevalent and more extreme.

How Does the U.S. Compare to Other Countries?

In Table 1 we can compare poverty rates across 26 OECD countries. In this table, poverty is being measured as the percent of the population falling below one half of a particular country’s median household income. This is what is known as a relative measure of poverty, and is used extensively in making cross-national comparisons. The first column shows the overall poverty rate for each country; the second column displays the poverty rate for children; and the third column indicates the percentage distance from the poverty line to the average income of those in poverty.

Table 1. Extent of Poverty across 26 OECD Countries

CountryOverallChildrenPoverty Gap
New Zealand10.914.126.2
United Kingdom11.111.835.5
25 country average 10.711.729.6
United States17.820.939.8

Source: OECD Data, 2019.

What we find is that the U.S. rates of poverty are substantially higher and more extreme than those found in the other 25 nations. The overall U.S. rate using this measure stands at 17.8 percent, compared to the 25 country average of 10.7 percent. The Scandinavian and Benelux countries tend to have the lowest rates of poverty. For example, the overall rate of poverty in Denmark is only 5.5 percent.

Looking at the poverty rates for children we see similar patterns. The United States again leads all nations in having the highest rates of child poverty at 20.9 percent, while the overall average stands at 11.7 percent.  Again, we see the Scandinavian countries having the lowest rates of child poverty, with Denmark seeing only 2.9 percent of its children falling into poverty.

Finally, the third column indicates the poverty gap, which is defined as the percentage by which the average income of the poor falls below the poverty line. This gives us an overall gauge of the depth and severity of poverty in each country. Once again we find that the United States is at the very high end in terms of this measure. The distance between the poor’s average income and the poverty line is nearly 40 percent.  Only Italy has a greater poverty gap than the U.S.

To summarize, when analyzing poverty as the number of persons who fall below 50 percent of a country’s median income, we find that the United States has far and away the highest overall poverty rate in this group of 26 developed nations. Furthermore, the distance of the poor from the overall median income is extreme in the U.S.  At the same time the United States is arguably the wealthiest nation in the world.

This paradox is revealed in additional analyses that have examined how well children and adults from the lower, middle, and upper ends of the income scale do. Not surprisingly, the United States has the highest standards of living at the middle and upper ends of the income distribution scale, yet for children at the lower end, their standards of living fall behind most other industrialized nations.

The reasons for such a discrepancy are twofold. First, as discussed in Discussion Module 8, the social safety net in the United States is much weaker than in virtually every other country in Table 1. Second, the United States has been plagued by relatively low wages at the bottom of the income distribution scale when compared to other developed countries. These factors combine to contribute to both the relative and absolute depths of U.S. poverty in comparison to other industrialized nations.