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United States does not count energy poverty

The Federal Reserve produced a report last year on household poverty in the US. It investigates numerous aspects, including rent/mortgages. But energy expenses are not mentioned at all.

In the debate over the cost impact of Germany’s energy transition, one number has drawn a lot of attention: the more than 300,000 households that had their power cut off in a single year because they were not able to pay the bill. Out of 40 million households, however, that number represents less than one percent. Could this performance be relatively good in an international comparison?

Once again, it’s really hard to say; not every country collects the data, and even those who do have different parameters. For the US, there are no numbers at all (if you know of any, please do drop us a comment below).

The Federal Reserve’s report is a year old, but I just came across it. It collects statistics across a wide range of topics, but energy expenses are not one of them. The most commonly used metric is not reported either: households that are behind on their utility bills. Here are the basic categories the study investigates:

And this is where the comparison gets interesting: aside from retirement funds, I’m not sure any of those items would be particularly relevant for German households. Universities are free. Germans have one of the highest savings rates in the OECD; debt is an issue, but Germans do not put everything on a credit card – and they often pay the full amount at the end of the month. Enough has been said about healthcare, which is somewhat affordable in Germany (about half the price per capita compared with the US); a German household containing someone requiring intensive care obviously faces financial stress, but perhaps not bankruptcy.

The main metric that the Federal Reserve uses is a household’s ability to pay for an emergency expense that costs 400 dollars. Apparently, 47 percent of Americans would not be able to. I do not know of any such study in Germany – but again, use the comment box below.

My main take away remains the same: “energy poverty” does not exist on its own. It is a subset of poverty. According to Eurostat data and the UK’s Cold Man study, Germany is one of the countries with the lowest energy poverty in the EU. Maybe that’s because policymakers, consumer advocates, charity organizations, etc. primarily called not for low energy prices, but higher wages and a fairer welfare system.

(Craig Morris / @PPchef)