The flickering television in Candy Lumpkins's trailer blared out The Bold and the Beautiful. It was a fantasy daytime soap vision of American life with little relevance to the reality of this impoverished corner of Kentucky.

The Lumpkins live at the definition of the back of beyond, in a hollow at the top of a valley at the end of a long and muddy dirt road. It is strewn with litter. Packs of stray dogs prowl around, barking at strangers. There is no telephone and since their pump broke two weeks ago Candy has collected water from nearby springs. Oblivious to it all, her five-year-old daughter Amy runs barefoot on a wooden porch frozen by a midwinter chill.

It is a vision of deep and abiding poverty. Yet the Lumpkins are not alone in their plight. They are just the negative side of the American equation. America does have vast, wealthy suburbs, huge shopping malls and a busy middle class, but it also has vast numbers of poor, struggling to make it in a low-wage economy with minimal government help.

A shocking 37 million Americans live in poverty. That is 12.7 per cent of the population - the highest percentage in the developed world. They are found from the hills of Kentucky to Detroit's streets, from the Deep South of Louisiana to the heartland of Oklahoma. Each year since 2001 their number has grown.

Under President George W Bush an extra 5.4 million have slipped below the poverty line. Yet they are not a story of the unemployed or the destitute. Most have jobs. Many have two. Amos Lumpkins has work and his children go to school. But the economy, stripped of worker benefits like healthcare, is having trouble providing good wages.

Even families with two working parents are often one slice of bad luck - a medical bill or factory closure - away from disaster. The minimum wage of $5.15 (£2.95) an hour has not risen since 1997 and, adjusted for inflation, is at its lowest since 1956. The gap between the haves and the have-nots looms wider than ever. Faced with rising poverty rates, Bush's trillion-dollar federal budget recently raised massive amounts of defence spending for the war in Iraq and slashed billions from welfare programmes.

For a brief moment last year in New Orleans, Hurricane Katrina brought America's poor into the spotlight. Poverty seemed on the government's agenda. That spotlight has now been turned off. 'I had hoped Katrina would have changed things more. It hasn't,' says Cynthia Duncan, a sociology professor at the University of New Hampshire.

Oklahoma is in America's heartland. Tulsa looks like picture-book Middle America. Yet there is hunger here. When it comes to the most malnourished poor in America, Oklahoma is ahead of any other state. It should be impossible to go hungry here. But it is not. Just ask those gathered at a food handout last week. They are a cross section of society: black, white, young couples, pensioners and the middle-aged. A few are out of work or retired, everyone else has jobs.

They are people like Freda Lee, 33, who has two jobs, as a marketer and a cashier. She has come to the nondescript Loaves and Fishes building - flanked ironically by a Burger King and a McDonald's - to collect food for herself and three sons. 'America is meant to be free. What's free?' she laughs. 'All we can do is pay off the basics.'

Or they are people like Tammy Reinbold, 37. She works part-time and her husband works full-time. They have two children yet rely on the food handouts. 'The church is all we have to fall back on,' she says. She is right. When government help is being cut and wages are insufficient, churches often fill the gap. The needy gather to receive food boxes. They listen to a preacher for half an hour on the literal truth of the Bible. Then he asks them if they want to be born again. Three women put up their hands.

But why are some Tulsans hungry?

Many believe it is the changing face of the US economy. Tulsa has been devastated by job losses. Big-name firms like WorldCom, Williams Energy and CitGo have closed or moved, costing the city about 24,000 jobs. Now Wal-Mart embodies the new American job market: low wages, few benefits.

Well-paid work only goes to the university-educated. Many others who just complete high school face a bleak future. In Texas more than a third of students entering public high schools now drop out. These people are entering the fragile world of the working poor, where each day is a mere step away from tragedy. Some of those tragedies in Tulsa end up in the care of Steve Whitaker, a pastor who runs a homeless mission in the shadow of a freeway overpass.

Each day the homeless and the drug addicted gather here, looking for a bed for the night. Some also want a fresh chance. They are men like Mark Schloss whose disaster was being left by his first wife. The former Wal-Mart manager entered a world of drug addiction and alcoholism until he wound up with Whitaker. Now he is back on track, sporting a silver ring that says Faith, Hope, Love. 'Without this place I would be in prison or dead,' he says. But Whitaker equates saving lives with saving souls. Those entering the mission's rehabilitation programme are drilled in Bible studies and Christianity. At 6ft 5in and with a black belt in karate, Whitaker's Christianity is muscular both literally and figuratively. 'People need God in their lives,' he says.

These are mean streets. Tulsa is a city divided like the country. Inside a building run by Whitaker's staff in northern Tulsa a group of 'latch-key kids' are taking Bible classes after school while they wait for parents to pick them up. One of them is Taylor Finley, aged nine. Wearing a T-shirt with an American flag on the front, she dreams of travel. 'I want to have fun in a new place, a new country,' she says. Taylor wants to see the world outside Oklahoma. But at the moment she cannot even see her own neighbourhood. The centre in which she waits for mom was built without windows on its ground floor. It was the only way to keep out bullets from the gangs outside.

During the 2004 election the only politician to address poverty directly was John Edwards, whose campaign theme was 'Two Americas'. He was derided by Republicans for doing down the country and - after John Kerry picked him as his Democratic running mate - the rhetoric softened in the heat of the campaign.

But, in fact, Edwards was right. While 45.8 million Americans lack any health insurance, the top 20 per cent of earners take over half the national income. At the same time the bottom 20 per cent took home just 3.4 per cent. Whitaker put the figures into simple English. 'The poor have got poorer and the rich have got richer,' he said.

Dealing with poverty is not a viable political issue in America. It jars with a cultural sense that the poor bring things upon themselves and that every American is born with the same chances in life. It also runs counter to the strong anti-government current in modern American politics. Yet the problem will not disappear. 'There is a real sense of impending crisis, but political leaders have little motivation to address this growing divide,' Cynthia Duncan says.

There is little doubt which side of America's divide the hills of east Kentucky fall on. Driving through the wooded Appalachian valleys is a lesson in poverty. The mountains have never been rich. Times now are as tough as they have ever been. Trailer homes are the norm. Every so often a lofty mansion looms into view, a sign of prosperity linked to the coal mines or the logging firms that are the only industries in the region. Everyone else lives on the margins, grabbing work where they can. The biggest cash crop is illicitly grown marijuana.

Save The Children works here. Though the charity is usually associated with earthquakes in Pakistan or famine in Africa, it runs an extensive programme in east Kentucky. It includes a novel scheme enlisting teams of 'foster grandparents' to tackle the shocking child illiteracy rates and thus eventually hit poverty itself.

The problem is acute. At Jone's Fork school, a team of indomitable grannies arrive each day to read with the children. The scheme has two benefits: it helps the children struggle out of poverty and pays the pensioners a small wage. 'This has been a lifesaver for me and I feel as if the children would just fall through the cracks without us,' says Erma Owens. It has offered dramatic help to some. One group of children are doing so well in the scheme that their teacher, Loretta Shepherd, has postponed retirement in order to stand by them. 'It renewed me to have these kids,' she said.

Certainly Renae Sturgill sees the changes in her children. She too lives in deep poverty. Though she attends college and her husband has a job, the Sturgill trailer sits amid a clutter of abandoned cars. Money is scarce. But now her kids are in the reading scheme and she has seen how they have changed. Especially eight-year-old Zach. He's hard to control at times, but he has come to love school. 'Zach likes reading now. I know it's going to be real important for him,' Renae says. Zach is shy and won't speak much about his achievements. But Genny Waddell, who co-ordinates family welfare at Jone's Fork, is immensely proud. 'Now Zach reads because he wants to. He really fought to get where he is,' she says.

In America, to be poor is a stigma. In a country which celebrates individuality and the goal of giving everyone an equal opportunity to make it big, those in poverty are often blamed for their own situation. Experience on the ground does little to bear that out. When people are working two jobs at a time and still failing to earn enough to feed their families, it seems impossible to call them lazy or selfish. There seems to be a failure in the system, not the poor themselves.

It is an impression backed up by many of those mired in poverty in Oklahoma and Kentucky. Few asked for handouts. Many asked for decent wages. 'It is unfair. I am working all the time and so what have I done wrong?' says Freda Lee. But the economy does not seem to be allowing people to make a decent living. It condemns the poor to stay put, fighting against seemingly impossible odds or to pull up sticks and try somewhere else.

In Tulsa, Tammy Reinbold and her family are moving to Texas as soon as they save the money for enough petrol. It could take several months. 'I've been in Tulsa 12 years and I just gotta try somewhere else,' she says.

Savethechildren.org

From Tom Joad to Roseanne

In a country that prides itself on a culture of rugged individualism, hard work and self-sufficiency, it is no surprise that poverty and the poor do not have a central place in America's cultural psyche.

But in art, films and books American poverty has sometimes been portrayed with searing honesty. John Steinbeck's novel The Grapes of Wrath, which was made into a John Ford movie, is the most famous example. It was an unflinching account of the travails of a poor Oklahoma family forced to flee the Dust Bowl during the 1930s Depression. Its portrait of Tom Joad and his family's life on the road as they sought work was a nod to wider issues of social justice in America.

Another ground-breaking work of that time was John Agee's Let Us Now Praise Famous Men, a non-fiction book about time spent among poor white farmers in the Deep South. It practically disappeared upon its first publication in 1940 but in the Sixties was hailed as a masterpiece. In mainstream American culture, poverty often lurks in the background. Or it is portrayed - as in Sergio Leone's crime epic Once Upon A Time In America - as the basis for a tale of rags to riches.

One notable, yet often overlooked, exception was the great success of the sitcom Roseanne. The show depicted the realities of working-class Middle American life with a grit and humour that is a world away from the usual sitcom settings in a sunlit suburbia, most often in New York or California. The biggest sitcoms of the past decade - Friends, Frasier or Will and Grace - all deal with aspirational middle-class foibles that have little relevance to America's millions of working poor.

An America divided

· There are 37 million Americans living below the poverty line. That figure has increased by five million since President George W. Bush came to power.

· The United States has 269 billionaires, the highest number in the world.

· Almost a quarter of all black Americans live below the poverty line; 22 per cent of Hispanics fall below it. But for whites the figure is just 8.6 per cent.

· There are 46 million Americans without health insurance.

· There are 82,000 homeless people in Los Angeles alone.

· In 2004 the poorest community in America was Pine Ridge Indian reservation. Unemployment is over 80 per cent, 69 per cent of people live in poverty and male life expectancy is 57 years. In the Western hemisphere only Haiti has a lower number.

· The richest town in America is Rancho Santa Fe in California. Average incomes are more than $100,000 a year; the average house price is $1.7m.