Extreme Poverty Sets a New Record (Again)
Thought this one might be interesting.
Rdan
(posted by Robert Waldmann / commentary after the jump)
extreme poverty update update:
I assume you have clicked the link. I’m not going to snip and paste the graph. Go there if you want to find out what I am talking about.
The rate of extreme poverty (income less than half the poverty line also called “deep poverty” and “severe poverty”) set a new record in 2010 for the second year in a row (the record only goes back to 1975. I don’t know why).
I have three thoughts. The first (as in my old post) is that there is clear evidence that AFDC (pre-reformed welfare) had an important effect on deep poverty. Since the Welfare reform bill of 1996, the rate of deep poverty and not so deep but still pretty damn bad poverty (50 to 75% of the poverty line) have diverged. Both declined in the late 90s boom (which convinced people with short attention spans and no understanding of omitted variable bias that welfare reform was a great success). Since 2000 the increase in deep poverty dwarfs the increase in not so deep but still pretty damn bad poverty.
Also note the late 70s. This was a period of rapidly declining unemployment and high inflation. AFDC benefits were not indexed to inflation — instead the dollar amount was adjusted by state legislatures or, quite often, wasn’t. I think the divergence of the two rates which Soltas shows in the 1970s corresponds to real benefit levels in many states falling below half the poverty line. I note before a commenter does that the change in the 70s is overstated as food stamp benefits, which are not counted in income for calculation of poverty rates, automatically increase as cash benefits decrease. I note that the change due to the welfare reform bill of 1996 is, if anything, understated as the bill also included huge cuts to food stamps which accounted for much more of the forecast spending reduction than the change from AFDC to TANF.
Finally get this “Evan Soltas is a student at Princeton University, where he intends to major in economics. ” The guy hasn’t even officially chosen his major (he looks about 16 in the photo) !
The official federal poverty line was based, in 1965 (or 1968), on three times the price of an emergency diet (dried beans only; no canned); about $5/day X 3 = $18,000/yr for a family of three. This was based on a 1955 study which in 1965 was not yet too far off the true mark.
I used the numbers in the MS Foundations book “Raise the Floor”, table 2-3 on page 44 to come up with a minimum needs figure also based on $5/day for food but plus everything else from telephone to income tax and it came to $42,000/yr (2008 dollars) for a family of 3 — not $18,000/yr …
… which looking at the US Census family income charts put American poverty at 37% not 12.5% if all these families had to pay for their own medical insurance — 26% if they all had paid for medical — likely about 30% if I knew who had paid medical and who didn’t.
I propose that some one or some organization set up a year by year index of the ratio between the offical poverty line and a real minimum needs line like I derived from MS’ chart. Then when some economically unenlightened essayist wants to complain that poverty has (only) stayed the same since LBJ they can easily check and see that LJB’s 12.5% might have been an adjusted 15% in 1968 — compared to today’s adjusted 30% — that poverty may have doubled since LBJ …
… while average income doubled …
… especially if you have been getting people used to the stagnantion of median income and the 30% drop in minimum wage …
… while average income doubled.
http://www.amazon.com/Raise-Floor-Wages-Policies-That/dp/0896086836/ref=sr_1_1?ie=UTF8&qid=1340721563&sr=8-1&keywords=RAISE+THE+FLOOR
http://www.blogger.com/blogger.g?blogID=5037190876571380696#editor/target=post;postID=837722216457513920
The official federal poverty line was based, in 1965 (or 1968), on three times the price of an emergency diet (dried beans only; no canned); about $5/day X 3 = $18,000/yr for a family of three. This was based on a 1955 study which in 1965 was not yet too far off the true mark.
I used the numbers in the MS Foundations book “Raise the Floor”, table 2-3 on page 44 to come up with a minimum needs figure also based on $5/day for food but plus everything else from telephone to income tax and it came to $42,000/yr (2008 dollars) for a family of 3 — not $18,000/yr …
… which looking at the US Census family income charts put American poverty at 37% not 12.5% if all these families had to pay for their own medical insurance — 26% if they all had paid for medical — likely about 30% if I knew who had paid medical and who didn’t.
I propose that some one or some organization set up a year by year index of the ratio between the offical poverty line and a real minimum needs line like I derived from MS’ chart. Then when some economically unenlightened essayist wants to complain that poverty has (only) stayed the same since LBJ they can easily check and see that LJB’s 12.5% might have been an adjusted 15% in 1968 — compared to today’s adjusted 30% — that poverty may have doubled since LBJ …
… while average income doubled …
… especially if you have been getting people used to the stagnantion of median income and the 30% drop in minimum wage …
… while average income doubled.
http://www.amazon.com/Raise-Floor-Wages-Policies-That/dp/0896086836/ref=sr_1_1?ie=UTF8&qid=1340721563&sr=8-1&keywords=RAISE+THE+FLOOR
http://ontodayspage.blogspot.com/2008/02/are-38-of-american-families-living.html
The official federal poverty line was based, in 1965 (or 1968), on three times the price of an emergency diet (dried beans only; no canned); about $5/day X 3 = $18,000/yr for a family of three. This was based on a 1955 study which in 1965 was not yet too far off the true mark.
I used the numbers in the MS Foundations book “Raise the Floor”, table 2-3 on page 44 to come up with a minimum needs figure also based on $5/day for food but plus everything else from telephone to income tax and it came to $42,000/yr (2008 dollars) for a family of 3 — not $18,000/yr …
… which looking at the US Census family income charts put American poverty at 37% not 12.5% if all these families had to pay for their own medical insurance — 26% if they all had paid for medical — likely about 30% if I knew who had paid medical and who didn’t.
I propose that some one or some organization set up a year by year index of the ratio between the offical poverty line and a real minimum needs line like I derived from MS’ chart. Then when some economically unenlightened essayist wants to complain that poverty has (only) stayed the same since LBJ they can easily check and see that LJB’s 12.5% might have been an adjusted 15% in 1968 — compared to today’s adjusted 30% — that poverty may have doubled since LBJ …
… while average income doubled …
… especially if you have been getting people used to the stagnantion of median income and the 30% drop in minimum wage …
… while average income doubled.
http://www.amazon.com/Raise-Floor-Wages-Policies-That/dp/0896086836/ref=sr_1_1?ie=UTF8&qid=1340721563&sr=8-1&keywords=RAISE+THE+FLOOR
http://ontodayspage.blogspot.com/2008/02/are-38-of-american-families-living.html
What “deflating” the official federal poverty line, year by year, would do is tell anyone who wanted to write that the percentage living below the poverty line is the same now as under LBJ (common report) — is that twice as many now live below the poverty line …
… even as average income has doubled.