The inflation rate has huge error bars, at least in terms of how official inflation compares to "real" inflation. So comparing one "inflation adjusted" number to another from 43 years ago and getting concerned over a difference of a mere couple of hundred bucks (about three percent) is pretty meaningless.
The biggest flaw in the article seems to be the assumption that the inflation-adjusted income of the median worker should be increasing. Wages will basically track inflation, since the main thing we buy from one another is each others' labour. Meanwhile land gets more expensive but technology gets cheaper. It's pretty much a wash.
Productivity is measured in $GDP per man-hour, and is consequently skewed by the effects of capital. Giving someone better tools increases his productivity, but it doesn't mean that he's a better worker or deserves higher wages; the person who deserves the increased income is the guy who provided the tools.
as a result, if better tools don't require higher skills/education (and thus don't naturally lead to higher wages), nobody wants to be the guy using the tools. In this case it is necessary either to still increase the wages for using the tools or outsource or bring cheap labor in.
They have revised GDP figures since 2007 or so. So in the interim/short term, productivity is actually much closer to hours worked than previously thought.
The longer term trend is also questionable starting around 1973, ala Tyler Cowan. Ah, good old economic numerology.
Not so much, no. Lump of Labor fallacy, m'lord. Wages have fallen because of something fuzzy and abstract ( and indefinable ) called "liquidity preference". If you take to the "fear vs. greed" cycle theory of economics, that means fear is winning.
A ... textile job in Indonesia still pays the same as it did, roughly ( modulo Baumol Cost Disease stuff - increased admin cost ) in 1950, it's just that that $2.00 or $0.50 per hour isn't worth driving to in the high-cost US.
Total numbers. It's the highest rate in two decades. "The poverty rate in 2010 was the highest since 1993 but was 7.3 percentage points lower than the poverty rate in 1959, the first year for which poverty estimates are available. Since 2007, the poverty rate has increased by 2.6 percentage points."
The problem is that the poverty line used by the census is basically arbitrary: http://www.law.cornell.edu/uscode/html/uscode42/usc_sec_42_0... , particularly the part about how at its discretion the government may tweak with the line to produce the desired results w.r.t. program eligibility. Since it is apparently the official cutoff for many programs, many people are motivated to keep it moving up.
I don't have a particular objection to that line as used for government program eligibility, but it's not valid to use it as an actual measure of "poverty", whatever that may be. 2011 poverty and 1959 poverty in the US are pretty much entirely incomparable no matter what definition you use.
Americans below the poverty line in 2009 are more likely to have things like complete kitchens, complete plumbing, automobiles, air conditioning, and dishwashers than Americans as a whole in 1970. Put another way, if we used the living conditions of someone at the poverty line right now and used that to define the poverty line in 1970, over half of the 1970 population would be below the poverty line.
That's not to say all modern Americans are comfortable. There are still some in true poverty. It's just not very many. (It turns out I've been "in poverty" for most of my life; I just never noticed.)
Sure. And compared to 250 years ago even the poorest of the poor in the US is a veritable king in material wealth. Who then could have green vegetables in the middle of a snowy winter, yet now anyone can buy canned vegetables.
My point is that the things you talk about occur because it's cheap. Can you find a house these days without complete plumbing? 15 years ago I helped a friend buy a used car for $600, which he could afford on US $11,000 per year as a graduate student.
Oddly enough, people with money don't a dishwasher or complete kitchen, because they can eat out. Money gives options.
In any case, you and the previous poster state that the definition of poverty used in the census is variable. The aforelinked definition is one of two definitions of poverty used by the US, specifically, this is the one used to determine who can participate in assistance programs. You can see that it's defined by the CPI, with no way to be flexible about it, unless a given State wants to raise it by at most 25%.
This is because the US definition is, contrary to with you both say, an absolute definition. Quoting from Wikipedia:
Since the 1960s, the United States Government has defined poverty in absolute terms. When the Johnson administration declared "war on poverty" in 1964, it chose an absolute measure. The "absolute poverty line" is the threshold below which families or individuals are considered to be lacking the resources to meet the basic needs for healthy living; having insufficient income to provide the food, shelter and clothing needed to preserve health.
This in turn is based on the CPI, and aside from a few minor changes "the U.S. government's approach to measuring poverty has remained static for the past forty years."
In other words, you and the previous poster are incorrect.
"The US government's approach to measuring poverty" is, well, just that. It is not the one true objective definition of poverty. If you are going to accept that as a definition of "poverty", it actually removes all incentives to "fight" poverty, because it's impossible to move the needle. If you somehow beat poverty back 5%, the government's going to move the line up to make up for it. As a government measure, it's fine. As the One And True Philosophical and Cultural Definition of Poverty, it's worthless, because the government won't let us "beat" poverty back to the point that it doesn't exist anymore.
Because if it would let us do that, we'd already have done it.
Your "absolute" terms are still relative, because you can't get around the fundamental and massive changes in technology in all forms across all of society.
Government definitions are suitable for government work, no sarcasm or reference to popular sayings intended. They are not suitable for philosophical debating; all the fact that legal poverty going up really means in the end is that we are in an economic downturn, not that anything (else!) fundamental has changed at the societal level. This isn't a special "poverty" problem, it's just another phrasing of the recession(/depression).
The reason for the US definition of poverty, founded as it is in the "War on Poverty", is precisely because it is absolute. Quoting again from that Wikipedia article: "Since [the Orshansky Poverty Thresholds] measure was absolute (i.e., did not depend on other events), it made it possible to objectively answer whether the U.S. government was "winning" this war."
Your argument about "one true objective definition of poverty" is pointless. What you're arguing is that since we're materially better off than the Middle Ages, no one is poor anymore. You want to throw the word "poor" out the window, while I want to say that the word has real meaning, and that meaning is "lacking the resources to meet the basic needs for healthy living; having insufficient income to provide the food, shelter and clothing needed to preserve health."
Your disdain for the government is clear, but without justification since any statement you make can be rejected with an equally disdainful comment on its originator. Better would be to point out how most families of four, making under $22,350 a year really have no problems meeting those basic needs. Books like "Nickel And Dimed" suggest otherwise. I look forward to your large scale research which clearly refutes such anecdotal evidence.
> "What you're arguing is that since we're materially better off than the Middle Ages"
No -- what he's arguing is that we're materially better off than the periods of time in which you and the article are trying to compare to. It's dishonest to make a comparison to some decades ago and then complain when others make comparison to those same time periods.
The word "poor" does have real meaning -- but its meaning is relative. 1959 poor and 2009 poor are not the same thing. The measures used to define poverty (and inflation) are not absolute, objective, or static, despite what wikipedia claims.
No, I'm trying to argue that 1) the definition that the US uses was chosen precisely because it isn't relative and can be used to judge of the "War on Poverty" has been won, 2) that being better off materially is only one aspect of being poor; shelter and health are two other factors, and 3) choosing a purely material, absolute definition, doesn't make sense since if you go back in time then everyone was poor. And I refuse to say that Louis XIV was poor simply because he didn't have air conditioning.
While someone who has to decide between food and rent money, despite having a plasma TV bought two years ago, before losing a job due to protracted illness, is poor.
There's a simple resolution to this - what do you define as poor? How many people in the US do you consider are poor? Are people now significantly less poor than they were in 1970, and how do you measure that?
Orshansky accurately described her poverty thresholds as a "relatively absolute" measure of poverty(60), inasmuch as they were developed from calculations that made use of the consumption patterns (at a particular point in time) of the U.S. population as a whole. (In the dichotomy between relative and absolute definitions of poverty, one of the essential characteristics of a purely "absolute" definition of poverty is that it is derived without any reference to the consumption patterns or income levels of the population as a whole.(61)) However, while Orshansky's poverty thresholds were not a purely absolute measure, they were also quite clearly not a purely relative measure, such as the 50-percent-of-median-income measure proposed by Britain's Peter Townsend in 1962 and (in the United States) by Victor Fuchs in 1965.(62)
The relativity is that the definitions assume that 1/3rd of income goes to food, which was the case in the 1950s. That is less now, while housing and transportation/energy costs are higher.
So okay, yes, there's some relativity in the definition, but it isn't by far a relative definition.
Since you want to introduce far-past figures into the mix, let me ask you this: would it be valid to compare how many poor people there are today to how many poor people there were 500 years ago? Would that comparison even make sense? I contend that it would not -- not that modern people aren't "poor" or that ancient people are all "poor", just that you can't treat them as though they're the same. It doesn't make sense to try to count them and say "OMG the number of poor went up" or "OMG the number of poor dropped" over time periods of longer than a few years, because in terms of material goods, shelter, health, nutrition, and all sorts of other factors, "poor" changes enough to make the comparison invalid.
Likewise, it would be pointless to compare the percent of the US population who are "poor" to the percent of the Sudanese population who are "poor" because you're talking about such different characteristics.
I think the definition of "poor" you gave earlier is OK. It's just not an absolute definition, and you need an absolute definition if you want to compare numbers over time.
Therefore yes, it's possible to make meaningful comparisons of the numbers of people who are poor. It's possible to ask questions like: "Is poverty a temporary condition, or a permanent characteristic of a subpopulation?", and "Is it due to the inability of the culture to generate enough resources, or is it due maldistribution of those resources?"
It's not easy. But your view seems to be that the definition changes so quickly that a person in 1991 and the same person now can't judge if they were poorer now or then. Factors like "income security, economic stability and the predictability of one's continued means to meet basic needs all serve as absolute indicators of poverty", yet you insist that because more people have access to a full kitchen, running water, internet, penicillin, or whatever then it's simply not possible to make valid comparisons.
While I disagree, and am dumbfounded that you don't recognize those non-material, absolute factors as the essential characteristic of poverty.
Factors like income security, economic stability, and the predictability of one's continued means to meet basic needs are essential to poverty. But if what you mean by "basic needs" changes then your year-to-year comparison quickly becomes more noise than signal. If "access to a full kitchen" was not a basic need last year but it is this year, then some people will end up on the other side of the line because the line moved and they stayed still. That introduces noise; you can only detect signal that's bigger than your noise (if you were living in a van down by the river in 1991, and own a nice 3 bedroom house now, that's a detectable signal.)
My contention is that, over the timescales we're talking about, the CPI (or the definition of "basic needs") has shifted enough to invalidate the numbers-to-numbers comparison.
You can still make valid observations and meaningful statements about, for example, the persistence of poverty or distribution of resources over time. There's enough signal to make those sorts of comments. I just don't see any way to make meaningful statements about how poverty rose by 1.2% since 1959, when I can point to several substantial differences in conditions for those in poverty between then and now that encompass far more than 1.2%.
My point is that "access to a full kitchen" is not part of the federal government's definition of poverty, at least not the one regarding those who are eligible for assistance.
Quite simply, it's not a basic need. Someone living in a studio apartment in NYC with a kitchenette, making $80K a year and living there because it's got a great location, is not poor. Someone who can afford to eat out for every meal, and lives in a place with many food offerings, needs no kitchen.
To test your contention, is a family of four living in the US on less than $23,000 per year - that being roughly the CPI-based poverty level using methods relatively unchanged for 40 years - not a reasonable definition of being poor in the US?
If not, what is a reasonable value, and do you have a way to determine that value which is effective for more than a few years? (Since if not, it will be highly subject to political pressure.)
> "My point is that "access to a full kitchen" is not part of the federal government's definition of poverty"
But it contributes directly to the definition, despite not explicitly being named. Because the definition is tied to CPI, which is tied to housing costs, which are more likely to include the cost of a full kitchen now than in the past especially for people near the bottom. I would argue that for someone in that position, having a full kitchen is better than not. Yet the CPI-based measure treats the cost of having a full kitchen as a negative (inflation), without treating the benefit of the full kitchen as a positive!
You keep misrepresenting my position (and asking questions that depend on your misrepresentation). I'm not saying that people now are not poor. I'm not saying the CPI-adjusted threshold is "wrong" for defining who is poor. What I'm saying is that people who are poor now and people who were poor in the past are not directly, numbers-to-numbers comparable. It's meaningless to say that 1.2% more people are poor now than then, because there are meaningful, relevant differences in conditions between now and then that account for far more than a 1.2% difference. The noise washes out the signal.
> "lacking the resources to meet the basic needs for healthy living"
> "This in turn is based on the CPI"
Neither of these are objective, static measures.
The CPI measures the cost of a "basket of goods" that includes "rent of primary residence". The above census data clearly shows that the characteristics of one's "primary residence" have changed significantly since 1970. "Basic needs for healthy living" in 1970 and "basic needs for healthy living" in 2011 are significantly different; it is inappropriate to treat them as equivalent.
Earlier this year, I helped a friend move out of a place that lacked complete plumbing as well as complete kitchen facilities (as detailed in AHS table 2.4). There are still people who live in those conditions -- just not as many of them. Which is really the point: the thread was touched off by the claim that more people are living "in poverty" today than in the past, but that's a misleading claim because what "poverty" means right now is different from what "poverty" meant then.
You and I have different ideas of what "static" means. Yes, if you rent a place then it's different than it likely has more material benefits than it did 40 years ago. My point is that the cost of renting or buying that place hasn't gotten cheaper. For example, the first relevant graph I found was http://www.jparsons.net/housingbubble/ , which shows that after adjusting for inflation the median house is still 15% more expensive now than the 1970s.
I am very aware that these compare median incomes. I don't know what poor people would have paid for housing in 1970, nor now for that matter. My point is that just because the places are better doesn't mean that it's easier to afford, and it's the latter which is more relevant. Suppose you would rather pay less for a place without a full kitchen, but there are none on the market - what choice do you have?
The details of poverty has changed. It's now cheaper to get a pay-as-you-go mobile phone than it was in 1970 to get a land line when cell phones were a James Bond item. The fact that there are poor in the US, and that the word "poverty" has a real meaning in today's life, has not.
What "objective, static measures" would you say make someone not poor?
I don't think it's possible to make an "objective, static measure" of whether or not someone is poor, since "poor" is relative.
My point is simple: the details of poverty have changed (and will keep changing), and because of this, comparing "how many people were poor" to "how many people are poor" is not really a sensible comparison. 1959 poor and 2009 poor are different, not just in minor details, but in significant ways.
The poor in 2009 are, in many ways and overall, better off than the poor in 1959 or 1970. That doesn't make them "not poor", it just makes them "better off" on average, and therefore not directly numbers-to-numbers comparable.
Personally I've wondered if the Gross National Happiness wouldn't be a better indicator. See, I was going to argue that an indicator of poverty is the stress of making enough money for basic survival. But then I remembered reading that middle-class and rich people have the same stress; people making $1 million per year worry that they don't make enough.
Agreed. Since there are more Americans than ever, having more in poverty than ever isn't a surprise. There's probably also more -not- in poverty than ever, too. Also not a surprise.
To be completely honest, I've said for years that women are the single greatest reason for unemployment. When 50 years ago the majority of workers were male and then you almost double the work force, you can try to have enough jobs but those jobs that men were doing exclusively back then are no longer theirs.
Hell, I saw a stat somewhere that there are now more women in medical school than men. That's insane considering that it was not just male dominated 50 years ago, it was considered just a male profession.
My intent is not to sound misogynistic here, just stating a fact. And when those who talk about returning to 1950s values (ahem, some Republicans) think of what that means.
I'm trying to think up a way to link those spikes in unemployment to notable events in the history of the women's rights movement, but it's not happening.
For some goods, it is much greater. For government, education, health care and land rent ( may go to housing cost in expensive areas ) it is not. And actually, fixed baskets of health care, housing, etc ( based on applicable standards at the time the older measurement was taken ) it hasn't changed as much.
How does that mesh with the increasing proportion of society that own their homes? Or the increase in technology in health care? Or the increase in the proportion of people going to college?
This is such a useless factoid without any context, as is the tacked-on bit about women's income. Does this hypothetical median male work as much? Does he work at a cushier job today? Does he have as many financial responsibilities? Has some unprofitable sector seen a disproportionate influx that would bias our selection of median male? (Ditto for the median female compared to the median male.)
It seems to me that salaries are simply less flat than they used to be.
I wonder how much the amount that is spent on the compensation of the median employee has increased from 43 years ago? My understanding is that healthcare rather than wages has been taking up an increasingly large proportion of that figure with the US's exploding healthcare costs.
This should be compared with median home price delta over the years and median cost of food. I bet the median home price has gone up drastically making the overall cost of living much higher now than then. Median cost of food and other necessities have probably gone down but that savings is probably wiped out by the home price.
People will talk about the benefit of technology (the flatscreen TV argument) and how that builds quality of life but I think disposable income is the biggest factor in high quality of life.
Actually no, I was just reading an article about this. The cost of healthcare and education have increased drastically. The cost of housing and food and gas have remained more or less the same, the cost of everything else has decreased.
EDIT: Remember that the CPI tries to compare apples to apples, which means N-square foot houses to ones of similar size. And IIRC the size of the average American's house has at least doubled since then.
So they pay twice as much but it's considered the same because they have bigger houses now? But isn't that "bigger TV" syndrome? (TVs cost twice as much, but hey, they're twice as big now.) I think that's trying to justify the price increase more than truly analyze it.
Housing is furiously repricing. SFAIK, there's no bottom to it, and it depends on where you are. If you live in a high land rent region like San Fran or NYC, it's stable. In Florida or Las Vegas, there is no bottom.
In Texas, it's stuck at 1990 or 1998 prices, dependent on area.
I don't know which is more surprising: that they can calculate inflation since 1968 with such astonishing precision (median income was $32,844) or that buying a car from a defunct automaker (Pontiac) is an act of patriotism.
The biggest flaw in the article seems to be the assumption that the inflation-adjusted income of the median worker should be increasing. Wages will basically track inflation, since the main thing we buy from one another is each others' labour. Meanwhile land gets more expensive but technology gets cheaper. It's pretty much a wash.