Poverty’s On The Decline … But Tell It To All Those Poor People

Andrew Sullivan —  Sep 17 2014 @ 9:00am

census_poverty_rates_over_time.png.CROP.promovar-mediumlarge

Emily Badger summarizes the news:

The official poverty rate declined from 15 percent in 2012 to 14.5 percent in 2013, although the number of Americans living in poverty remained statistically unchanged for the third year in a row. That’s largely because of population growth. Poverty is now starting to tick down as unemployment declines, and as more workers, who held at best part-time jobs in 2012, find full-time employment. Between 2012 and 2013, Census counted 2.8 million net new full-time workers in the United States, with many of those jobs marginally improving the prospects of families that had been living below the poverty line.

Jared Bernstein pours more cold water on the figures:

Yes, various indicators improved in 2013. Real G.D.P. was up, but no faster than the year before (a bit above 2 percent); same with payrolls. And while the unemployment rate fell seven-tenths of a percentage point in 2013, from 8.1 percent to 7.4 percent, more than half of that was from people dropping out of the labor force. That’s not exactly a sign of strength. In fact, the share of the working-age population with a job barely budged last year.

The real wages of low-wage workers were generally as torpid in 2013. For example, if we look at the hourly wage of those in the bottom third of the pay scale, it averaged a bit above $10 per hour over both 2012 and 2013. However, a stagnant low wage is actually an improvement, because real low wages fell sharply earlier in the recovery. And the real median hourly wage went up 1 percent last year, providing a slight bump to the middle class.

How Neil Irwin presents the figures:

This simple fact may be the most important thing to understand about today’s economy: Around 1999, growth in the United States economy stopped translating to growth in middle-class incomes. In the last 15 years, median income has been more or less flat while there was far sharper growth in, for example, per capita gross domestic product. …

But there really is no mystery as to why public opinion has been persistently down on the quality of the economy for years. You can’t eat G.D.P. You can’t live in a rising stock market. You can’t give your kids a better life because your company’s C.E.O. was able to give himself a big raise.

Jordan Weissmann considers the usefulness of the Census’ measure:

The official poverty rate is sometimes criticized as unreliable because of its odd origins and narrow definition of income. The statistic was basically MacGyvered into existence in the 1960s by a lone Social Security Administration economist who based it on cost of food for a family of three, since that was just about the only data on living standards she had to work with. Since then, the stat has only really been updated for inflation. While it counts cash payments such as Social Security towards a family’s finances, it doesn’t account for benefits such as food stamps. As a result, it vastly understates the decline of material need in America over the decades.

That said, it does provide a decent snapshot of poverty as it exists today. For several years, Census researchers have been honing an alternative statistic known as the Supplemental Poverty Measure, which takes into account more government benefits along with geographical variations in the cost of living for a much more sophisticated approach to quantifying need. But in 2011, the SPM was only 1 percentage point higher than the cruder, official measure we’ve been using since the Johnson days.

Ben Casselman points to a few pieces of good news:

The weak recovery has hit young people especially hard; the unemployment rate for Americans younger than 25 is still 13 percent, more than double the 6.1 percent for the population as a whole. But the “lost generation” may at last be seeing some gains. Americans ages 15 to 24 saw their household income rise 10.5 percent in 2013, the biggest increase for any group, though they are still earning 4 percent less than before the recession. Those 65 and older, meanwhile, saw their incomes rise 3.7 percent. No other age group saw statistically significant income gains.

Cassidy’s bottom line:

To oversimplify a bit, income stagnation paired with rising inequality is a recipe for political polarization and, under the American system of divided powers, political gridlock, which is what we have. Based on the latest Census Bureau figures, there’s no sign of that changing anytime soon.