Has family poverty halved over the last 20 years?

net of housing costs family poverty

According to Brian Perry, the the expert at the Ministry of Social Development writing in last year’s Social Report:

The primary measure is the proportion of people in households with equivalised disposable income net-of-housing-costs below a threshold set at 50 percent of the 2007 household disposable income median – and held fixed in real terms (the 2007 anchored or constant value measure, CV-07).

This measure shows whether the incomes of low-income households are rising or falling in real terms, irrespective of what is happening to the incomes of the rest of the population.

The two other measures use fully relative thresholds set at 50 and 60 percent of the current year’s household disposable income median net-of-housing-costs (REL 50/60). These measures reflect how low-income households are faring relative to middle-income households.

Diffusion of consumer durables to poor American households since 1984

We do not have air-conditioning. Do not know many people who do but New Zealand does have a temperate climate. But if you are down and out in America you still have air-conditioning.


Sources: The Economic Condition of Poor Americans (and the rest of us) Continues to Improve – Coordination Problem and Well-Being – Extended Measures of Well-being: Living Conditions in the United States, 2011 – People and Households – U.S. Census Bureau.

In the 2000s, dishwashers, air conditioning and microwaves were still diffusing rapidly in poor households in addition to the usual digital goods.

To make it even worse, despite the ravages of the 1996 US federal welfare reforms and a top 1% who apparently kept for themselves 90% of all income gains since the 1970s, air-conditioning in poor houses increased by 50% or so between 1994 and 2004.

Imagine how many more poor households would have dishwashers, air-conditioning, microwaves and digital goods but for the top 1%. Not that many actually because most of them already have those consumer durables despite their income not increasing for several decades.

I always puzzle over these who claim that incomes of ordinary families have not increased since the 1970s because that implies you can only buy the same basket of goods and same quality of goods as in the 1970s. That is what no real income growth means. You cannot buy more than before.