For decades, the U.S. Census Bureau has reported that over 30 million Americans were living in “poverty,” but the bureau’s definition of poverty differs widely from that held by most Americans.
In fact, other government surveys show that most of the persons whom the government defines as “in poverty” are not poor in any ordinary sense of the term. The overwhelming majority of the poor have air conditioning, cable TV, and a host of other modern amenities. They are well housed, have an adequate and reasonably steady supply of food, and have met their other basic needs, including medical care.
Some poor Americans do experience significant hardships, including temporary food shortages or inadequate housing, but these individuals are a minority within the overall poverty population.
Over the past one-, two-, and three-decade periods, both middle class and poor households have experienced noticeable gains in living standards. Their gains are slower than those experienced by middle-income families in the earlier post-war era, but the gains are well above zero.
In 1980, in-kind benefits and employer and government spending on health insurance accounted for just 6% of the after-tax incomes of households in the middle one-fifth of the distribution. By 2010 these in-kind income sources represented 17% of middle class households’ after-tax income
…The broadest and most accurate measures of household income are published by the CBO. CBO’s newest estimates confirm the long-term trend toward greater inequality, driven mainly by turbo-charged gains in market income at the very top of the distribution. The market incomes of the top 1% are extraordinarily cyclical, however. They soar in economic expansions and plunge in recessions. Income changes since 2007 fit this pattern.
What many observers miss, however, is the success of the nation’s tax and transfer systems in protecting low- and middle-income Americans against the full effects of a depressed economy.
via Gary Burtless
HT David_Boaz’s Tweet – https://twitter.com/David_Boaz/status/477910953548197888?s=09
Roland Fryer carried a gun at 14 as a member of the gang; worked extra jobs at college to pay off his father’s bail bondsman; and an assistant professor at Harvard at the age of 27. He is the sharpest economist around working on the economics of inequality and discrimination.
The always excellent Matthew Kahn reminded me today of the Stigler diet: George Stigler’s famous 1945 journal article The Cost of Subsistence in the Journal of Farm Economics. Stigler posed this problem:
For a moderately active man (economist) weighing 154 pounds, how much of each of 77 foods should be eaten on a daily basis so that the man’s intake of nine nutrients (including calories) will be at least equal to the recommended dietary allowances suggested by the National Research Council in 1943, with the cost of the diet being minimal.
Stigler managed to find a nearly optimal daily diet of:
- 1.6 pounds of wheat flour,
- 0.3 pounds of cabbage,
- 0.6 ounces of spinach,
- 0.4 pounds of pancake flour,
- 1.1 ounces of pork liver.
All of this food necessary to sustain health and weight of a moderately active man amounted to $0.16 per day in 1944, which is an annual cost of $39.93, not including leap years. A recent update for inflation put the annual cost of the Stigler diet at $561.43 in 2005. Not more than two dollars a day .
Stigler later concluded that the main issue about food consumption is a preference for a variety rather than a nutritional diet which could be obtained very low cost if you like cabbage, spinach, flour and a little bit of pork liver. For many years, pork liver was not available in my local supermarkets in Australia and New Zealand until recently when Asian buyers started to buy again.
When various claims made about child poverty and children going without food, and adults too, the purpose of the Stigler diet in the calculations of the cost of subsistence is to show that it is actually extremely cheap to get the necessities of life in a capitalist society. Something more than either a lack of income in a modern welfare state or far from high prices of this extremely cheap, but spartan diet must be playing a role.
The New York Times passed over as quickly as it could the fact that up until the year 2000 the middle class was shrinking because more of them are moving into the upper middle class and the rich.