I wanted to tag b_b's post with #optimism, because it has a lot of good news: a significant increase in real income, and fewer people in poverty.
But the article also contains this line:
- The official poverty rate decreased to 13.5 percent for last year...
13.5% is a lot of people, even if it is 3.5 million people less than last year.
It is hard for me to get a handle on what life is like for people in this country. I see wealth and poverty around me, but only in my little bubble of experience. Statistics like those in this article help me see the bigger picture, though abstractly and imperfectly. An extreme example would be someone like Jérôme Kerviel, who at one point had the lowest net worth of anyone in the world, though I doubt he missed any meals.
More realistically, the 13.5% of people below the poverty line might include new graduates who haven't started working, adults who are between jobs, or entrepreneurs who are in the red this year but have good prospects of future profit. These people should be counted, if that's how the poverty line is defined, but to appreciate the plight of the poor I would want to have a better understanding of chronic poverty, people who seem trapped with little hope of a brighter future.
The NPR article is based on a Census Bureau report, which includes a sidebar on page 3 that gives an important insight into economic mobility.
- The Survey of Income and Program Participation (SIPP) provides monthly data about labor force participation and income sources and amounts. The data yield insights into the dynamic nature of these experiences and the economic mobility of U.S. residents. For example, the data demonstrate that using a longer time frame to measure poverty (e.g., 4 years) yields, on average, a lower poverty rate than the annual measures presented in this report, while using a shorter time frame (e.g., 2 months) yields higher poverty rates. Some specific findings include:
• Income data from the 2008 SIPP panel suggested that between 2009 and 2012 households experienced less economic mobility than found in earlier SIPP panels. Overall, 57.1 percent of households remained in the same income quintile between 2009 and 2012, while the remaining 42.9 percent of households experienced either an upward or downward movement across the income distribution.
• Households with householders who had lower levels of education were more likely to remain in, or move into, a lower quintile than households whose householders had higher levels of education.
• During the 4-year period from 2009 to 2012, 34.5 percent of the population had at least one spell of poverty lasting 2 or more months.
• Chronic poverty over the 4-year period from 2009 to 2012 was relatively uncommon, with 2.7 percent of the population living in poverty all 48 months.
It's not all good news, but I am much more comfortable using the optimism tag on the news that less than 3% of the population appears to be trapped in poverty.
This is interesting. Your example of the poverty line made me think about companies. If we can make a parallel, who would consider Uber or Amazon to be in a bad position ? I don't know what's the % of people shorting Amazon, but I'm confident it's low. VC seems to trust Uber with the expected return they will provide down the road. If a machine learning engineer completing his PHD and doing an internship at x car company, with 50k debts, is considered below the poverty line even if his expected net worth (is that even a thing?) in 3, 5 or 10 years is huge, this indicates that we have to find a better way to look at this problem. The time frame is definitely important. Chronic poverty should be where the resources go to understand and solve the problem. Didn't got much time to think about economic issues lately, but I've thought about the relations between competitiveness in a global world, the social and economical balance of work, GDP and unemployment. Basically, more freedom for companies will impact positively competitiveness while decreasing social balance/gains (think protection of the employees, holidays, safe-nets, retirements). This should also improve employment and GDP due to increased fluidity. The question is, where does the balance becomes sustainable ? Should we opt-in for a 10% unemployment rate and very good social security which can help you plan your life (think France), or for a 5% unemployment rate with way more random things along the road (think USA) ?
Really interesting. Anyone else quite surprised by the 2.7 percent number? Having trouble untangling my thoughts about the report. The data of that time period is skewed by the financial crash, probably. But skewed how? What's the number going to look like for 2012 to 2016? I guess we've already got SIPP info for most of those years. I want to go looking but I'm falling behind at work because I'm reading a census report, which just sounds ridiculous when I type it.
Further reflection makes me think that it isn't so surprising that the number is so low, and this is not so much the good news that I thought. To qualify, you have to have 48 consecutive months of very low income. I can imagine a lot of people who are dirt-scraping poor who would catch a break now and then and exceed the cutoff for at least one month. Anyone who works in retail is going to get a boost every November and December when it's all hands on deck for the holiday shopping season. Same for delivery and warehouse workers. Agricultural work is highly seasonal. These sectors represent a very large segment of the workforce. Anyone who drifts from job to job could have some gravy months that allow them to catch up on rent and bills and IOUs, barely scraping by yet excluded from the Census Utterly Destitute list.
And, of course, income doesn't mean a whole lot by itself. You can have 48 great months in a row and still not keep up with interest on your debt. This is how many 100k folks feel, though on a case-by-case basis I would be tempted to laugh at them.
I was completely surprised. I would have guessed 10%, and would have believed 15%. What happened to the permanent underclass? What's more, this is the 48-consecutive-month poverty measure. A survey over ten years would necessarily reduce the 2.7 number, though it's hard to imagine how it could get much smaller.Anyone else quite surprised by the 2.7 percent number?
This is not to say that the U.S., along with other advanced economies, does not struggle with issues of income inequality and poverty. But given the much higher standard of living in the U.S., what is considered poor here is a level of income still not available to most people globally.
Hey, my response to our thread is still ongoing. My first attempt was dead linked and lost and I'm a bit crushed. But this stuff is important to me, and I appreciate the dialog. There's an article in Vox today that discusses the new economic platform of mainstream liberals in the US that seems patently relevant here.