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Damn that rising tide ...
Posted by: McQ on Thursday, May 24, 2007

And I'm not talking about global warming, but instead a new study by the CBO that points out that despite John Edwards claims to the contrary, the poor have actually been doing better over the years ... much better. The WSJ provides a synopsis of the findings (via Cato@Liberty):
A new study by the Congressional Budget Office says the poor have been getting less poor. On average, CBO found that low-wage households with children had incomes after inflation that were more than one-third higher in 2005 than in 1991. The CBO results don’t fit the prevailing media stereotype of the U.S. economy as a richer take all affair — which may explain why you haven’t read about them. … The poorest even had higher earnings growth than the richest 20%. The earnings of these poor households are about 80% higher today than in the early 1990s. … CBO says … earnings from work climbed sharply as the 1996 welfare reform pushed at least one family breadwinner into the job market. … earnings for low-income families have still nearly doubled in the years since welfare reform became law. Some two million welfare mothers have left the dole for jobs since the mid-1990s. Far from being a disaster for the poor, as most on the left claimed when it was debated, welfare reform has proven to be a boon. … The report also rebuts the claim, fashionable in some precincts on CNN, that the middle class is losing ground. … every class saw significant gains in income. … the CBO study found that, with the exception of chronically poor families who have no breadwinner, low-income job holders are climbing the income ladder. When CBO examined surveys of the same poor families over a two year period, 2001-2003, it found that “the average income for those households increased by nearly 45%.” That’s especially impressive considering that those were two of the weakest years for economic growth across the 15 years of the larger study.
Of course, expect Edwards to ignore this as he attempts to justify the huge tax increases he's discussed as "anti-poverty" measures and continues to try to convince you his "Two Americas" theme is still viable.
 
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at 55K a talk, Edwards is in no danger of getting anywhere near a poor person. If he had any scruples, he should be giving that speech money to charity. After all, doesn’t the best example always start with the person pushing it.
 
Written By: capt joe
URL: http://
This is a perfect example of "infotainment". Frankly, this should not be news. First off it should not be news on the fact that it’s false that the poor are in bad shape, and getting worse blah blah blah. Second off, it shouldn’t be news because MOST AMERICANS KNOW THEY’RE GAINING WEALTH!!! Especially the Poor! That means that it’s common sense/knowledge; and that’s not news worthy.

But that’s not entertaining. What’s entertaining is when an hack comes around and manipulates some facts into skewed statistics; then the media go and tout it. Frankly, people in general in this country are more interested in hearing exciting news. That doesn’t exclude good news, but it means that most ’news’ right now is in the doom and gloom realm. It is arguably more exciting that the sky is falling when the alternative is only as exciting as a bad bill being vetoed, or that we’re gaining progress through the surge in Iraq. Sky is falling gets a 10, alternatives get a 6. 10>6. Infotainment>truth. RAWR!!!!

The whole underlying view Americans hold is what dictates supply and demand; including when they watch the news. I believe that the demand for factual and important news—great progress (or failure) and heroic stories about our military around the world, factual and sensible discourse about legislative actions in all 3 branches of the federal government, important goings on in the world—should be the norm, and should give way to news channels that act as such. But the truth is that the demand is in what we currently have. And frankly, it should stay this way and only be changed by a change in demand which will spring from the grassroots movements and such. So before some liberal comes on here and says "well I bet you guys just want it regulated and to have control over what is and isn’t news", let’s blow that ship out of the water.

I’m sure the posters here at QandO will agree that news channels and the information they give out should be regulated by our personal choice to, or not to, watch what they offer. I will say that I see blogs, forums, and the general access to virtually infinit and imediate stories is a step in the right direction.
 
Written By: Ike
URL: http://
The study is gamed. The first comparison point is a trough of the last recesssion. All of the income growth for the poor was in the mid and late nineties. The 2000-2007 numbers look rather different, which is why the Republican who requested the study didn’t request that timeframe.
 
Written By: glasnost
URL: http://
Chart, Page 1, study, makes this rather clear.

Link is here
 
Written By: glasnost
URL: http://
The study is gamed. The first comparison point is a trough of the last recesssion. All of the income growth for the poor was in the mid and late nineties. The 2000-2007 numbers look rather different, which is why the Republican who requested the study didn’t request that timeframe.
So we agree that Edwards should be giving his speech money to charity. good.
 
Written By: capt joe
URL: http://
Let’s make it clearer then. You’re being conned by the WSJ editorial page. Anybody can see that from just looking at the chart which you conveniently didn’t include. Just look at the difference between the growth in the Clinton years’ vs. the fall and stagnation under Bush since then.

TODAY’S WSJ LEGERDEMAIN:

Judd Gregg (R-NH) requested that the Congressional Budget Office prepare a study measuring how low-income households with children have fared from 1991 to 2005. CBO dutifully complied, and found that low-income households with children have seen their income rise 35% over this period. The result is trumpeted in a lead editorial in today’s Wall Street Journal. The poor get richer! shouts the Journal. There are the predictable sneers at John Edwards for his insistent belief that there are poor people in the United States, and demands that the “class envy lobby” accept “this dose of economic reality.”

But wait. Why fifteen years? Well, it is a nice, round number. But fifteen years (from the last year where data) is available is 1991. That was a recession year, when incomes for this group collapsed. So the CBO study that Gregg demanded measures the change from a recession year to a boom year. Incomes for the poor — or anybody — always rise over the course of a business cycle. The measurement Gregg demanded is simply useless.

If you look closely at the study, you find that all the low-income growth occurred in the 1990s — more than all, in fact. It peaked in 2000, and has fallen since. One table in the study shows that low-income households with children had their income drop more than 10% from 2000 to 2005. You could take that point and argue that the Bush administration has made the poor poorer. That wouldn’t be a fair argument– Bush didn’t cause the 2001 recession — but it would be much fairer than the point Gregg and the Journal are making.

The interesting question is whether, by the time the current business cycle hits its peak, incomes for people at the bottom will recover to where they were at the peak of the last business cycle. As of 2005 they still haven’t caught up.

–Jonathan Chait
 
Written By: markg8
URL: http://
A new study by the Congressional Budget Office says the poor have been getting less poor.
The poor have been getting ’less poor? Man, is it against the rules to say something clearly? How about - ’the poor are richer’ or ’the poor are better off now than they were 15 years ago’ or ’the poor have increased their earnings at a higher % than the rich.’

Here’s another headline - ’The young are getting less young every day’. Take it to press.
 
Written By: meagain
URL: http://
What’s the price of 40" flat screens at Wal-Mart again?

Check out any slum in the 3rd world and then come back and explain how poor Americans are. Yeah, sure compared to the Google founders and hot-shot attorneys like Edwards they look "poor" but in reality they are doing fine.



 
Written By: Harun
URL: http://
The interesting question is whether, by the time the current business cycle hits its peak, incomes for people at the bottom will recover to where they were at the peak of the last business cycle. As of 2005 they still haven’t caught up.
A far more interesting question is whether the poor households in 1991 were the same poor households in 2005.

The poverty measures are merely snapshots; people’s situations change over time. Very often someone with a low household income one year is just starting on his career, and 15 years later is showing much higher income.

We talk about "the poor" as if they’re always the same people. In reality, the measurement we use just shows different people at various stages of their earning years.

Also, what we call "poor" in these studies isn’t really poor, it’s low income. A senior citizen on a pension would be poor, but it’s very likely his house is paid for, and he has a substantial net worth.

 
Written By: steverino
URL: http://steverino.journalspace.com/
In order to avoid all this distortion caused by trough/boom intervals or whatever, why don’t we take a little longer view. Fifty or one hundred years, say. This will avoid all the partisan crap. Satisfied? My guess is that the poor are at least a little better off over either of these intervals. But, then again, so are the rich. Darn! That pesky Capitalism!
 
Written By: timactual
URL: http://
steverino beat me to it. I’m going to have to beat this dead horse a bit more later on, but it’s covered in the third paragraph of the summary/introduction:
The 35 percent real income growth between 1991 and 2005 for low-income households with children—considered as a group—does not describe changes for individual households over time. Surveying such households at a specific point (in this case, 2001) and following them over the next two years provides a different perspective. The average income for those households increased by nearly 45 percent from 2001 to 2003. (By contrast, average income for low-income households with children—that is, the households constituting the group as a whole—fell over that same three-year period.) Six in 10 of the surveyed households experienced a substantial increase in income, while 1 in 4 experienced a substantial decline.
Why that’s the case is your critical thinking exercise for the morning. I’ve got to hit the road, but I’ll cover it later today in detail if someone hasn’t already done so.
 
Written By: Bryan Pick
URL: http://www.qando.net
So, Bryan, are you disputing the CBO’s chart, showing the bottom quintile dropping like a stone after 2000 and continuing to decline right through the present day era, with this quote pulled from nowhere in particular, describing something we’re not sure of? Or are you presenting some kind of alternative measurement while accepting the CBO as true?

Frankly, that paragraph is stuffed so full of qualifiers and unclear terminology, I can’t be sure what it’s trying to tell me.


"Changes for individual households over time"? What individual households? The individual households of Morris County, New Jersey? Five individual households that hang out with the writer at a sports bar? What, in fact, are you talking about? And why are mucking around with "low-income households with children"? Why are we switching the metrics in the middle here? We’re not massaging the data for favorable cases, are we?
 
Written By: glasnost
URL: http://
All of the income growth for the poor was in the mid and late nineties. The 2000-2007 numbers look rather different...

Written By: glasnost
Just look at the difference between the growth in the Clinton years’ vs. the fall and stagnation under Bush since then.

Written By: markg8
The WSJ article is in question is analyzing the effects of welfare reform that occurred in the mid nineties. Your partisan obsessions are irrelevant to the subject.
 
Written By: Shasta
URL: http://
glasnost, I don’t know why you had so much trouble deciphering the paragraph: it’s really very simple.

The bottom quintile isn’t some amorphous blob, it’s a collection of individual families. But the collection of families is different at different times. If you track the performance of the individual families, you will find they fare better than the ever-changing collection.

Here’s a very simplified example:

Suppose there are 5 families in the country. And suppose in 2001, the Anderson family is the lowest quintile, earning $20,000.

What you don’t know is that Mr. Anderson has just gotten out of college, and in 3 years his income is now $28,000 — a 40% increase.

Now suppose in the same time, Mr. Baines has retired, and his income drops to $15,000. But he bought a house in 1965 for $30,000, and now it’s worth almost $1,000,000. Whatever the case, he doesn’t have a mortgage to pay, has no outstanding debt, and doesn’t need more than his $15,000/yr income.

Mr. Baines is now the bottom quintile, and in 3 years, the bottom quintile’s income has dropped 25%.

But is anyone worse off? The Anderson family sure isn’t — their income has increased 40%. The Baines family isn’t, either: they’ve embarked on retirement with an enormous net worth.


This serves to illustrate the folly of tracking quintiles instead of tracking individuals.
 
Written By: steverino
URL: http://steverino.journalspace.com/
There is plenty of emphasis on ending poverty in America. What I rarely see is what it means to end poverty. What does that look like? How do we know when we’ve reached the goal? Liberals are quick to ask how we know we’ve won the war on terror, how do they define when we’ve won the war on poverty? Please be specific. Stating "when everyone has social justice and a living wage" will be a poor if not laughable answer.




 
Written By: Grimshaw
URL: http://
steverino’s exactly on the same page as I am. And glasnost, the quote was from the CBO document to which the WSJ article refers and to which you linked. It’s from page 1, the third paragraph of the summary. The WSJ provides a truncated quote toward the end of the snippet McQ provided.
 
Written By: Bryan Pick
URL: http://www.qando.net
Grimshaw,

I’m with you on this one. What is the end of poverty supposed to look like?
Isn’t there always going to be someone or some group that’s on the bottom?
Since people all have different levels of ability, talent and intelligence, it seems there will always be someone doing better than someone else. No matter how much you raise the bottom end, they’re still will be people on the bottom end!

All this end poverty stuff is starting to sound like an egalitarian nightmare. I’m starting to believe that the only way to make some people happy is to be sure we all make the exact same money. Everyone makes $100,000 a year, no matter what they do. But no one makes anymore. I guess this would eliminate class envy, right? No one makes any more because they’re brilliant and/or creative, and no own makes any less because they’re not.
I’d like to see some new ideas myself on how this never ending situation is supposed to be eliminated. In my opinion, I’m not sure there will ever be a consensus out there.
 
Written By: autot
URL: http://
*sigh*

Yes, the study is somewhat gamed because it starts at the trough of a recession. But even comparing immediate-post-trough 1991 to immediate-post-trough 2002, the poor are measurably better off, even at a time that many were predicting gloom-and-doom as the result of welfare reform. And things have been level for the two years after the trough, just like they were from 1991-94. I would be interested in seeing the 2006 and 2007 data, now that employment has tightened and wages have begun to rise.
 
Written By: Sean
URL: http://www.myelectionanalysis.com
Everyone makes $100,000 a year, no matter what they do. But no one makes anymore. I guess this would eliminate class envy, right? No one makes any more because they’re brilliant and/or creative, and no own makes any less because they’re not.
Nope autot - even that won’t solve the problem. You see, if we give everyone 100K, some people are gonna spend it foolishly. A round at the bar on me... you like my new tattoo? How about these fancy alligator boots?

Others will choose to make more prudent decisions. No eating out. Save X dollars. Invest wisely. And guess what happens??? 10 years down the road, the smart people have all the wealth and the dumb people are complaining about raising a family of 8 on a measly 100K.
 
Written By: meagain
URL: http://
meagain,

Well if there was some way to control their behavior using the law, say only allow clothing factories to produce simple blue and green tunics for everyone to wear, and then have rationing of TVs, phone lines, and such, we could pretty much stop the problem of spending skills inequality.

It worked quite well in communist China pre-capitalism where income inequality was remarkably low.
 
Written By: Harun
URL: http://
meagain,

Amen to that! I stopped believing that Poverty was an economic problem many years ago. In my opinion, you speak the truth!

Maybe some of the posters here will come up with ways to eliminate the problem of people making questionable decisions regarding their lives and finances, but in my many years here on this planet, I certainly haven’t seen anything that works.
By the way, John Edwards scares the h*ll out of me. When it comes to this topic specifically, I find it hard to fathom that he actually believes what he says.
 
Written By: autot
URL: http://
When the mill closes and my job goes to (Mexico, India, China.....) I join the poor . It is happening more and more...........
Is this so hard to see?
Yes some at the bottom are moving up......but many more in the middle are moving down......
Statistics applied to individual cases are always unreliable.
I hope all you jobs are secure because it’s a bitch to get credit when they aren’t
 
Written By: darohu
URL: http://
I’ll assume that the lefties who lurk here didn’t see my questions rather than assume they don’t have any answers, though I suspect the latter is true as well.

 
Written By: Grimshaw
URL: http://
Gee, darohu, one would think if you were facing a layoff that you would learn a new trade. Or are you too stupid to do that?
Yes some at the bottom are moving up......but many more in the middle are moving down......
Prove your assertion. For your statement to be true, the percentage of families in the bottom quintile would have to be growing. I’ll bet you a buck you’re dead wrong.

In fact, it’s not "some" that are moving up: well over half of the bottom quintile have moved up within 10 years. This country has incredibly high financial mobility.
 
Written By: steverino
URL: http://steverino.journalspace.com/
I like your site
 
Written By: Ronan
URL: http://www.google.com/

 
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