Oscar Jr. Was Here

Easterbrook, Alarmist Again

Gregg Easterbrook posts about the recent release of the federal government's newest poverty guidelines, POVERTY: BLAME THE MIDDLE. Excerpts and comments follow:

Below are the new Department of Health and Human Services poverty lines for the contiguous 48 states and the District of Columbia, Alaska and Hawaii lines being slightly higher:

One person, $9,310 annual income.
Two people, $12,490.
Three in household, $15,670
Four in household, $18,850.
Five in household, $22,030.
Six in household, $25,210.
Seven in household, $28,390.
Eight in household, $31,570.
Each additional person in household, add $3,180.

I hope you are thinking what I thought when I saw these numbers: they are shockingly low as the definition of poverty. Consider a family of four with a $18,850 annual income. Such a family would pay no federal income taxes and not pay income taxes in most states, but would pay Social Security taxes, sales taxes, fuel taxes, and other taxes. Let's say for the sake of a simple analysis that such taxes wipe out the food stamps and housing assistance for which the family might be eligible, leaving it with $18,850 for the year.

Stated another way, $18,850 per year for four people is $1,571 per month. Suppose the apartment costs $500, probably typical for a small housing-project-class place. Perhaps $500 per month would go to food, even if the family subsists on macaroni and peanut butter. Already you're down to $571 per month for everything else--getting back and forth to work, clothes for four people, health care expenses, any life or car insurance, school books, day care so the parents can work, a telephone, heat, power, you get the picture. Throw in a hefty car-repair bill and the family breaks financially.

Now consider that in this family, both parents would have to work 40 hours per week at the federal minimum wage of $5.15 per hour just to clear slightly more than $18,850. If one parent worked 40 hours at the minimum wage and the other worked 20 hours at the minimum wage while caring for the children the rest of the time, the household would earn less than the poverty line.

It is a scandal that in the affluent United States, one person in eight continues to live in poverty--and it is a second scandal that the one-in-eight figure is based on the definitions above.

Isn't this tautological? Change the definitions above, and one-in-eight figure will, by definition, change. How is this scandalous?

I won't note that taxes on the top brackets have been cut substantially twice in the last three years, while the Earned Income Tax Credit, which aids the working poor, has become only slightly more generous and the minimum wage has not increased since 1996.

He won't?

I won't note that Christian theology teaches that the first concern of society should be the least well off. And yet, though the president and many prominent Republicans and Democrats miss no chance to boast about their Christianity, poverty has become a non-issue in American politics.

He won't?

No, I won't blame the greedy rich and the hypocritical politicians for the continuation of poverty amidst plenty, because this shifts attention away from the group that is most to blame: typical Americans. It is the country's middle-class, middle-income majority that endlessly demands new government benefits for itself, locking up public funds that could otherwise help the impoverished.

Hey, I might be in the middle-class majority, but I don't demand any new (and few, if any, old) government benefits. That's an awful broad brush that Easterbrook wields.

In any event, having spent a good part of my adult life living below the then-current poverty lines (living quite comfortably, I should add), I wondered how alarmed I should be for Easterbrook's hypothetical family of four. Being a big fan of data, I obtained Census Bureau data for 2002 here and here.

What do the data show about Easterbrook's hypothetical two-worker family?

If I'm interpreting them correctly:

Data in the first table show that only 17 percent of all families living below the poverty line have two or more working family members, and only 2 percent of all families in total are those below the poverty line with two or more working family members.

Data in the second table show that 61 percent of households with income below $9,999 are single-person households with a weighted-average income (using the midpoint of the income range) of about $6,500; 55 percent of households with income below $19,999 are single-person households with a weighted-average income of about $10,800. 81 percent of households with income below $12,499 are one- or two-person households with a weighted-average income of about $7,700. Only 11 percent of all households with income below $19,999 contain four or more people, and only 3 percent of all households consist of of four or more people with an income below that amount.

54 percent of all households with income below $19,999 have no earners, while 34 percent have one earner. Only 6 percent have two or more earners.

Only 24 percent of all households with income below $19,999 had members that worked at full-time jobs; 64 percent had no members that worked at all.

I don't feel so guilty now.

Delivery pizzas should cost a couple dollars more, groceries and paper towels and Old Navy pants and practically everything should cost slightly more so that the minimum wage could rise (there would be a ripple effect raising near-minimum wages as well) and poverty decline.

Raise the price on such staples as food and clothing in order to benefit the poor? Huh? I suppose it could help the 36 percent who work (if it didn't cost them their jobs), but what about the other 64 percent?

Posted by oscarjr at February 20, 2004 12:59 AM | TrackBack