1 u.s. poverty trends: why has the official u.s. poverty rate been stuck at 11-16% since 1971 ?...
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U.S. Poverty Trends: why has the official U.S. poverty rate been stuck at 11-16% since 1971 ?
World Poverty and Economic Development ECON 3240
Fordham University
Poverty, inequality & mobility
Absolute Poverty Absolute deprivation:
less than some physical minimum (malnutrition)
$1/day consumption Poverty line constant for long periods of time (50 years in U.S. & world)
UN, U.S., UK and World Bank use absolute poverty lines
Relative Poverty Relative deprivation:
inequality: what is my share? Top 1%, CEO salaries; varies by cty
Typically 1/3 of median middle class income or consumption: how close are poor to social norm?
Europeans use relative poverty measures– social stability
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U.S. Poverty line depends on family size, about $11/day compared to $1.25/day
Is poverty relative? A family with $11/day would be considered middle class in developing countries, Adam Smith’s Linen Shirt (and shoes and plumbing and…). Source: 2014 Poverty Guidelines, Office of ASPE Heath and Human Services, http://aspe.hhs.gov/poverty/14poverty.cfm
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Key trends in U.S. Povertyhttp://aspe.hhs.gov/hsp/14/PovertyAndIncomeEst/ib_poverty2014.pdf
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Key trends in U.S. Povertyhttp://aspe.hhs.gov/hsp/14/PovertyAndIncomeEst/ib_poverty2014.pdf
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Key trends in U.S. Povertyhttp://aspe.hhs.gov/hsp/14/PovertyAndIncomeEst/ib_poverty2014.pdf
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Key trends in U.S. Povertyhttp://aspe.hhs.gov/hsp/14/PovertyAndIncomeEst/ib_poverty2014.pdf
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Key trends in U.S. Povertyhttp://aspe.hhs.gov/hsp/14/PovertyAndIncomeEst/ib_poverty2014.pdf
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Key trends in U.S. Povertyhttp://aspe.hhs.gov/hsp/14/PovertyAndIncomeEst/ib_poverty2014.pdf
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Key trends in U.S. Povertyhttp://aspe.hhs.gov/hsp/14/PovertyAndIncomeEst/ib_poverty2014.pdf
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Key trends in U.S. Poverty
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Poverty among Children rises during recessions… why (click figure for 2012 data)
Help for the working poor
Earned income credit (EIC or EITC) Food stamps way up Extended unemployment benefits. Doubling up, young people 25-35 living
at up to 13% from 9% (failure to launch, mainly boys…)
Help for the working poor
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Key trends in U.S. Poverty
From 1945 to 1959 poverty fell rapidly from 33% to 22%, number of poor fell by 1.4 million per year
From 1959 to 1972 poverty fell rapidly from 22% to 11.3%, but stopped falling in the 1970s
From 1980 to 1993 poverty rose to about 14% as unemployment rose & men’s wages fell.
Poverty among children rose to about 25% in 1980s, while for the elderly poverty fell steadily to under 10% (9.7% in 1999).
From 1993 to 2000 the overall poverty rate fell back to about 12%, declining most rapidly for children, African Americans and Hispanics.
From 2000 to 2010, rose back to 15% due to high unemployment of “great recession.
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Why has U.S. not achieved MDG -1 (officially)
1. Women’s agency increasing (peaking? see Pew report on earnings by gender)
2. We mismeasure consumer prices: as much as 1% too high since, a 2 edged sword, a chain index would be better, why can’t we fix it?
3. Most in-kind transfers not counted in official poverty measure (food stamps, housing subsidies, EITC) .
4. Lack of an ACA? See the welfare to work diagrams….
5. High rates of Immigration, poverty and inequality figures are misleading, poverty in our hemisiphere has fallen, even as U.S. poverty remains high.
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Almost no increase in adjusted NAS measures
Number below poverty
level
90 percent
confidenc
e interval2
(+/-)Poverty
rate
90 percent
confidenc
e interval2
(+/-)
Number below poverty
level
90 percent
confidenc
e interval2
(+/-)Poverty
rate
90 percent
confidenc
e interval2
(+/-)
Number below poverty
level
90 percent
confidenc
e interval2
(+/-)Poverty
rate
90 percent
confidenc
e interval2
(+/-)
Official measure 46,343 842 15.1 0.3 46,247 761 15.0 0.2 -96 1011 -0.1 0.3
MSI-NGA (Medical out-of-pocket expenses (MOOP) subtracted from income) 41,314 812 13.5 0.3 41,608 806 13.5 0.3 293 1,059 0.0 0.3
MIT-NGA (MOOP included in the thresholds) 42,751 844 14.0 0.3 42,498 803 13.8 0.3 -253 1,059 -0.2 0.3
MSI-GA 41,032 820 13.4 0.3 41,945 807 13.6 0.3 913 1,064 0.2 0.3
MIT-GA 42,175 861 13.8 0.3 42,988 801 13.9 0.3 813 1,086 0.2 0.4
MSI-NGA 47,789 834 15.6 0.3 46,299 836 15.0 0.3 -1,490* 1,054 -0.6* 0.3
MIT-NGA 53,039 928 17.3 0.3 52,089 867 16.9 0.3 -950 1,107 -0.4* 0.4
MSI-GA 47,472 867 15.5 0.3 46,946 816 15.2 0.3 -527 1,116 -0.3 0.4
MIT-GA 52,623 922 17.2 0.3 52,004 839 16.9 0.3 -620 1,114 -0.3 0.4
*Statistically different from zero at the 90 percent confidence level.
(Numbers of people and their confidence intervals in thousands, poverty rates and their confidence intervals in percentage points. For information on confidentiality protection, sampling error, nonsampling error, and definitions, see www.census.gov/apsd/techdoc/cps/cpsmar12.pdf)
Alternative Poverty Estimates Based on National Academy of Sciences Recommendations, by Geographic and Inflationary Adjustments: 2010 and 2011
Note: While the alternative measures differ among one another in their computation of medical expenses, geographic variations in costs, and inflation adjustment methods, they are similar in their scaling of thresholds by family size and their treatment of noncash benefits and child care and work-related expenses. See Alternative Poverty Estimates in the United States: 2003 (P60-227) at <www.census.gov/hhes/www/poverty/altpovest03/altpovestrpt.html> for additional information and references. Page 2 of that report introduces the methods used in these NAS-based measures for determining thresholds and resources, and distinguishes them from the methods used in other measures.
Poverty measurement method
20101 20111 Change (2011 less 2010)3
No Geographic Adjustment of Thresholds
Geographic Adjustment of Thresholds
THRESHOLDS UPDATED FOR INFLATION USING CONSUMER PRICE INDEX (CPI-U):
No Geographic Adjustment of Thresholds
Geographic Adjustment of Thresholds
THRESHOLDS COMPUTED USING CONSUMER EXPENDITURE SURVEY:
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State
90 percent 90 percent 90 percent 90 percent
confidence confidence confidence Percentage confidence
% interval1 (+/-) % interval1 (+/-) % interval1 (+/-) Points interval1 (+/-)
United States…….14.8 0.2 13.8 0.2 15.1 0.2 *1.3 0.2
Louisiana..................18.9 2.0 16.2 1.9 21.3 2.1 *5.0 2.2
New Mexico...............19.9 2.0 19.3 2.3 20.2 2.2 0.9 2.7
Mississippi............... 21.0 1.5 20.6 2.0 20.0 1.7 -0.7 2.0
District of Columbia….19.1 1.6 17.2 1.6 19.7 1.8 *2.5 2.0
Georgia.....................18.5 1.5 16.9 1.5 18.6 1.5 *1.7 1.7
Arizona.................... 19.1 2.1 19.6 2.2 18.0 2.3 -1.6 2.2
South Carolina..........16.6 1.3 13.9 1.5 18.0 1.6 *4.1 1.8
Texas....................... 17.7 1.0 16.6 1.1 17.9 1.1 *1.3 1.2
West Virginia............16.7 1.6 15.2 1.7 17.2 2.1 2.0 2.7
Arkansas................. 17.6 2.5 17.1 3.0 17.0 2.1 -0.1 2.3
Kentucky..................16.9 1.8 17.0 2.4 16.8 2.0 -0.2 2.5
California..................16.2 0.6 15.0 0.7 16.6 0.7 *1.6 1.0
Tennessee................16.5 2.1 15.8 1.8 16.5 2.1 0.7 1.8
North Carolina...........16.6 1.3 15.4 1.4 16.4 1.6 1.0 1.7
Alabama...................16.4 2.0 15.4 2.3 16.3 2.1 0.9 1.9
Nevada......................15.0 1.5 11.9 1.5 16.0 1.8 *4.1 1.8
New York..................15.9 0.9 15.0 0.9 16.0 1.0 *1.0 1.0
Indiana.....................16.0 1.7 15.2 1.8 15.9 1.9 0.7 1.6
Montana................... 14.8 2.0 13.2 2.6 15.5 2.4 2.3 3.2
Florida..................... 15.1 0.8 13.9 1.0 15.4 0.9 *1.6 1.2
2008-2009 2010-20112
Change
(2010-2011 average less
2008-2009 average)3
2-year average
2009-20112
3-year average
Percentage of People in Poverty by State Using 2- and 3-Year Averages: 2008-2009 and 2010-2011
(People as of March of the following year. For information on confidentiality protection, sampling error, nonsampling error, and definitions, see www.census.gov/apsd/techdoc/cps/cpsmar12.pdf)
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Poverty among Children Fell During the 1993-98 Economic Boom
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African American and Hispanic Poverty fell in 1990s to lowest rates ever recorded…
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African American and Hispanic Poverty fell in 1990s to lowest rates ever recorded…
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Poverty Among young children rose rapidly from 1980 to 1983: why?
Children are not responsible for their own poverty “There is no such thing as undeserving 5 year old.”Charles Murray Losing Ground (1984)
But children do tend to live with working age adults who are expected to work and thus are not easy for government to help– unemploymen rose sharply 1980-83Ellwood’s work-security and family structure helping conundrums… make public assistance more complex and private job and wage growth more important…
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Female Headed Households rose as a share of poor households in the 1960s
0%
10%
20%
30%
40%
50%
60%
1959 1962 1965 1968 1971 1974 1977 1980 1983 1986 1989 1992 1995 1998
FHH Share of Poor Families Poverty Rate for FHH
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But share of persons living in FHH rose steadily, then leveled off after 1995
Persons Living in Female Headed Households as % of all Persons 1959-96
0%
5%
10%
15%
20%
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Poverty Rate for all Families
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
Contribution of growth in SPFs to family poverty rate
Family Poverty Rate if share of SPFs since stayed at its 1959 share of 10.3%.
SPFs as a % of families
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0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Male head SPFs
Two Parent Families
All Families
1996 welfare reform ends welfare as we knew it…
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Single parent families for better or worse…
Poverty Rate for all Families
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
Contribution of SPFs to rise in Poverty rate
Family Poverty Rate if share of SPFs since stayed 1959 share (10%).
SPFs as a % of families
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The Number of Poor Children
increased dramatically in 1980s
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Working Poor with no Medical Insurance: a full-time Job may not be Enough
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Welfare Caseloads decline dramatically after 1996 due to welfare reform and a tight labor market…
U.S. Welfare Recipients % of Population
0%
1%2%
3%
4%5%
6%
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Education is a Good Predictor of Poverty among Children Under 6...
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Family Structure is also a factor...
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But Race is not..
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Families with Children do get In-Kind Transfers and Tax Credits
To get an “alternative” poverty rate: take the official Census Bureau poverty line and add these in-in-kind, "near-cash" benefits:
Food stamps, Housing subsidies & School lunches
then add Earned Income Tax Credit (EITC) tax refunds
and subtract federal, state, and payroll taxes.
Source: http://cpmcnet.columbia.edu/dept/nccp/
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In-kind Transfers and the EITC help, especially at the very bottom...
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The EITC alone reduces under 6 poverty by 4% or about 10 million children
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Teen birth rate rises then falls
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