Tuesday, September 13, 2011

Poverty at Highest Point Since 1993

The Census Bureau has released its Income, Poverty, and Health Insurance Coverage:2010 report, it's worth a skim.  The 2010 poverty rate has increased to 15.1%, the highest since 1993.  This isn't an adjusted figure which is important to note.  Raw poverty statistics are used to assess eligibility for government programs so do not include the impacts of those programs or of tax measures designed to assist the poor (something necessary to keep in mind when nonsense comes up about the government not reducing poverty, since the raw figure is used for eligibility it doesn't measure the impact of most government programs, to a large extent the basic poverty measurement is a closer approximation of market failure than government failure, though anti-poverty measures like job training muddy this interpretation).  The decline in real median income also needs to be noted, though I have nothing to contribute to the subject.  Though it is interesting that the Northeast was the only region for which the decline in median income was not statistically significant.

The main thing I wanted to note is that this increase in poverty is pretty much what the liberal critics of the 1996 welfare reform were predicting as the downside.  It also needs to be noted that the percentage of the population receiving less than 50% of the poverty line in income has been increasing as well.  While the 90s welfare reform did a lot to benefit the working poor and to reduce work disincentives, the compromises made with the Gingrich House resulted in some serious gaps in the safety net.  Early papers I had read on the subject had noted that this seemed to be developing as early as 2008 - 2009, now it seems to have become a reality.  The time limit on welfare receipt seems to contribute significantly to poverty in a long downturn, just as predicted.  It remains to be seen what long term impact this will have on the individuals involved (unemployment insurance is a different topic, while I think our welfare system is almost criminally negligent our unemployment insurance is too generous, benefits should be reduced on a fixed schedule as a work incentive to encourage people to settle for jobs worse than they are accustomed to).  States, such as Michigan, that are shortening welfare eligibility terms will only make this tendency worse.

The 2004 - 2008 panel data is also particularly interesting, though it's off my main point of unintended consequences of welfare reform.  Still, I think knowledge about poverty is poor in the US and I feel the need to do my little bit to get accurate information out:

The proportion of households in the bottom quintile in 2004 that moved up to a higher quintile in 2007 (30.9 percent) was not statistically different from the proportion of households in the top quintile in 2004 that moved to a lower quintile in 2007 (32.2 percent).

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.

Approximately 31.6 percent of the population had at least one spell of poverty lasting 2 or more months during the 4-year period from 2004 to 2007.

Chronic poverty was relatively uncommon, with 2.2 percent of the population living in poverty all 48 months from 2004 to 2007.

More recent data from the 2008 panel show that 23.1 percent of the population experienced a poverty spell lasting 2 or more months during 2009, and around 7.3 percent of the population were in poverty every month in 2009.

In 2009, 26.1 percent of all people experienced at least 1 month without health insurance coverage.

Also, since Social Security has been in the news:

In 2010, the number of people aged 65 and older in poverty would be higher by almost 14
million if social security payments were excluded from money income, quintupling the number of elderly people in poverty.

The biggest thing to remember is how low rates of persistent poverty are, most people are only that poor for short periods of time.  However, these short periods tend to come intermittently, something that welfare reform resulted in was people who could have used the assistance to provide a more stable and comfortable home for their children not getting the assistance because of a fear of a prolonged illness or other problem in the future.  We don't know what this is doing to kids developmentally, we do know enough about human behavior to suspect that the lowered income does little to impact bad behaviors such as smoking, drinking, or consumption of semi-addictive junk food.  More likely, the cut backs are in the kinds of things we want these people to be spending money on.  We can wail and gnash our teeth over people's bad habits, or we can accept reality and try to make people's lives better.  Let him who is without sin cast the first stone.

[Hat Tip: NY Times]

No comments:

Post a Comment