ARC's 1st Law: As a "progressive" online discussion grows longer, the probability of a nefarious reference to Karl Rove approaches one

Friday, February 23, 2007

Extreme Poverty, the Minimum Wage, & Distortions Galore

Saw this story on Memeorandum today. It is a lengthy article on how we're all headed for the soup line:

U.S. economy leaving record numbers in severe poverty

By Tony Pugh
McClatchy Newspapers

WASHINGTON - The percentage of poor Americans who are living in severe poverty has reached a 32-year high, millions of working Americans are falling closer to the poverty line and the gulf between the nation's "haves" and "have-nots" continues to widen.

A McClatchy Newspapers analysis of 2005 census figures, the latest available, found that nearly 16 million Americans are living in deep or severe poverty. A family of four with two children and an annual income of less than $9,903 - half the federal poverty line - was considered severely poor in 2005. So were individuals who made less than $5,080 a year.

The McClatchy analysis found that the number of severely poor Americans grew by 26 percent from 2000 to 2005. That's 56 percent faster than the overall poverty population grew in the same period. McClatchy's review also found statistically significant increases in the percentage of the population in severe poverty in 65 of 215 large U.S. counties, and similar increases in 28 states. The review also suggested that the rise in severely poor residents isn't confined to large urban counties but extends to suburban and rural areas.

The plight of the severely poor is a distressing sidebar to an unusual economic expansion. Worker productivity has increased dramatically since the brief recession of 2001, but wages and job growth have lagged behind. At the same time, the share of national income going to corporate profits has dwarfed the amount going to wages and salaries. That helps explain why the median household income of working-age families, adjusted for inflation, has fallen for five straight years.

These and other factors have helped push 43 percent of the nation's 37 million poor people into deep poverty - the highest rate since at least 1975.

The share of poor Americans in deep poverty has climbed slowly but steadily over the last three decades. But since 2000, the number of severely poor has grown "more than any other segment of the population," according to a recent study in the American Journal of Preventive Medicine.

"That was the exact opposite of what we anticipated when we began," said Dr. Steven Woolf of Virginia Commonwealth University, who co-authored the study. "We're not seeing as much moderate poverty as a proportion of the population. What we're seeing is a dramatic growth of severe poverty."

The growth spurt, which leveled off in 2005, in part reflects how hard it is for low-skilled workers to earn their way out of poverty in an unstable job market that favors skilled and educated workers. It also suggests that social programs aren't as effective as they once were at catching those who fall into economic despair.

About one in three severely poor people are under age 17, and nearly two out of three are female. Female-headed families with children account for a large share of the severely poor.

Read the whole thing - if you don't, you'll miss some real shockers.

Ok, now couple of things I'd like to point out.

First, the federal minimum wage used to be $5.15 an hour, with many states having higher minimums. Now that we've got the Dems in power, it's in the process of being increased even higher. As stated in the article, those in "extreme poverty" are individuals making approx. $5,000 or a family of four making $10k. Assumption obviously is that if you've got two working adults, they should be able to pull in $5k a year. What this means is that these individuals - if they were fully employed, but did not work any overtime - would be earning just $2.50 per hour. How can this be? Well, obviously we're not talking about people who have even the barest of skills to be able to qualify for a minimum wage job - and now that the minimum wage is higher, it's even more unlikely that they'll ever land what they would consider to be a high paying job. I personally blame the Democrats for condemning those in extreme poverty to continue in their current condition.

Second, it obviously goes without saying that there are a variety of other issues related to those in extreme poverty, such as drug addiction, mental illness, etc, etc. Those in extreme poverty aren't able to communicate with customers, perform basic tasks, etc.

Third, the study also mentions that 1 out of 3 in extreme poverty are under 17. Now, I don't know the specifics of the study, but I wonder how individuals are considered to be in extreme poverty. Are these kids in families whose total income falls under the extreme poverty line? Or are we talking about high school students who are working part time and/or seasonally...

Fourth, the study does not mention whether the poor from Mexico who are flooding into America were considered in this study. This is important because, as I've mentioned numerous times, our lack of a guest worker program results in these individuals not being able to get the federal minimum. While I'm no fan of the minimum wage, it is the law.

Fifth, the study continues to use demographics of 20 to 65 or 75 when discussing how a certain percentage of us will rely on government assistance of some sort:
Two of three will use a public assistance program between ages 20 and 65, and 40 percent will do so for five years or more.

I'm curious as to whether federal and state college tuition loans or other government assistance are covered by this.

And finally, one little tidbit about the income of those in "extreme poverty" that you should be aware of. It appears in the 50th paragraph and it is the following:
Most researchers and economists say federal poverty estimates are a poor tool to gauge the complexity of poverty. The numbers don't factor in assistance from government anti-poverty programs, such as food stamps, housing subsidies and the Earned Income Tax Credit, all of which increase incomes and help pull people out of poverty.

I think this is a pretty important paragraph and the author obviously does as well - although he probably hated to write it. He sandwiches it between two paragraphs with criticism of this position and drops it down to the final paragraphs, when most readers are tearing their hair out and running for the federal assistance office.

Obviously, being in extreme poverty is not a laughing matter. However, articles on studies like this are curiously devoid of facts or methodologies used in the study. I understand that they don't want readers to fall asleep, but it seems that these articles are written more to scare than to inform the reader.

Your Co-Conspirator,
ARC: St Wendeler