Posts tagged with: Poverty in the United States

consumptionWhat if told you that between 90-100 percent of Americans are living in “healthcare poverty.” You would probably object and say that while the country certainly has a healthcare crisis, my numbers are surely inflated. After all, most people in the U.S. have access to healthcare.

In reply, I explain that while it’s true most people are able to consume healthcare services, they are still in poverty since those services are paid for at least partially by the government or private insurance. You would probably respond that I seem very confused on this issue. And you’d be right.

Yet when we hear reports that between 14 and 16 percent of  Americans are living in poverty, few people bother to ask, “Are they talking about consumption or income?”

The reason it matters is the same reason that most Americans are not in “healthcare poverty”: they are able to consume more goods and services than they are able to pay for with their income. As James X. Sullivan, an economics professor at Notre Dame, has explained:
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Blog author: jcarter
Monday, November 30, 2015
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PoorTaxImagine you’re a single mom with one child who receives $19,300 a year in government benefits. A local business offers to hire you full-time at an hourly rate of $15 an hour. At 2,000 hours a year (40 hours for 50 weeks) you would earn $30,000. Should you take the job or stay on the government dole?

The additional $10,700 a year certainly sounds enticing. But because you would lose your benefits and have to pay taxes, your disposable income would be about 31 percent less, around $20,700. By working full-time you’d only earn $1,400 a year more than when you were on welfare. That means you are working full-time to earn an additional 70 cents more an hour than when you were unemployed. Why bother?

That 31 percent is the effective marginal tax rate for low- and moderate-income workers will face, on average, in 2016. The marginal tax rate is the percentage of an additional dollar of earnings that is unavailable to an individual because it is paid in taxes or offset by reduced benefits from government programs. As the Congressional Budget Office points out in a statement of the obvious, that rate affects people’s incentives to work: “In particular, when marginal tax rates are high, people tend to respond to the smaller financial gain from employment by working fewer hours, altering the intensity of their work, or not working at all.”

As Robert VerBruggen notes, that marginal rate remains high well above the poverty line:
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School-Desks--Empty-Classroom--GENERIC-HD--1-9-09---18449637Back in October I offered five guidelines on “how to be a better guesstimater,” ways to hone your skills at guessing and estimation — guesstimation — that will help us minimize innumeracy.

A recent Washington Post article—“Majority of U.S. public school students are in poverty”—shows how applying these five tips could prevent people from falling for obviously inaccurate reporting. Here is the main claim of the article:

For the first time in at least 50 years, a majority of U.S. public school students come from low-income families, according to a new analysis of 2013 federal data, a statistic that has profound implications for the nation.
The Southern Education Foundation reports that 51 percent of students in pre-kindergarten through 12th grade in the 2012-2013 school year were eligible for the federal program that provides free and reduced-price lunches. The lunch program is a rough proxy for poverty, but the explosion in the number of needy children in the nation’s public classrooms is a recent phenomenon that has been gaining attention among educators, public officials and researchers.

Are those numbers accurate or even plausible? Let’s see how we could apply the tools of guesstimation to this claim.
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Blog author: jcarter
Thursday, August 21, 2014
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7figuresFeeding America is a nationwide network of 200 member food banks, the largest domestic hunger-relief charity in the United States. The Feeding America network of food banks provides food assistance to an estimated 46.5 million Americans in need each year, including 12 million children and 7 million seniors.

The report “Hunger in America” is Feeding America’s series of quadrennial studies that provide comprehensive demographic profiles of people seeking food assistance through the charitable sector.

Here are seven figures you should know from the latest report:
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will-work-for-food“There is no material poverty in the U.S.,” says the always-provocative Walter E. Williams. “What we have in our nation are dependency and poverty of the spirit, with people making unwise choices and leading pathological lives aided and abetted by the welfare state.”

The Census Bureau pegs the poverty rate among blacks at 35 percent and among whites at 13 percent. The illegitimacy rate among blacks is 72 percent, and among whites it’s 30 percent. A statistic that one doesn’t hear much about is that the poverty rate among black married families has been in the single digits for more than two decades, currently at 8 percent. For married white families, it’s 5 percent. Now the politically incorrect questions: Whose fault is it to have children without the benefit of marriage and risk a life of dependency? Do people have free will, or are they governed by instincts?

There may be some pinhead sociologists who blame the weak black family structure on racial discrimination. But why was the black illegitimacy rate only 14 percent in 1940, and why, as Dr. Thomas Sowell reports, do we find that census data “going back a hundred years, when blacks were just one generation out of slavery … showed that a slightly higher percentage of black adults had married than white adults. This fact remained true in every census from 1890 to 1940”? Is anyone willing to advance the argument that the reason the illegitimacy rate among blacks was lower and marriage rates higher in earlier periods was there was less racial discrimination and greater opportunity?

No one can blame a person if he starts out in life poor, because how one starts out is not his fault. If he stays poor, he is to blame because it is his fault. Avoiding long-term poverty is not rocket science. First, graduate from high school. Second, get married before you have children, and stay married. Third, work at any kind of job, even one that starts out paying the minimum wage. And finally, avoid engaging in criminal behavior. It turns out that a married couple, each earning the minimum wage, would earn an annual combined income of $30,000. The Census Bureau poverty line for a family of two is $15,500, and for a family of four, it’s $23,000. By the way, no adult who starts out earning the minimum wage does so for very long.

Read more . . .

On National Review Online, Acton Research Director Samuel Gregg offers an analysis of last night’s debate between President Barack Obama and Gov. Mitt Romney. Gregg begins with the assertion by Melinda Henneberger of the Washington Post that the candidates are ignoring poor and working-class Americans. Gregg responds:

… what’s generally missing from the discussion of poverty in the context of this presidential election — though Romney did obliquely reference it in the second debate — is acknowledgment that: (1) the economic causes of impoverishment are more subtle and less amenable to wealth redistribution than the Left is willing to concede; and (2), with a few exceptions, liberals are generally reluctant to acknowledge some of poverty’s non-economic causes, not least because it throws into relief some of the more destructive effects of their cultural agenda.

If poverty was simply a question of wealth redistribution, the sheer amount of dollars spent since the not-so-Great Society programs of the 1960s should have resolved the problem. In 2011, Peter Ferrara calculated that “total welfare spending [in 2008] . . . amounted to $16,800 per person in poverty, 4 times as much as the Census Bureau estimated was necessary to bring all of the poor up to the poverty level, eliminating all poverty in America. That would be $50,400 per poor family of three.”

The effects in terms of reducing poverty have, however, been underwhelming. As Ferrara observes: “Poverty fell sharply after the Depression, before the War on Poverty, declining from 32% in 1950 to 22.4% in 1959 to 12.1% in 1969, soon after the War on Poverty programs became effective. Progress against poverty as measured by the poverty rate then abruptly stopped.” In short, America’s welfare state, which now easily accounts for the biggest outlays in the federal government’s annual budget, has proved inadequate at realizing one of its central goals.

Read “Who’s Really Forgotten the Poor” by Samuel Gregg on NRO.

Blog author: jcarter
Thursday, February 16, 2012
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At Public Discourse, Ryan T. Anderson reviews Lawrence Mead’s From Prophecy to Charity: How to Help the Poor:

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