Every year, the U.S. Census comes out with its report on incomes and poverty. And every year the same finding repeatedly surprises me.
As economist David Henderson says, the report “always shows that there is mobility between income categories, even in the short run, and that poverty is temporary for most people in America who experience it. Virtually all reporters ignore it.”
First, the bad news. The report reveals that during the 4-year period from 2009 to 2012, more than one out of three Americans (34.5 percent) had at least one spell of poverty lasting 2 or more months.
But the good news is that few people stayed in poverty all four years. Chronic poverty from 2009 to 2012 was relatively uncommon, with 2.7 percent of the population living in poverty all 48 months.
According to the report, the data “demonstrate that using a longer time frame to measure poverty (e.g., 4 years) yields, on average, a lower poverty rate than the annual measures presented in this report, while using a shorter time frame (e.g., 2 months) yields higher poverty rates. So whenever you hear about poverty rates always ask, “What’s the timeframe?”
Another significant finding is that there is a lot of economic mobility in America—both up and down. Social mobility is the ability of an individual or family to improve (or lower) their economic status. A slight majority of Americans (57.1 percent of households) remained in the same income quintile between 2009 and 2012. But the remaining 42.9 percent of households experienced either an upward or downward movement across the income distribution.
A primary key to mobility appears to be education. The report found that households with heads of the household who 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.
So why, as Henderson observes, are these points often ignored by reporters? I suspect it’s because most journalist don’t understand the importance of social mobility. They are too often concerned with income inequality and don’t realize that social mobility is significantly more important. Another reason is that while income inequality has a simple solution (e.g., take money from group A and give it to group B), social mobility is more complex and reliant on social and cultural factors.
However, if we truly want to help all Americans—especially those in poverty—there are a few things we could do: encourage parents to stay together, improve our local schools, and get involved in our communities. Doing that would improve the quality of life for millions of Americans in a way that worrying about the size of our neighbor’s paycheck can never do.