US Poverty Report

Link to columnby David Henderson via TCS Daily.

Census Bureau released its 2005 poverty statistics the other day, and much was made of the have fact that median income levels are still below those of 2000, although they did rise last year by a small percentage. Analysis of the population usually relies on dividing the US by income quintiles, as the Census data does. Results are interesting if you drill into the numbers and circumstances of the high and low groups a bit and compare them. The figures below define each group.

" In 2005, the lowest quintile had incomes of up to $19,178 and the highest quintile had incomes exceeding $91,705. People often picture families at all quintiles looking pretty much alike except for income and ethnicity. But that picture is false. "

Henderson points out that poverty statistics don't adjust for wealth, meaning many retirees with low incomes today actually have high net worths after a lifetime in the labor force and saving for retirement. Most people defined as being in poverty also don't have a job, and if they aren't retired, they are generally younger than 35 -- 35 to 54 being statistically the peak earning years for most individuals. As people get more experienced in the workforce, they get raises and skills, that over time, lift them out of the bottom quintile. Another little nugget --even if you don't have a job, if you live with a person with a job, it's likely you aren't going to be poor. If you work full-time, and have a spouse working full time, it very, very unlikely that you are in the bottom quintile.

"In the lowest quintile, 58.7 percent of households had no one earning money, 35.9 percent had one earner, and only 5.5 percent of households had two or more earners. (These percentages total 100.1 percent due to rounding.) In the highest quintile, by contrast, only 2.6 percent had no one earning money, 21.1 percent had one earner, and a whopping 76.3 percent had two or more earners...... In the lowest quintile, 64.2 percent of the heads of household (the Census now calls them "householders") did not work at all and only 14.0 percent worked full-time year-round. By contrast, in the highest quintile only 11.3 percent of heads of households did not work, while 73.0 percent worked full-time year-round....... Only 17.9 percent of households in the bottom quintile had a married-couple family; by contrast, 79.0 percent of households in the top quintile had a married-couple family. "

Of course, as has been mentioned earlier, by myself and others, poverty statistics also don't adjust for transfer payments -- things like food stamps, medicaid, medicare, etc. It's true that a minimum wage worker has a tough time getting by, but only about a half a million people in this country earn only the minimum wage. Henderson also points out that the Consumer Price Index, used to adjust incomes to inflation, generally overstates inflation by just under 1 % a year. Overtime, this also skews the statistics. So do we really have a poverty probelm in this country? I'll say that there are certianly some people who need help -- but I think all of the above prove it's not nearly as bad as you might think.