2013 poverty and income results: Rising tide lifts a few boats, but the levee needs work.

September 16th, 2014 at 4:13 pm

They’re out and I’ve got an extensive analysis up at PostEverything. For here, some highlights.

–The poverty rate fell more than I expected last year–down half-a-percentage point from 15% in 2012 to 14.5% in 2013. It was fully driven by a sharp decline in child poverty rate, which fell almost two percentage points, from 21.8% to 19.9%, the largest one-year decline since 1966.

I did underscore the possibility of just such an upside risk to the poverty rate, so I’m not too surprised, and the stagnant median income is largely what I expected as well (though families with kids did better on both the income and poverty front, largely from work-based gains).

All told, the fact that middle- and low-income households remain considerably worse off relative to pre-recession levels underscores the point I emphasize in my Post post: “…economic recoveries are taking much longer than in the past to reach the poor and middle class, and that reality poses a fundamental challenge that too many of today’s policymakers are ignoring. If this is the new normal — expansions that for years leave most households behind — then broad swaths of Americans have every right to demand that policymakers stop their seemingly endless partisan squabbling and address the factors blocking shared prosperity.”

–As the figure shows, poverty fell most sharply among Hispanic families. While poverty for families with kids fell less than a percentage point for white (non-Hispanic) and African American families, it fell 3.2 percentage points for Hispanic families with kids. (For the record, Hispanic and black family poverty rates, 27 and 32 percent respectively, are much higher than the rate of 10 percent for white families.)

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Source: Census

–One pretty remarkable Census series underscores the long-term job market challenge facing working families. The figure below plots the annual median earnings of full-time, full-year workers since the 1960s. Women certainly gained ground over these years, at least until a few years ago when their real earnings trajectory flattened.

But the median male–and remember, we’re talking men who a connected to the job market, as in full-time, full-year workers–is earning the same amount in real dollars today as 40 years ago.

Since around 2000, both series have been essential flat and that makes it awfully hard to generate gains in income without putting in more hours (at flat wages). And that’s hard to do when the job market doesn’t serve up the opportunity to put in more hours. This is surely one reason why from 2000 to 2013, the median income for working-age households is down 11%, over $7,000, from $65,800 in 2000 to $58,400 in 2013.

medearns14

Source: Census

–I argue in the Post that such working families face two challenges: First, the structure of the economy has made it harder for them to benefit from overall growth. Global competition, technological changes, barriers to education, deunionization, financial and housing bubbles, intractable recessions followed first by jobless and then wageless recoveries, the persistent absence of tight labor markets — all of these factors contribute to the growing disconnect between growth and the economic well-being of most households.

Second, policymakers have not only failed to protect or adequately prepare the less advantaged for these developments, they’ve exacerbated their impact.

It’s as if at the same time the rising river of global competition and inequality were threatening those stuck in the floodplains, the town’s engineers decided to ignore the eroding levies.

Some excellent CBPP materials: Greenstein, Parrott, more to come.

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One comment in reply to "2013 poverty and income results: Rising tide lifts a few boats, but the levee needs work."

  1. readerOfTeaLeaves says:

    I’m increasingly convinced that in both economics-business and in politics, the U.S. has become fundamentally corroded and dysfunctional by a number of economic ‘innovations’ over the past 30 years — including junk bonds (taking off in the 1980s), as well as the phenomenal growth in tax havens.

    Apparently, Michael Millken remains among the world’s wealthiest people:
    http://money.howstuffworks.com/personal-finance/financial-planning/junk-bond1.htm
    IOW, selling junk and engaging in insider trading pays off. As for the companies that were the targets of hostile takeovers, they would have been subject to ‘business school rules’ and accounting machicolations.

    Between 1967, a lot of resources came under pressure (timber, fisheries, minerals) that made things more expensive. In addition, we entered an ‘MBA culture’, and began to focus on ‘shareholder value’ and ‘quarterly returns’.

    A lot more than the levees need work.
    We need more opportunities for employee-owned co-ops, we need pricing that includes resource depletion costs (which are currently externalized via lobbying), and we need some new ways of thinking about economics as a social structure.


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