Poor Americans are Doing Just Fine

The now Democratic managed CBO just published a report of low income families. You can read into it what you want, but one of the bottom lines is that low income families have seen a 35% real income growth since 1991. Not bad, but there is more.

The study also points out something we all know, but sometimes do not think about. Individual families do better over time even when the general welfare remains the same or declines. Most people are not still making minimum wage after a couple of years of work exerience and some people manage to save and improve. The study surveyed poor families longitudinally from 2001-2003. Those were bad years for the U.S. economy, yet the average poor families saw their income rise by 45%. Of course, you can point to the downside. Although six in ten saw significant increases in income, one in four declined and the rest stayed the same. I think that is generally a good result when 60% of the poor make more money even in a recession, but I know that I am just a heartless conservative. Liberals can revel in the bad news. That is what they do best.

If you look at the graphs on the chart, you will see that incomes have declined relative to the peak years. The inconvenient truth Bush critics will need to address is that the decline began the last year of the Clinton administration. In other words, it was an ordinary economic thing, not a Bush problem.

I think a big success can be found in welfare reform, as work and EIC replaced the failed old welfare system.

When I eyeballed the chart, it looked like real incomes in 2005 were at about the same level they were in 1998. AND remember that does not mean most people are making only what they did in 1998. After nine years of experience, they are usually making more. It just means that a new entrant into the market is making what a new entrant made in 1998 and so on. I do not recall 1998 being such as bad year and this year is better than all the years before that, but critics can howl.

Some people will never be happy and can find sadness in sunshine and flowers.

Posted by Jack at May 23, 2007 10:37 PM
Comments
Comment #221171

Just in case anyone is having trouble visualizing what Jack is talking about, here’s the graph:

Well, apparently the IMG tag is disabled. Here’s a quick link.

Note the steep increase in earnings during the Golden Age of Clinton, which accounts for every single cent of the income growth Jack cites. And then the sharp decline and subsequent stagnation.

Yipee. Hurray for sunshine and flowers.

Jack, this is exactly what I’m talking about. You and your fellow Republicans are so happy to accept mediocrity and even failure as the best America can do.

Bullcrap. The first two-thirds of that graph show the greatness America is capable of under competent leadership. Unlike you, I will never be content with less.

Posted by: American Pundit at May 24, 2007 1:58 AM
Comment #221180

AP

The decline began when we were still in those golden years of Clinton. It is because we had an economic slowdown that began in 2000 (the year before Bush took office). We have not succeeded in getting rid of the economics.

The interesting part is that a typical poor family improved its financial position even during the slowdown years by 45%, so if they were asked if they were better off than before, six in ten poor families would truthfully answer - yes.

I would prefer faster progress too, but you cannot repeal economics.

What this DEMOCRATIC study indicates is that those who talk about things getting worse and worse are just wrong. In the very worst case, 2005 was a lot like 1998 (which I wrote on many occassions) and better than all the years before 1998. My understanding is that figures for 2006-7 will be even better and that we will again hit all time highs by early 2008.

So the liberal argument could be, “we think that the poor are getting richer too slowly” but it cannot be that they (or we) are suffering from anything approaching a bad situation.

I will put in my usual disclaimer that presidents get too much credit or blame in general for economic conditions. I am not so much trying to praise Bush or blame Clinton, and I do not think the reverse makes much sense either. I am pointing out that the doom and gloom crowd is just making themselves and others upset for no good reason.

BTW - there is a good chance that we will commit economics again. If this cycle is like others, we will enter a down phase by 2009 or 2010. If a Dem is in the White House, the graph will show upswings from 2003 until the Dem takes office. In fact it will be a lot like your graph. I look forward, if I still am writing, to hearing the Dem excuses.

Posted by: Jack at May 24, 2007 8:00 AM
Comment #221181

AP,

What your graph really shows is a steep rise in earnings between 1997 and 2000. That coincides with a period of remarkably low unemployment.

It takes a sustained period of low unemployment to push up wages at or near the minimum wage, because that is the only time (short of successful unionization efforts) that these workers have any bargaining power for higher wages or better jobs.

Posted by: Steve K at May 24, 2007 8:05 AM
Comment #221184

Jack,
With a 3% rate of inflation these people make exactly what they made in 1991 or even maybe a little less.
Great news Glad you figured in infation. These people are stuck exactly where they were 16 years ago.

Posted by: timesend at May 24, 2007 8:58 AM
Comment #221193

Please can you please set this so I can e-mail this to a friend. Or do you know a way I can do this. My microsoft outlook will not work and no one uses this anymore because it’s a pain in the but…deb

Posted by: debi williams at May 24, 2007 11:19 AM
Comment #221198
What this DEMOCRATIC study indicates…

First of all, it’s not a Democratic study. It’s from the NON-PARTISAN CBO. Second, I think people can read a graph without you telling them what it means.

Third, I just can’t get enthusiastic about a six year drop in wages the way you do, Jack. Sorry. America is better than that and I’m sorry you don’t believe it.

Posted by: American Pundit at May 24, 2007 11:29 AM
Comment #221224

It so easy to mislead with percentages. Let’s see, a low income family for example, 3 persons living on $22,000 a year. Add 35%, or $7,700. Voila, 15 years later they are still under $30,000 per year.

Still low income. Still struggling to make ends meet and enjoy America’s largesse. Average cost of low income housing well over $9,000 per year. Annual cost of minimal medical insurance, co-pays and deductibles, about $6,000 per year. Cost of utilities, about $1,800 per year. Cost of maintaining a used car including taxes, insurance, and repairs and gas fill-up once per week: $4,480 per year. Supermarket cost for 3, $1,900 per year. Cost of interest on debt, $500 per year. Clothing $1000. Basic TV service, phone service: $900/yr. Income taxes: about $3,500.

Grand total: excluding any savings, vacations, unanticipated expenses, life insurance, income and other taxes, user fees, etc. : $28,980.

Which leaves about $1,020 per year for family gifts, birthdays, eating out, and of course building that wealth pot for retirement.

There is no question that additional 35% income growth over 16 years was a big help. It barely kept this family from dropping into the poverty level, IF they live in a relatively low cost of living area which excludes a large number of states like California, New York, New Jersey, etc.

Posted by: David R. Remer at May 24, 2007 2:40 PM
Comment #221229

Jack,

Give credit where credit is due. You don’t mention it was Clinton who expanded and fought for the EIC and against Republican attempts to whittle away at that too.

You are right about earnings being economic and have little to do with presidential policy. However, I fail to see your point except that the poor made real income gains during Clinton’s presidency and have been declining for the last seven years despite low unemployment.

Posted by: chris2x at May 24, 2007 4:03 PM
Comment #221234

I wonder what the multiple jobholding rate curve between 1991 and today will looks like.
Anyone knows where to find one, if such thing even exists?

Posted by: Philippe Houdoin at May 24, 2007 4:15 PM
Comment #221237

>>I will put in my usual disclaimer that presidents get too much credit or blame in general for economic conditions. I am not so much trying to praise Bush or blame Clinton

Jack,

You mentioned delines during the latter part of Clinton, and increases during Bushes, both of which are false assumptions. Then, don’t mention welfare reforms took place under Clinton.

In your first response to others’ comments, you make the absurd statement above…puhleeeze!?!

Posted by: Marysdude at May 24, 2007 5:06 PM
Comment #221238

Now , Jack,
Since we have had this discussion over and over again, I’ll avoid giving you my opinion, again.

I’ll admit I am a terrible graph reader, But:

Isn’t the earned income credit area getting larger because of the Aide to Dependant Families area?

Isn’t the increase in the lower economic, mostly due to the fact that the government has simply re-arranged or created more Acronyms for governmental aide?

Oh - I did read that more child support might be part of the reason!!! That’s good news!

I also loved the part where they didn’t take into account the cost of working - child care, transportation, etc.

If the graph had a comparison between the upper, middle and lower income brackets, I think it might make a little more sense. And you might have a stronger leg to stand on…or not.

BTW - just which party was in control when this “study” was done?
These days it makes a difference? I don’t trust either of them.

Posted by: Linda H. at May 24, 2007 5:18 PM
Comment #221239

Jack,
I left out a couple of words. Isn’t the earned income credit getting larger because the Aide to Families is getting smaller? Isn’t that almost the same thing! One doesn’t have to actually work to get EIC. That’s sort of like comparing oranges to oranges - I think.

Posted by: Linda H. at May 24, 2007 5:29 PM
Comment #221245

Jack/David:

I’m not sure I like the premise of this thread. “The poor are doing fine”. If they were doing “fine” they wouldn’t be “poor”.

I think it is more important to figure out how to improve their situation. There are some things I can support.

1. Helping with medical costs. We need a guarunteed “bottom” of some sort to make sure everyone has some guarunteed medical coverage. It doesn’t do us “rich” republicans any good to need to pay for some serious medical issues that could have been better handled by a GP if only found earlier.

2. The only true way I know of to improve the bottom is through education. The world revolves around job skills. If we truely want to “move” the bottom up, we need to invest in job training.

Craig

Posted by: Craig Holmes at May 24, 2007 7:01 PM
Comment #221249

Jack

You’re cherry-picking again (or, I should say, you’re promoting cherry-picked sources again). The lower 5/6 of households on the income spectrum have been losing ground in the Bush II era. I feel like a broken record having to repeat this. LOSING GROUND IN REAL DOLLARS, while the upper 1/6 has incomes growing at unprecedented rates. ALL of the growth is going to the wealthy and some of that growth is being taken from everyone else. Isn’t that class warfare.

No amount of picking out little isolated bright spots counters this tough fact that you have yet to address head on. You’ve dismissed it lightly in the past with platitudes like (I paraphrase) “Well, a little income disparity isn’t bad,” when this isn’t about disparity, it’s about LOSING GROUND IN REAL DOLLARS.

So spare me your distractions with cherry-picked economic data and just address the problem of real incomes sliding among the middle and lower economic classes while the rich get richer. This is a recipe for disaster yet was being fed by the current administration and the former congressional regime. You’d buy a lot of credibility by actually addressing this as though you gave a rat’s ass.

Posted by: Mental Wimp at May 24, 2007 8:04 PM
Comment #221260

Timesend

The figures are adjusted for inflation. The poor are making significantly more than they were.

Debi

I do not know how to do that. I would just cut and paste.

AP

It looks like a three year drop (the started during Clinton’s last year and ending in 2003). I am not enthusiastic about that either, but it is how the economy tends to work. One thing is certain: this is a bipartisan thing. It started with Clinton. Bush just ended the slide.

David

We can say what we want about the poor. The fact remains that they might be poor today, but they are less poor than they were in 1991. That is the only point of the study.

Chris 2x

Incomes began to decline the last year of Clinton. That is the economic point. And incomes have not dropped for seven years. They stopped dropping in 2003 (the year of the capital gains tax cuts). We do not have figures for 2005-6 here. I have seen WSJ articles indicating that medians rose in these years.

Marysdude

I am trying to make the point that the economy is more than the president. The expansion of the 1990s began the year before Clinton and ended the year before he left. Clinton did a decent job, but the growth during his time was like the rooster getting credit for the sunrise.

I did mention welfare reform. I wrote a whole post re. If you recall the history, it was proposed and passed by Republicans. A minority of Dems voted for it and Clinton, to his credit defied his own party to sign it.

Linda H

The Dems were in control. This study just came out a couple days ago.

Re EIC it is not the same as AFDC. You do have to work to get EIC. It is much better than AFDC.

Craig

We should invest in job training. Welfare reform did many of these things, BTW.

Mental

The poor are about as well off as they were in 1998 and significantly better than they were before that. They lost ground only when counted against the bubble, which popped the last year Clinton was in office.

It would be better if the poor were less poor, but they have not lost much ground. We are also not talking about the same people. As the study shows, poor families were 45% better off in 2003 than in 2001, even during the slowdown.

I think we need to remember this. It is as if you started to work in 2001 and made $100. By 2003, you were making $145. I enter the labor force in 2003. Because of the recession, I start at $95. The general level has dropped for those at a particular level, but those working did not get poorer since they climbed higher.

Re general inequality - it can become a social problem. It does not bother me very much besides that. I have no problem with unequal results, since most people behave in unequal ways and have unequal talents or work ethics or sometimes luck. The politics of envy does not appeal to me.

Growing inequality, BTW, is worldwide. It is not a Bush thing. It increased a lot in the 1990s and actually decreased from 2000-2003. Of course the reasons were the economic decline and the decline in stock prices. This was not a good thing.

Posted by: Jack at May 24, 2007 11:14 PM
Comment #221262

Interesting graph, Jack.
I have always believed this doom and gloom to be nonsense, while trying to keep an eye on the steadily improving condition of median incomes across the board.
However, the one graph I found very interesting is graph 6. It would appear that female-headed households are a real failure compared to other households. This is surprising since radical feminists seem to portray the female-headed household as something for which to strive.
It would seem that instead of promoting the progressive feminist agenda; women have the power to go it alone, or should I say propped up by the arm of government. We might want to rethink the great value of more traditional family units. Your economic news would be even better if the traditional family unit was stronger and was promoted more aggressively.

JD

Posted by: JD at May 24, 2007 11:29 PM
Comment #221274

Jack,
The artifical labor increase allowed by all administrations since Reagan, in the form of illegal immigration, has put an real cap on the wages of the working class. The information you present is inaccurate if as you state it is adjusted for inflation.

Posted by: j2t2 at May 25, 2007 3:26 AM
Comment #221278

j2t2

It is adjusted for inflation and is not inaccurate. The CBO is an excellent source. It is bipartisan and currently the Dems are in the majority.

You can interpret it in different ways, if you like. Illegal immigration has pulled wages down for the lower group of wage earners. Many of the lowest wage earners are probalby illegal immigrants. You can interpret that as you wish, but the bottom line is that the poorest group - despite illegal immigrants or because of them - improved significantly.

Posted by: Jack at May 25, 2007 8:18 AM
Comment #221289

jack
And there are no more homeless people and the infant mortality rate is improving and poor people no longer have to choose between paying the rent or going to a doctor and ain’t it just grand.

I am with AP.

Presidents can and do make a difference as to wages. Fighting the minimum wage increase until finally agreeing to it at the cost of literal blood. Appointing anti-union hacks to the NLRB where all they have to do to hurt unions is delay ruleings. Running a DOL that constantly changes regulations to deny workers overtime and reduces mandated enforcement funding.Appointing a Fed chairman that regards increasing wages as the enemy in inflation instead of the real culprits,increasing energy and medical cost gougeing,war cost etc.At some point the wieght of those rose colored glasses must hurt your nose.

Posted by: BillS at May 25, 2007 11:44 AM
Comment #221298

Why don’t you far lefties try comparing the poor in this country to the poverty in the rest of the world. Why don’t you compare the poor in this country to the rich in the rest of the world! How about a comparison from history.

Our poverty stricken are richer than the majority of the worlds population and live a better standard of living than the rich have had throughout HISTORY.. LOOK IT UP!~

You guys always love comparing apples and oranges.
No where else in history or in the current world does anyone have the opportunities to move up the financial ladder.

Shame on anyone who complains about poverty in the USA. Look around the world first and start with real poverty and depression.

Posted by: scott at May 25, 2007 1:33 PM
Comment #221303

scott
So you are saying that we can’t do better? FYI We are 31st in life expectancy and behind Cuba and Craotia in infant mortality. Are you satisfied with that?

Posted by: BillS at May 25, 2007 5:11 PM
Comment #221315

BillS

You cannot trust Cuban statistics. Croatia is a nice country.

Posted by: Jack at May 25, 2007 9:33 PM
Comment #221332

Bill S

Why did you blatantly change the subject from poverty to the mortality rate of infants?

Posted by: scott at May 26, 2007 12:57 AM
Comment #221335

Bills

The difference between you and I when it comes to poverty lies not in our great want for all to live a decent, comfortable life. It comes in how we each believe the task needs to be accomplished. You as a leftist, would give the government the job of taking from the rich to GIVE to the poor. The problem with this way is that holding a job and self sufficiency are vital for good self esteem. When you GIVE a man something, most of the time it is not as well taken care of as if the man worked for it.

I would accomplish the task by free market democracy. Let the people vote for our leadership, and let them vote with their money as to which companies and products make it. The nice thing about this way is that it has proven itself. Some problems? Yes. Always! your computer has problems, your marriage has problems, a Boing passenger jet today had engine problems. But it works. We live a standard of living here that is unmatched any where in the world and any where in history. Have we made mistakes? Yes! Many, Slavery, Indians, in our relationships, as teachers in our classrooms, with our employers, our employees, with our children! Our Poverty ridden still live a standard of living unmatched in 90% of the world. People from all over the world are begging to come here to live in poverty. 12 million of them are breaking the law and risking their freedom to live HERE in poverty!


Now you lefties! Don’t pick details out of my writing like my %90 It might be %95) and debate my sentences. Stand up and debate the philosophies.

Tell me why a socialist system with strong governmental control of business and peoples freedom (like you find in Cuba) is better than our free market democracy. Tell me why the free market system is bad. Tell me why working hard in this country and having it pay the big bonuses is so wrong. Debate me on how your way is the best way to solve the problem the world has always had of some people having lots of money and some having none.

Posted by: scott at May 26, 2007 1:35 AM
Comment #221352

Scott,

You have hit upon an important point.

The poor in America would be among the wealthiest in most other countries.

Bills’ liberal response to you reeks of the arrogance and elitism that those in other countries use to justify their hatred for Americans. And they say the Bush Administration is arrogant and elitist. Geez! This liberal, left-wing idea that the American poor should be better off than the wealthy of other nations is certainly not going to play well with Islamic fascists and will probably be used in their recruitment videos.

JD

Posted by: JD at May 26, 2007 11:40 AM
Comment #221435

Looks like I left them speechless!

Posted by: scott at May 28, 2007 1:15 AM
Comment #221637

hillary proves my point


We Are All in It Together, Clinton Says
Tuesday May 29, 4:41 pm ET
By Holly Ramer, Associated Press Writer
Clinton: Shared Prosperity Should Replace ‘On Your Own’ Society

MANCHESTER, N.H. (AP) — Presidential hopeful Hillary Rodham Clinton outlined a broad economic vision Tuesday, saying it’s time to replace an “on your own” society with one based on shared responsibility and prosperity.

The Democratic senator said what the Bush administration touts as an ownership society really is an “on your own” society that has widened the gap between rich and poor.

“I prefer a ‘we’re all in it together’ society,” she said. “I believe our government can once again work for all Americans. It can promote the great American tradition of opportunity for all and special privileges for none.”

That means pairing growth with fairness, she said, to ensure that the middle-class succeeds in the global economy, not just corporate CEOs.

Posted by: scott at May 30, 2007 4:29 AM
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