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Poverty in U.S.: The View from the American Enterprise Institute

by The Maven Mon Sep 12th, 2005 at 11:13:19 AM EST

Last Friday's New York Times provided us with a truly boneheaded op-ed by Nicholas Eberstadt of the American Enterprise Institute, "Broken Yardstick", which took issue with the new Census Bureau report on poverty rates.  (For those who might not know, the AEI is one of the major right-wing think tanks in the U.S., along with the Heritage Foundation and the Cato Institute.)  I understand the Times' policy of publishing op-eds that disagree with the editorial page's "forceful, long-held view on a certain topic", but the illogical posturing and lack of thoughtful reasoning that pervade Eberstadt's essay are hardly a testament to the process of editing those submissions.

Eberstadt's principal thesis seems to be that America's measures of poverty are seriously flawed, given that the poverty rate is higher now than it was 30 years ago, in 1974.  While there might be some changes worth examining (see this Census page for some discussion, and more generally, this series of links), the types of examples he provides are both specious and misleading to the extreme.  The Census Bureau, interestingly, does provide a link to the AEI's website for a seminar series on poverty.  Not surprisingly, Eberstadt made a powerpoint presentation, "Indicators of Deprivation and Wellbeing in Modern America", back in March of this year at one of these seminars, covering much the same ground as his op-ed.   Let's take a look below at some of his distortions put forth in the Times:

"Per capita income adjusted for inflation is over 60 percent higher today than in 1974."  Median income adjusted for inflation, however, hasn't moved significantly.  In 1973, the median income among males was $28,892; in 2003, it was $29,931-- a net gain of 3.60% over 30 years (that's 0.12% per year, folks).  (Source: Historical Income Tables, U.S. Census Bureau)  Virtually all the increase he cites to is due to significantly higher labor force participation among women and greater income parity between the genders.

"Thirty years ago, the proportion of adults without a high school diploma was more than twice as high as today (39 percent versus 16 percent)."  That's nice, but:  a) what does this directly have to do with the poverty rate; and b) doesn't that seem to indicate that the problems of poverty are even more entrenched than education alone?  If anything, these figures would seem to show that a high school diploma is no longer the ticket out of poverty that it once was.

"And antipoverty spending is vastly higher today than in 1974, even after inflation adjustments."  So, just because we're spending more, and the rate hasn't declined, the calculations for the poverty rate must be the wrong ones?  The same 'logic' could be used to say that because, after adjusting for inflation, my rent has gone up (spending on housing) and food is more expensive (spending on nutrition), I must therefore be living in a better home and my meals must taste better.  Ri-i-i-ght.

"In 1972-73, for example, just 42 percent of the bottom fifth of American households owned a car; in 2003, almost three-quarters of 'poverty households' had one." and "By 2003, the fraction of poverty households with central air-conditioning (45 percent) was much higher than the 1980 level for the non-poor (29 percent)."  Obviously, Eberstadt has never heard of the concept of relative standards of living.  Poverty is not a fixed and absolute level but rather one that evolves over time.  What was unavailable even as a luxury item in one era becomes standard in the next.  In 1974, not even the richest households could own a cell phone or DVD player; using Eberstadt's logic, today's "poverty households" must be unimaginably wealthy to own such devices.

"All strata of America - including the disadvantaged - are markedly healthier today than three decades ago."  Absolutely no support whatsoever is given for this proposition, but I'm certain that somewhere out there, some measure of "healthy" could be defined in such a way to meet this assertion.  I'm equally as certain that there are plenty of other measures which would flatly refute this.  For a researcher who likes to toss around statistics, this is a shockingly unsupported (and unsupportable) statement.

"Though the officially calculated poverty rate for children was higher in 2004 than 1974 (17.8 percent versus 15.4 percent), the infant mortality rate - that most telling measure of wellbeing - fell by almost three-fifths over those same years, to 6.7 per 1,000 births from 16.7 per 1,000."  Apparently, Americans should be pleased that we're currently number 43 in the world in terms of lowest infant mortality rates, behind Cuba, Taiwan and South Korea.  (Source: CIA World Factbook 2005)  Again, just because there has been progress in an absolute sense doesn't provide any idea of whether the U.S. is gaining relative to the rest of the world, or slipping, which I would suppose is more likely the case (the U.S. ranked 28th in 1988, for example).  In fact, infant mortality had begun rising a bit during the years of the Bush Administration!  Not to mention that Eberstadt's looking at apples and oranges here.  We would need the comparative data for infant mortality in order to make any claim regarding an improvement over time (and that improvement as a poverty measure would only hold if the relative decline in mortality among children in poverty was at least equal to the overall decline across all income segments; data by race, not income, can be found at Table 30 of this National Vital Statistics Report).  The immense advances in neonatal medicine over the past 30 years have done nothing to make familes less poor.

All in all, Eberstadt falls back on that hoariest of right-wing strategies:  if the data aren't what you'd like them to be, keep changing the metrics until finding something that makes them appear far better than they are.  By proposing to completely alter the components of the measurement, no accurate contrasts with the past would be possible, as there would no longer be a basis for any apples-to-apples comparison.  Disingenuous, to put it mildly, but if one wants to hide the ball, this is a great way to do so.

Finally, if the standards Eberstadt would prefer were to be put into place -- essentially, if the poor are better off in any way than they were in the past, then they're no longer "poor" -- we would doubtless see exactly the statistical gains the GOP could then employ to trumpet the effectiveness of their theories in fighting poverty.  But of course that, to quote from their Dear Leader, would be a case of the soft bigotry of low expectations.  The 37 million Americans now living in poverty deserve better, but they surely won't get the help they need and deserve under the current administration.  Defining the problem away won't improve the life of even a single poor individual.

(Cross-posted, with some revisions, from TPMCafé and Booman Tribune.  A vastly truncated version was also sent to the Times as a Letter to the Editor.)

These are the typical arguments used to defend the US economic model, especially against the European one:

the poor have more cars than they did 30 years ago
they have more "stuff" than the Europeans (cars, washing machines, etc...)

Never a word, as you point out, about the concept of relative wealth - people feel wealthy (or not) in comparison to what people have around them, not in comparison to what they would have in some other (far away) period in time. And your statistic about median incomes is striking in that regard: stagnation of the majority and increase of the average due exclusively to the increases for the wealthy.
Also, all the "quality of life" issues that are hard to put into monetary values (and thus do not exist) are totally discounted: access to healthcare, the stress of having no safety net, the unability to plan long term, etc...

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Mon Sep 12th, 2005 at 05:57:49 PM EST
Among the materials I recently added to this post were the links to the discussions regarding the alternative measures of poverty on the Census Bureau website and, yes, from the AEI.  As I concede, it might be worthwhile to seriously examine making certain changes, as the present calculations based solely on income do seem a bit outdated.  But any changes to the formula must include measures that would permit comparisons to the past as well as on a going-forward basis.  I haven't had time yet to examine the AEI materials to see if they appear to have any real legitimacy.

I intend to pass these links along to some friends of mine who actually deal with these kinds of things to see if they have any feedback, and if so, I'll follow up with further thoughts based on where that might lead.

by The Maven on Mon Sep 12th, 2005 at 07:09:25 PM EST
[ Parent ]
That would be great! Thanks for crossposting this here.

In the long run, we're all dead. John Maynard Keynes
by Jerome a Paris (etg@eurotrib.com) on Tue Sep 13th, 2005 at 08:25:45 AM EST
[ Parent ]

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