Ezra Klein: Dispatches From The Conehead Economy

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February 26, 2007

Dispatches From The Conehead Economy

According to a new analysis of the 2005 Census Data, the number of severely poor Americans shot up by 26 percent between 2000 and 2005, growing 56 percent faster than the overall poverty population did during the same period. That's worrisome: we're not just seeing an increase in poverty, we're seeing an increase in severe poverty, to the highest rate since 1975. And this is all coming at the tail end of a fairly robust -- at least if you believe the macroeconomic numbers -- expansionary period.

Indeed, this has been the first expansion in which poverty has increased in every successive year (I haven't seen the data for 2006 yet). That's a fairly remarkable trend, and a real break with how our economy traditionally worked. Periods of growth used to aid every element of society, but we've become so unequal that even multiyear expansions will peter out before they reach the bottom segments of society. Meanwhile, the Luxembourg Income Study found that America has the highest child poverty rate of any of the 31 developed nations studied. As the wise Ms. Goodrich says, "that is one international competition the U.S. probably doesn't want to win." If only we weren't so damn competitive.

February 26, 2007 in Economy, Inequality | Permalink

Comments

We're also winning the infant mortality rate sweepstakes for developed nations, at least we were right up there last time I checked.

These are very upsetting poverty figures, Ezra. To what do economists attribute such grim numbers in the face of an ongoing expansion? What factor(s) is/are at work here? (Econ was never my strong suit, something to do with all those numbers.)

Posted by: litbrit | Feb 26, 2007 10:59:48 AM

A typical disagreement about the causes, from the article linked to at Ezra's link:

"What appears to be taking place is that, over the long term, you have a significant permanent underclass that is not being impacted by anti-poverty policies," said Michael Tanner, the director of Health and Welfare Studies at the Cato Institute, a libertarian think tank.
Arloc Sherman, a senior researcher at the Center on Budget and Policy Priorities, a liberal think tank, disagreed. "It doesn't look like a growing permanent underclass," said Sherman, whose organization has chronicled the growth of deep poverty. "What you see in the data are more and more single moms with children who lose their jobs and who aren't being caught by a safety net anymore."

I don't think the two phenomena are as mutually exclusive as Sherman seems to think, that single mothers from the underclass would probably be the most vulnerable.

Posted by: Sanpete | Feb 26, 2007 12:54:53 PM

Policy probably has something to do with it.

What is most troubling to me is that so many liberal policy wonks seem to think that it is some novel feature of the economy-as-weather -- "oooh, something mysterious is happening, let's investigate and noodle over this."

I'm not against careful investigation, but, really, isn't this just one more feature of a perfect economic expansion, as envisioned by the Bush Administration and its supporters?

This is what they want, they have had power, and they got what they wanted. Hello?

Posted by: Bruce Wilder | Feb 26, 2007 1:37:13 PM

Severely off-topic, but too good (for laughs) not to pass on: (with hat-tip to Josh Marshall)

Taking carefull aim

Posted by: JimPortlandOR | Feb 26, 2007 2:04:57 PM

we're seeing an increase in severe poverty, to the highest rate since 1975.

I believe that the permanent underclass phenomenon is the correct analysis. This permanent underclass is due to the lack of education and direction, and who is really surprised?

Fewer and fewer graduate and of those who do, less and less is learned. For the last 30+ years the authority and ability of schools to maintain control has steadily been eroded. The money thrown at the problem the liberals thought would fix the problem hasn't. Many today are not even asked to do homework because no one will do it anyway and there are no consequences.

Couple that with the breakdown of the Churches' abilities to convey a standard moral code of behavior, the lack of interest and/or ability of parents in doing so and you have a whole generation of the poor who are functionally illiterate and who have little moral compass.

If you wish to change this long term, education and moral training is the answer. If you wish to help them for the short term, create higher wages and more job availability for them by getting tough on illegal aliens and the employers that knowingly hire them. (This only works for those who put America and Americans first).

Posted by: Fred Jones | Feb 26, 2007 2:06:05 PM

One thing I'd like to know: is the group of people in severe poverty relatively static?

If it is, this is a serious problem. But it might not be--I'm wondering if there's any way of telling.

For example, I would have showed up as in "severe poverty" in one of my years in college--I studied abroad, and so worked very little. (I was in my late 20's, so was an independent household.) More college student households, or more immigrants who are poor the first year in the US, is not worrisome.

Posted by: SamChevre | Feb 26, 2007 2:17:58 PM

I agree Ezra. Terrible numbers.
http://www.economist.com/debate/freeexchange/2007/02/perish_the_poor.cfm
Severe poverty in 2005 was at the rate it was in 1996.
Hasn't there been one hell of a rise in its incidence.

Posted by: Tim Worstall | Feb 27, 2007 7:19:49 AM

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