The poverty line crunch.

A recent article in The Economist magazine, commented on LBJ's fabled "War on Poverty." In the 1960's LBJ and his administration adopted a political goal to wipe out poverty, like the current administration's "War on Terror" Johnson had a particular difficult time identifying the enemy. The poverty line that was adopted and used to define what being impoverished meant (this poverty line is still used by the government today) is $18,660 for a family of four.
This number in no means truly addresses the actual cost of raising a family in America today. Mollie Orshansky, administrator of Social Security during LBJ's administration, determined the number by calculating the needs of a family's nutritional needs and multiplied by one-third, because families of that era on average spent a third of their income on food. The current threshold poverty amount is really the cost of feeding a family in the 1960's adjusted for current inflation. This is leading to criticism that there are a greater number of Americans that are living in poverty than the Census Bureau and the Dept. Of Health and Human Services account for.
The recent economic boom and welfare reform are agravating the problem. Due to the welfare reform initiatives enacted by Bill Clinton while the economy was booming several Americans who are in desperate need of assistance will not qualify. While the welfare reforms of the 1990's were heralded as reducing poverty, they are hitting the working poor the hardest -- those who work, but are unable to find work that pays a fair wage. Poorly designed welfare limits exclude the working poor from the needed relief that the government spends their tax dollars to provide.
This article was found at: http://www.economist.com/agenda/displayStory.cfm?story_id=3146724


Dr. Tufte said...

Ask for help on getting that link to look better! Also, you need blank lines between paragraphs.

This is more of a macroeconomic topic - try to get one more microeconomic for next time around.

There is a lot of frivolity involved in how the government comes up with poverty numbers. And there are many Americans that are below where we currently draw that line.

However, it isn't clear how useful knowing that is. Our poverty line in the country is higher than the middle class income in many countries we regard as being comparable to us, and far beyond what most of the population of the world has. Does that make our poor really poor?

Ski-Doo said...

I asked my friends the other day this question, as we sat eating at a resturante,"why is it that most of the people you see who are fat, are poor also?" That is the question of the day, now I don't argue that there are people out there who need assistance but very few, if any people in America are actually starving to death. I mean seriously look around, everytime you see some person boobin on the TV about not getting enough welfare, they weigh about 300 pounds. Looks to me like their gettin enough.

Now I know that this is not always the case, but be honest; is there not some truth to my argument? When you look at America and the opportunities it offers people, there is little room for not "making it." In this country you have got to try to be a failure. Look at it, we get our schooling up to 12th grade paid for; then when you look at our colleges they are the envy of the world. And for a lot of us our college degrees are paid for by Uncle Sam with his wonderful grants. Then look at the thousands of dollars that people put out for scholorhips for almost anything.

I hate to say it but very few peole have any excuse for being on welfare for an extended period of time. Yes there are many who truly need it and that is what it is there for; but you have to put forth some effort into not succeding or in not providing for your family in this country.

Ski-Doo said...
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Biancca said...

That is completely untrue. I know several single moms that are working hard and really struggeling, and no NONE OF THEM ARE FAT. Yes, people in other counties are even poorer, but at least there it is accepted, all of your neighbors are in the same situation, you aren't looked down upon for needing help. And there ARE lots of poor Americans.I have seen lots of people eat out of trash cans. I know that people die on the streets, they are not fat and lazy. Things happen, maybe they make bad choices, but maybe they don't. Who are you to judge?

Dr. Tufte said...

Wow, harsh words Ski-Doo...

Unfortunately Biancca, Ski-Doo's observation is supportable. It is a fact that obesity is more common among the poor. You make the perfectly reasonable argument that this is not true for individuals who are poor, but it is true on average. (FYI: a lot of arguments about policy end up with one side focusing on averages and the other on individuals). The reasons for this are poorly understood, and constitute a well known problem in the public health literature. One thing we do know is that it is a phenomenon of developed countries: once countries get rich enough, their poor start getting fatter.

I think that Ski-Doo makes a good point that people in the U.S. are offered a lot of advantages that should keep them from being poor. But that isn't the same thing as saying there shouldn't be any poor people because they are offered advantages not available to others. Bad luck exists and does not always even out, and people can be constrained into making choosing (optimally) between lousy alternatives.

Biancca's points are also correct. We do have poor people in this country who probably do not choose to be that way. Here I think the averages are important. Do we have less poor people or more? Do the people we define as poor have more or less? The preponderance of the evidence here is that, on average, our society is improving the lot of poor people. But that doesn't mean we are improving (or even can improve) the lot of every individual poor person.