U.S.A. fact of the day

by on December 17, 2016 at 3:00 am in Data Source, Economics | Permalink

Poverty is higher among Appalachians than the national average, but not by much — Kentucky has a poverty rate of 18.5% and West Virginia 17.9%, compared to a national average of 14.7%.

That is from Bill Easterly.  The difference of course would be smaller yet if we adjusted the poverty level by regional rather than national CPIs.

1 3rdMoment December 17, 2016 at 3:52 am

The stereotype of Appalachia isn’t about poverty, it’s about white poverty. How do those rates compare?

2 JC December 17, 2016 at 5:43 am

Talking about stereotypes… if you’re white and poor, you’re a victim of globalization and globalist policies. If you’re black and poor, it’s your “culture” and innate will to live on government handouts…

3 The Other Jim December 17, 2016 at 9:32 am

Well hey, as long as your not projecting, it’s all good.

You should probably check to see if your neighbor is thinking anything racist right now. Don’t worry, you don’t need to get up. I’m sure you can do it from there.

4 Daniel O'Neil December 17, 2016 at 11:48 am

I’m not sure you understand what the word “Projecting” means, ToJ.

5 Andre December 17, 2016 at 11:49 am

Watch out JC, natives get restless when they hear that white lives matter evidence.

6 Troll me December 17, 2016 at 2:43 pm

Outside of the alt-reicht, I don’t think many people are pushing such ideas.

7 dearieme December 17, 2016 at 4:52 am

If it were a difference that the Left wanted to scream about they’d say that Kentucky has a poverty rate 26% higher than the national average, or perhaps that its poverty rate is 126% of the national average.

8 The Other Jim December 17, 2016 at 9:30 am

No, no, no… they’d never say 26%.

They’d say MORE THAN ONE IN FOUR.

Or if they wanted to go Full Krugman, NEARLY ONE IN THREE.

9 Jan December 17, 2016 at 12:09 pm

Infantile.

10 Jamie_NYC December 17, 2016 at 8:23 pm

You are calling Krugman infantile? He has Aspergers, you insensitive bully!

11 Alan December 17, 2016 at 12:53 pm

True, unfortunately

12 garten December 17, 2016 at 10:51 am

….What ?? There is NO poverty in America.

LBJ’s War-on-Poverty eliminated it. Our government spent over 16 TRILLION Dollars over past half century to rid us of poverty. We now spend a trivial 1 TRILLION Dollars per year to keep poverty from sprouting up again.

13 msgkings December 17, 2016 at 12:22 pm

No we spend 1 trillion per year to keep people from starving or dying without access to medical care.

14 Floccina December 27, 2016 at 3:47 pm

msgkings the poverty rate is based on work income, by consumption poverty has been nearly eliminated. http://conversableeconomist.blogspot.com/2013/09/the-poverty-rate-income-and-consumption.html

15 Troll me December 17, 2016 at 2:56 pm

There’s a trillion dollar ladder.

How many more ladders can be built when there’s a ladder in the first place? Say … people who climb ladders then become better at building ladders as a result.

Actually, it’s not a ladder. It’s health and education services, and some transfers. The ladder in the second year does not cost $0 for the fact of it’s having positive effect in the first year. In fact, it costs about the same every year.

But perhaps we should sum up the present value of all US military expenditures over the same time period, and observe that the nation is no more secure than it was 50 years ago?

That’s gotta be something like a $50 trillion waste according to your method of accounting.

16 Jason Bayz December 17, 2016 at 3:03 pm

+1

What people really pay attention isn’t the absolute rate, it’s the relative rate. How does the state rank in comparison to other states? In terms of income-defined poverty, West Virginia ranks 43rd in the nation.

https://en.wikipedia.org/wiki/List_of_U.S._states_by_poverty_rate

The problem with this measure is that cost of living will have a huge effect on defined poverty rates, and also because low income != poverty. What we’re really thinking about in terms of “poverty” is intelligence and behavior. Looking at these stats, West Virginia is averageville, USA. In terms of out of wedlock births, West Virginia’s rate(35.6) is virtually the same as the national rate(35.7):

https://www.census.gov/prod/2013pubs/acs-21.pdf

In terms of the murder rate, West Virginia ransk 26th out of 50, only slightly higher than the American average:

https://en.wikipedia.org/w/index.php?title=List_of_U.S._states_by_homicide_rate&oldid=754371611

NAEP scores are somewhere around average as well:

http://www.nationsreportcard.gov/science_2005/s0107.aspx?subtab_id=Tab_1&tab_id=tab2#chart

The lurking variable, of course, is race.

17 Jason Bayz December 17, 2016 at 3:09 pm

The NAEP data I linked was from 2005, this data from 2015 show West Virginia as among the worst performers in the nation, about where you’d predict based on poverty rates:

http://www.unz.com/isteve/urban-institute-naep-scores-by-state-adjusted-for-demographics/

18 Steve Sailer December 18, 2016 at 4:04 am

West Virginia is to whites as Hawaii is to Asians.

19 Steve Sailer December 18, 2016 at 4:10 am

It’s an interesting question: which state is worst for each race?Off the top of my head, I’d say:

Whites: West Virginia
Asians: Hawaii
Blacks: Wisconsin
Hispanics: Connecticut
American Indians: South Dakota

Best for each state:
Whites: Minnesota
Asians: Texas
Blacks: Hawaii
Hispanics: Missouri
American Indians: California

Note: the best states by race are even more off the top of my head than the worst states.

20 Steve Sailer December 18, 2016 at 4:03 am

West Virginia is roughly as white as New Hampshire, but it does much worse on a host of measures.

21 Floccina December 27, 2016 at 3:53 pm

The best and brightest have been leaving WV leaving for a long time.

22 prior_test2 December 17, 2016 at 4:52 am

I’m sure there is a perfectly logical reason why the Appalachians stand out in poverty compared to other places. But it is probably going to be white-washed in an orgy of political correctness, because really, we all know that the reason for endemic generations long poverty has to do with black and white just so stories.

23 Lanigram December 17, 2016 at 11:01 am

The historical, cultural, and geographical reasons for Appalachian poverty – an outlier in the US – are well described in the old book “Night Comes to the Cumberlands…”. It is amazing the poverty persists, given twenty years ago we thought the internet would destroy the power of place. Instead, wealth seems to funnel into a few very wealthy blue cities. We will not be working from home.

24 Lanigram December 17, 2016 at 11:10 am
25 Jan December 17, 2016 at 12:11 pm

Ok, but I still like the idea of retiring in West Virginia. I’ll come for the low housing costs and stay for the french fry salads (I actually say one of these advertised as “our best seller” last time I was there–I’m sure it’s delicious).

26 Jan December 17, 2016 at 12:12 pm

*saw, not say

27 Alan December 17, 2016 at 12:56 pm

The Appalachian hillbilly culture is remarkably similar to urban underclass black culture.

28 Art Deco December 17, 2016 at 5:41 pm

The homicide rate in West Virginia is 3.0 per 100,000. The homicide rate in Baltimore runs to around 37 per 100,000.

29 msgkings December 17, 2016 at 7:22 pm

The entire state of WV isn’t the proper comparison to the city of Baltimore.

30 Decimal December 19, 2016 at 1:15 pm

Cherry-picked !

31 zz December 17, 2016 at 5:26 am

It may come as a surprise to those who who aren’t from this region, but Kentucky != Appalachia. Almost all of the population is outside of the Appalachian region (Louisville/Lexington), and is a pretty normal Midwest/Southern blend of people. The fact that they have higher poverty at all is probably due to the Appalachian population in the eastern part of the state.

This fact is almost entirely an aggregation error, and says nothing about the extreme (relatively speaking) poverty in the eastern part of the state.

32 Jan December 17, 2016 at 6:41 am

Exactly. If you look at Appalachian counties, rather than states, the contrast is more pronounced.

https://www.communitycommons.org/2016/08/mapping-poverty-in-the-appalachian-region/

33 Slocum December 17, 2016 at 7:20 am

“The difference of course would be smaller yet if we adjusted the poverty level by regional rather than national CPIs.”

Wouldn’t we adjust by regional cost of living not CPI? The census bureau already does the latter. It’s called the ‘Supplemental Poverty Measure’, and by that measure, both Kentucky and West Virginia have poverty rates that are not only below the national average, but also well below those of ‘rich’ states like California, New York, Texas, and Florida:

https://en.wikipedia.org/wiki/List_of_U.S._states_by_poverty_rate

BUT, as others have noted, when it comes to poverty in Appalachia, we’re worried about people living in poor rural counties, not those in Louisville and Lexington.

34 GoneWithTheWind December 17, 2016 at 10:44 am

Poverty shouldn’t be measured in money or wages. There are a lot of people whose wealth or income would rate them as poor who live quite well and by choice. Also for whatever reason, there are specific income streams which the government is aware of but will not count when they measure poverty. And of course there are income streams that the government is not aware of that do not get counted.

IMHO it is illogical to say that someone is poor if they own any cars/trucks. Or if they have 55″ TV’s and air conditioning. Also if they take vacations in Mexico, Hawaii or the Caribbean. And don’t forget spending $100’s on gambling. And just for the sake of argument I would also include anyone who buys steak or lobster with food stamps as well.

35 Jan December 17, 2016 at 12:20 pm

I agree on taking fancy vacations and spending a lot on gambling as disqualifying for the “poor” label, though I wonder how many folks who earn poverty incomes actually do those things. Some of the other factors you list don’t make a lot of sense to me. For example, because air conditioning is historically cheap and almost essential in many parts of this country (see how many old people die during rare heatwaves in states where A/C is less common.) And while I agree a car is a big ticket item, in most parts of this country if you don’t have a car it is very difficult to work, and even tougher to work in lower wage jobs with irregularly scheduled hours (like retail or fast food).

36 Slocum December 17, 2016 at 12:49 pm

There are rural parts of the country where a car really isn’t a big ticket item — places where old cars and trucks can be bought cheaply and where there are shade-tree mechanics who know how to keep the old things running.

37 Amigo December 17, 2016 at 4:00 pm

I don’t follow the logic on a car making a person not poor. My father-in-law drove a rusted out 1970 Nova certainly worth little more than the cost of salvage. Lived in a falling down house without running water, without air, without phone, but did have wood stove for heat. He had old box TV, but that stopped working w/ digital conversion. For reference, when he died several years back, the house, out-buildings and land was sold for $3000, I think with the car still sitting on it. He had a difficult temperment that made it difficult for him to sustain employment and be around people, but worked on his own – hauling garbage before the town created a route and put him out of business, then he harvested ginseng, and did what logging he could. The logging was difficult because he only had 1 arm (the other was lost when he was shot in his 20s by a moonshiner in a land dispute), along w/ effects of increasing age and previous stroke.

I guess I look at his situation and saw a car as helping him navigate a pretty rough life, but car or not he was poor.

38 GoneWithTheWind December 17, 2016 at 5:41 pm

I have lived in some very hot and very humid parts of the country without air conditioning. It isn’t a necessity it is a luxury. Just for the record air conditioning isn’t “cheap”. While you can buy a window air conditioner for $110 a Walmart it will cost you many times more than that to run it. IMHO it is a tough argument to make that you are “poor” and need the government or someone else to pay for your food and lodging but you voluntarily choose to pay $100’s a month to sit in front of a cool breeze from your window air conditioner.

A new AAA reports shows, on average, the cost of driving 15,000 miles a year rose 1.17 cents to 60.8 cents per mile, or $9,122 per year. Fuel, maintenance, insurance, etc. It all adds up. Again how can you claim to be poor but can afford a car?

39 Jan December 17, 2016 at 7:02 pm

If you have a window a/c, you are not paying $100s/month to pay for it. My small house in a hot part of the country uses less than $200/month in electricity.

40 Jan December 17, 2016 at 7:07 pm

That’s with central a/c.

41 Pshrnk December 18, 2016 at 6:58 pm

In my 2,300 square foot home in central Mississippi I have yet to see a $200 electricity bill. Yes, I use the central AC, and wear shorts and short sleeves at home.
I also see no use for shoes indoors.

42 Amigo December 17, 2016 at 7:34 pm

GWTW, if you want to argue the government shouldn’t provide aid that’s one thing, but it’s entirely possible to be poor and financially desperate and have a car.

Quora thread on advantages of having a car even if you’re homeless. (Can get to and from work).
https://www.quora.com/Homelessness-Where-is-the-safest-place-to-sleep-in-a-car-at-night

I get that you don’t want aid abused. Me neither. To condition aid on not having a car seems counterproductive.

43 Jan December 17, 2016 at 7:50 pm

You should re-read the car part of my comment.

44 mkt42 December 19, 2016 at 3:26 am

“A new AAA reports shows, on average, the cost of driving 15,000 miles a year rose 1.17 cents to 60.8 cents per mile, or $9,122 per year.”

$9K per year is the average; I guarantee that the people who are in poverty and who own cars are spending a lot less than that. That $9K figure clearly includes the cost of depreciation; the average American buys a new car every several years; the average poor American does not.

We can easily create a better estimate of the annual cost to a low income American of operating their clunker:

Fuel: at 15K miles and 30 mpg and $2.50 per gallon: $1,250 per year

Insurance: less than $900 per year; there’s no point in getting comprehensive coverage for your heap and the national average was $900 in 2014. This is assuming that the driver is getting insurance at all; a non-trivial proportion of drivers are (illegally) driving without insurance. https://www.valuepenguin.com/average-cost-of-insurance

Maintenance: this is the tough one to estimate; I spend less than $500 per year on my 13-year old car, but it’s a Toyota which’ll pretty much run forever. The old beater cars owned by many poor people often have significant maintenance needs — but they often skimp on those needs. Call it $1,000 per year.

Depreciation: Ha. They bought a beat-up clunker; it’ll have slightly less value when they’re done with it. Maybe $1,000 per year tops.

Registration, license etc. Varies by state but maybe $50 per year, again this assumes the driver bothers to have up to date license and registration.
http://www.ncsl.org/research/transportation/registration-and-title-fees-by-state.aspx

That’s $4,200 per year. And that figure could be (and undoubtedly is) reduced further by cutting corners by driving fewer miles, driving an even clunkier cheaper car, getting cheaper insurance, and doing without some of the legally required paperwork.

It’s more expensive than riding public transportation in most cities, but even low income people will usually get a car if they can afford it, because the time cost of taking public transit everywhere is ghastly outside of a few well-networked cities such as New York and Boston. Actually even there traveling outside of the central city to the outer suburbs can be a long ordeal.

45 spencer December 17, 2016 at 11:32 am

The BEA calculates regional cost of living or indices of regional price parity.

One break out they do is rent and cost of goods. The range for the cost of goods is much narrower than for rent. For goods the range is from 92.8 to 108.1 while for rents the range is from 62.1 to 159.0. So a range of 15.3 compared to 96.9.

Their calculation of regional price parities is dominated by urban areas and they do not do
detailed price parities for rural areas. Because Appalachia is essentially rural, except maybe with the exception of Wheeling WV., the estimates of real state poverty rates may not be very accurate when you are looking at poverty in Appalachia.

I would assume that rent in most of Appalachia is near the bottom of the range.

My own personal feeling about Eastern Kentucky and other coal mining regions is that they are over populated. A 100 years ago coal mining employed a much larger labor force than it does now. But there are not many other economic opportunities for former
coal miners in coal country and the individuals with much get up and go have gotten up and gone. So you are left with a population that make very poor employees and they just continue to inbreed with each other. It may be the prime example of anti-poverty measures being counter productive in that it allows these individuals to continue to live in these regions with essentially no economic opportunity when they all should have moved elsewhere.

46 Lanigram December 17, 2016 at 12:18 pm

“…should have moved elsewhere.”

Apparently, the young and employable do, though I haven’t seen data to confirm.

47 Slocum December 17, 2016 at 12:41 pm

Ronald Bailey of Reason wrote a nice article about this (his family originally came from coal country in West Virginia):

http://reason.com/archives/2016/12/10/stuck

48 spencer December 17, 2016 at 11:38 am

Anyway, the BEA price parities report that real income in KY is 92% and West Virginia is 91% of the national average.

49 albatross December 17, 2016 at 1:02 pm

The cost of living difference between poor and rich areas is important for making life workable in poor areas. But we seem to be moving toward a world where more of our day-to-day purchases are made online, with the same prices offered to people in the poorest part of Appalachia and the richest part of Manhatten. I wonder how that affects the gap in well-being between people in poor and rich areas.

50 Slocum December 17, 2016 at 2:43 pm

Yes, but keep in mind that the goods everybody buys have gotten dramatically cheaper (food and clothing especially, take a much smaller bite out of the average paycheck, but the same is also true of durable goods like appliances, tools, and obviously all kinds of electronics):

http://cafehayek.com/2006/01/working_for_sea.html

Rent and mortgages play a much bigger role and those do vary dramatically across regions. So if you live somewhere where housing costs are low, it just doesn’t take much now to get by.

51 Shane M December 17, 2016 at 3:12 pm

Ideally, some of the distribution would move to low cost areas, but geographic considerations hinder Appalachia. I’m originally from KY and have driven through much of Eastern Kentucky/Appalachia, and it’s just isolated and takes a long time to get to and from.

At least one Amazon fulfillment center is located in rural central Kentucky (Campbellsville), but the others are around more urban areas like Louisville, Lexington, and Northern KY/Cincinnati. West Virginia apparently has an Amazon customer service center in Huntington, but no fulfillment centers.

There are additional reasons that would deter businesses from moving there beyond geography (such as corruption, fraud, and quality of labor pool), but the geography would be a difficult primary consideration to overcome in many cases. I guess it’s possible they might be able reorient their economy to take advantage of the geography like Gatlinburg TN, or similar, but it’s still difficult to get in and out, and it’s not unique – there’s a lot of similar mountains and scenery in nicer areas to visit.

52 Troll me December 17, 2016 at 3:49 pm

Some people will only shop at a grocery store where things are arranged just so, look great on display, in a way that allows them to have a more aesthetically pleasing trip to the store. Also, they KNOW they are paying a higher price, and so there is basically zero tolerance with regard to quality control failures – which further drives up the price difference.

One/two of many things related to things being cheaper in a non-rich area.

53 Boris_Badenoff December 17, 2016 at 3:31 pm

Any measure of “poverty” which doesn’t account for SNAP & all the other “free” in-kind benefits is just a joke, an excuse for supporting a bloated and useless government bureaucracy.

54 Art Deco December 17, 2016 at 6:00 pm

SNAP doesn’t have high overhead. The people who maintain it are not concerned that you think it’s ‘useless’.

55 Andromeda Yelton December 18, 2016 at 9:22 am

Having lived in both WV and elsewhere…the feeling of poverty is really different. The thing about rural poverty is even if it’s a relatively small percentage of the population, it spreads over large areas…you can go a long way and never see anything that isn’t poverty, so it has this grinding inescapable quality. In the urban area where I live now, there’s definitely poverty, but you can also literally get on the subway and go a few stops and not be surrounded by it any more.

I also find the poverty is much more segregated in my current urban setting than it was in WV. There are poor neighborhoods and rich ones and, as someone who isn’t poor, I can readily avoid the poor ones and just never have to confront the fact that my nearish-neighbors’ lives can be so different from mine. In WV this wasn’t true; even as someone who wasn’t poor I lived surrounded by poor people, and routes to places I wanted to go went through places with visible poverty.

Overall, poverty was part of the culture for me growing up in rural and town WV in a way that it definitely isn’t for my daughter growing up in urban MA, even though I have never been poor. The qualitative, experiential differences are a lot bigger than the quantitative ones.

56 Cooper December 19, 2016 at 1:53 pm

A household with $243K in annual income would be a top 1% household in West Virginia. West Virginia’s state income tax revenue from a household on the 1% threshold is $14,540.

In neighboring Virginia, one would need to earn $401K to be in the top 1%. Virginia’s state income tax revenue from a family on the 1% threshold is $22,454.

West Virginia doesn’t have nearly as many rich people as Virginia does and the rich people that they do have aren’t nearly as rich.

State tax revenue as a share of personal income is MUCH higher in West Virginia than Virginia. 11.09% versus 8.66%.

West Virginians send a larger share of their income to the state government than resident of Massachusetts, Maryland, Pennsylvania, Washington, Oregon or California.

The usual response we hear from the Left on how to fix poverty (increase taxes, spend more!) wouldn’t really work in West Virginia. They just don’t have the tax base to support a bigger government.

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