The misuse of data on extreme poverty in the United States

Recent research suggests that rates of extreme poverty, commonly defined as living on less than $2/person/day, are high and rising in the United States. We re-examine the rate of extreme poverty by linking 2011 data from the Survey of Income and Program Participation and Current Population Survey, the sources of recent extreme poverty estimates, to administrative tax and program data. Of the 3.6 million non-homeless households with survey-reported cash income below $2/person/day, we find that more than 90% are not in extreme poverty once we include in-kind transfers, replace survey reports of earnings and transfer receipt with administrative records, and account for the ownership of substantial assets. More than half of all misclassified households have incomes from the administrative data above the poverty line, and several of the largest misclassified groups appear to be at least middle class based on measures of material well-being. In contrast, the households kept from extreme poverty by in-kind transfers appear to be among the most materially deprived Americans. Nearly 80% of all misclassified households are initially categorized as extreme poor due to errors or omissions in reports of cash income. Of the households remaining in extreme poverty, 90% consist of a single individual. An implication of the low recent extreme poverty rate is that it cannot be substantially higher now due to welfare reform, as many commentators have claimed.

That is from a new NBER working paper by Bruce D. Meyer, Derek Wu, Victoria R. Mooers, and Carla Medalia.

Comments

President Captain Bolsonaro has signed into law a bill that allows the government to intern drug addicts for the duration. This way, fighting crime will be easier.

Duration of what?

Duration of their adfiction.

I have a family member with a drug addiction and we hope for incarceration as the only possible rescue for him.

Let's include homeless households and redo.

You think many of them are also not in extreme poverty? It may be more difficult to obtain their information to verify, though.

Some homeless people have more fancy mobile phones than I have.

if its gonna be another Survey study
theres probly not much point in redoing the study
unless the purpose is to hawk up another book

This is an example of the perils associated with a media that has become overtly agenda driven. Now more than ever, the sheer volume and complexity of data, makes “Facts” - which many postmodernists will argue, typically when it serves their purpose, don't really exist - relatively easy to turn into “research” that supports almost any political agenda. Interesting times.

"...extreme poverty, commonly defined as living on less than $2/person/day, are high and rising in the United States."

I sit as a board member on my county's workforce working group in coordination my State's workforce and employment taskforce. Would like to hear the #1 complaint is? Lack of reliable, drug-test passable employees that will A) not ghost and B) stick with it for more than 3 months. This is across the board. From regional SMEs to big corporations like Lowe's. This is for jobs in many cases that have seen wages raised from $12/hour to $15/hour, 6x plus the extreme poverty rate, to no avail.

Real poverty, true poverty has never - in human history - been easier to escape in 'developed' countries than it is now. Those that really really really want a job can get a job.

There is a different elephant in the room and it is psychological and drug and alcohol related. Solve the 'despair' and 'learned-helplessness' crisis and you will start solving the poverty crisis. There are 'animal spirits' at work here regarding this economic problem. It will persist until that is addressed.

Yes, and that is why lately the left has abandoned any pretense of belief in meritocracy. Current poverty is not an issue with opportunity. It is a problem of self control and physiological issues. Of course, we don't know how to address those issues and that is why we avoid framing the issues correctly, especially because treating mental illness nowadays is basically impossible. Ultimately, it comes down to what we think is worse: rewarding people who don't deserve be rewarded, or having their suffering made public. No easy answers here.

Solve the 'despair' and 'learned-helplessness' crisis and you will start solving the poverty crisis.

Very good comment.

1. Get religion
2. End public welfare

Because the only other option I can see is Andrew Yang's UBI Superstate to manage the post-scarcity human zoo.

That would be a "classically libertarian" (sarc.) interpretation. "Look, with transfers very few people live in true poverty. So let's end transfers!"

A more serious project would be to make transfers as efficient as possible, and to make sure they are positioned to maximize positive incentives.

I don't even know, how long does a marginal productivity worker have to wait for an EITC? Is it yearly, or an immediate negative payroll tax?

"A more serious project would be to make transfers as efficient as possible, and to make sure they are positioned to maximize positive incentives."

That's the other option I referenced but which you apparently didn't read: direct transfer payments in the post-scarcity panopticon.

I don't think there's enough money, and the incentives are too perverse, for UBI. I'm frankly not convinced the modern bureaucratic welfare state is sustainable. I'm happy to be proved wrong. In fact, if we get more nuclear power ramped up then I'll gladly get in line with everybody else for my #YangBucks.

It’s yearly and essentially only applies to families.

It’s clearly due for an overhaul.

Unsurprisingly it’s not a part of any Democrat Party platform.

Sorry, "End public welfare" seemed pretty unambiguous.

First I wrote this:

"1. Get religion
2. End public welfare"

Then I wrote this:

"Because the only other option I can see is Andrew Yang's UBI Superstate ..."

I understand your confusion, because Leftists are truly not capable of rigorous thought. You're simply born that way.

"Lack of reliable, drug-test passable employees"....you forgot to add "at bargain basement prices".

Employers have no reasonable complaint about being unable to obtain quality employees. Lowes can get as many employees of whatever skills or quality they want, as long as they are willing to pay market prices.

There is a huge element of personal responsibility in poverty. But when a policy person or politician start talking about personal responsibility, they are just making an excuse to do nothing. Saying "people should be more responsible" isn't a policy proposal.

What mechanisms do you think are blocking the market-clearing price?

This is like the homeless debate: the problem is not lack of housing, it's mental illness.

That is a massive cop-out. I'm no politician, but several sit with me on my board, believe in the things I just said, and still care and are working towards finding a solution on this issue. We work with leaders in education, healthcare, and communities towards trying to find a goal which, is for certain and undeniably hard.

"Bargain basement prices". Again, we aren't talking about firms that are closing shop because they can't find employees. The 4 Lowe's in my county are at about 70% full employment. They simply can't find the other 30% to meet all of their demand needs. In other words, there are 70% of the employees in that store that are making it work and motivated at $12-15/hour, and managers make more. That's not just Lowe's, that's firms across the board. It's an issue of having enough quality people to fill the slots that are available. Hiring druggies is not possible for a host of reasons. Many of these businesses are starting to hire more ex-cons. But the reliability issue is really difficult, especially with those 25yo or younger. They have very little persistence.

So no, I disagree with you that wage issues are the predominant fact at play here. Employers with opportunities at $20-25/hour FT are saying the same thing.

As I alluded to, there is a work ethic problem going on here, one that is attached to a malaise and despair issue.

Wearing a Lowe's uniform at current wages is the equivalent of stamping "LOSER" on your forehead.

You have to either raise the wages at Lowe's substantially, or you have to revert to pre sexual revolution mores and basically deny independent opportunities and income to women, so that a guy working at Lowe's starts looking like a decent catch again.

Then learn to code. Or start your own national hardware chain. Or become a rock star.

How much are you willing to pay for your drill bits to assure that everybody at Lowe's gets paid like the store manager (who will then have to be paid proportionately more)?

Also, I want a unicorn for Christmas. Y'all are doing good work proving EverExtruer's point.

If cheap stuff is your goal, then you should support immigration and outsourcing.

Part of the point of opposing immigration and outsourcing is to produce higher wages.

It seems to me that the lack of work ethic is more explained by improvements in leisure options such as video games rather than malaise and despair. My evidence for this is that lack of work ethic predominantly affects younger people, while malaise and despair are primarily affecting middle-aged to older people.

Doing nothing is a great policy (especially when doing something has a good chance of being expensive and making matters worse), so it would behoove more politicians to just sit there and do nothing.

$15/hour is $2400 a month full time. Keep in mind a lot of low wage jobs are restricted to part time hours, so at 30 hours a week it comes out to $1800 a month. With taxes that might come out to about $1500 a month.

Average used car monthly payment is about $400. Average car insurance payment is about $100. So that income is now down to about $1000 a month, and we haven't even considered rent and food.

Average rent across the country for a 1 bedroom apartment is about $1000 a month. Cheapest average is in South Dakota at $525 a month. Utilities add another $200 a month. Groceries add another $300 or so.

So $15/hour means you're basically underwater every month. And you don't have health insurance. Illness, car repairs, and other unexpected costs will hammer an already precarious, insolvent situation.

Also note that man does not live for bread alone. Men ultimately seek socially responsible, gainful employment (and do anything for that matter) to attract mates and reproduce. Women today have independent sources of income and no longer have to attach themselves to $15/hour losers. So there's even less incentive for men to be $15/hour losers than the simple math above indicates. It becomes increasingly rational for men to engage in higher risk activities such as crime, organized crime, political agitation, forming militias etc.

Well, you have to pay all those expenses whether you are working or not. And an individual car is not a necessity; there are only about 1 billion cars for 7 billion people so most people do not have their own. I also don’t see much organized crime or militias being formed; I’d guess men are more likely to just spend more time playing video games and porn.

First, none of what you just said explains the 70% of currently employed people at these firms - with historically low national unemployment mind - that are, in fact, not underwater and making it work.

Second, many of these people are making it work and doing so married and with children. These people are not "LOSERS" (I assume that's some kind of metaphor for teenager?) as you mentioned above and many are middle-aged or close to retirement.

Third, numerous of these employers currently offer yearly raises, health insurance and retirement plans, some even with 401k match. Examples include JC Penneys, Target, Applebees, and Kroger etc.

Fourth, any man who would engage in higher activities like the ones you mention above would've likely done so anyway because of the 'psychological/animal spirits' problem I said in the first place. These people would also, if employed, likely not be good employees or stay employed for very long. The vast majority of people, men and women DO NOT engage in these high-risk activities. Many however are turning to drugs and alcohol, which is a symptom of despair and learned-helplessness we're trying to get an angle on.

My original statement is still a true statement. Those that wish to not be poor and unemployed can be better off and/or employed. There are state and federal resources galore as well as addiction programs. The recession was bad but it is not a depression. There are more job openings than there are workers to fill them, but there are plenty enough people to fill them, those people simply don't want to work.

I laid out the simple arithmetic, none of which you've addressed.

You're speaking in vague generalities. "Many of these people are making it work and doing so married and with children" doesn't mean jack. Collapsing marriage rates and record low fertility rates do.

You're out of touch, and you dont want to face the music. None of which can be addressed in the current environment anyway. We simply can't restore pre sexual revolution standards because "sexism" or dramatically inflate wages, especially male wages, in the current zeitgeist, so we won't. American society will just continue to decline until it's replaced by a more reactionary culture, whether domestic or foreign in origin.

"pre sexual revolution standards...."

I thought we were talking about math?

We are bro. Those standards determine costs.

I sure most of the people in this discussion didn't live in the US before minimum wage requirements became widespread, before welfare and food stamps and AFDC became widespread, before service industries came to dominate the economy, before the innumerable laws (not connected to adversely affecting anyone) that penalize people by depriving them of their driver's license, and before 90% of the population was within 2 degrees of separation from government money. I'm sure these factors influence the labor market a little.

....if "American society" was in "decline" but since it's not, it doesn't

That all depends on how you define "decline". Some regard, for example, the decline of male earnings relative to women, marriage, and family formation as "progress" and the very opposite of "decline". Others don't.

Of course it's in decline. China and Russia seizing around the world initiatives, US productivity down, government programs teetering on the edge. We are a nation of consumers rather than creators. Primary education in the doldrums. Social heroes went from Alvin York, Nathan Hale, and Cyrus McCormick to Lady Gaga, Oprah, and (insert current youTube sensation). At least the three heroes of the past actually contributed to society, rather than make millions while decrying the meanness of everyone they don't like

Said every pouting pundit of pessimism since Socrates.

Average used car and average rent, is no one buying below average stuff in your world?

If you are restricted to part time hours, you can respond by getting a second job. Also many are not so restricted. Taxes are 7.5% FICA and whatever your state has, maybe 5%. So your taxes are a bit high.

Your "average used car payment" is ABSURD. I am wealthy and I would not pay more than $2k/yr for a car. I have a ten-year old Toyota and I spend less than $2k/yr including depreciation, gas and repairs. What possible reason could I have for needing a fancier car than that?

Average rent "across the country" for a 1BR apartment is not close to $1k/month, in many mid-sized cities you can rent a sizeable house for that cost. Moreover if you are single (no other earner in your household) why not split a roommate or house? 1BR apartment all to yourself is wasteful.

$200/mo for utilities is also quite high for a single person. Groceries $300/mo for a single person is again ABSURD. $150/mo is very comfortable and allows for a wide variety of healthy food.

$15/hr gives you the median U.S. individual income (well above the European level) and includes health insurance benefits.

Forming militias! Ha!

+1 and add that a lot of these jobs are a second income for a family.

You're out of touch. Getting a second part time McJob across town adds costs like additional commuting and no more benefits.

A new Corolla, the cheapest, smallest reliable car that isn't a deathtrap, financed at 5% for 8 years with nothing down is like $300 a month.

Median rent for 1 bedroom in a crummy midsized city like Cleveland with no jobs is around $600 a month. In any city with a decent amount of jobs, that figure approaches $1,000. Furthermore, the below average/median urban rents include dangerous areas that are basically unlivable for normal people.

Lowest rent places are in the South and Midwest, which have hot weather and cold winters, this utilities are expensive despite cheap rents.

This guy has to be trolling.

He’s 100% trolling.

There are open manufacturing jobs that start at $15 / hr with health insurance and profit sharing, and these jobs go unfilled.

Ive worked for one of these firms and I spent a huge chunk of time hiring. 80% wouldn’t last through the 90 day mark. Couldn’t show up on time, or couldn’t figure out how to use QA equipment, or didn’t have two brain cells to rub together to run the machines, or more commonly showed up drunk or high and were fired.

$15 / hr with just the standard mandatory 8 hours overtime and 10% differential (openings are never on first shift) = $44,600 a year. Not to mention the health insurance and profit sharing retirement plan. Third shift adds another 5%. The hustling workers would work 20 hours of overtime as soon as they proved themselves.

That’s 60k a year without counting double wage Sunday hours. Experienced workers (15 plus years) would make easily $100,000 with overtime.

$45,000 a year compared to living for free off NEET bucks at your mom’s house with disability payments, Medicaid, and SNAP? Tough sell.

Many of these young men only got a job because their single mothers forced them. Being fired was a godsend. Back to League of Legends and smoking weed.

I'm not trolling at all. It's incredible how out of touch and in denial people are.

That $15 an hour is less than what manufacturing jobs paid in the past. Costs are much higher today. And factoring the decline of unions, much less stable income.

"A new Corolla, the cheapest, smallest ...": it's decades since I bought a new car. Our present one we bought as a ten year old.

Lucky the country where the poor man is expected to buy a new car. Or absurd.

You live in London, no?

A car is a necessity in all but a few genuinely "walkable" cities in the US, where the rents are too high for most people anyway.

It's not just that a car is necessary for even the poor man in the US, it's that a reliable car is necessary. It's not like you have a car just to tool around in on weekends and road trips. You need it to get to work and run errands, and there aren't many other options for transport. If it breaks down you'll miss work and have costly repairs. You cant just wait around and get a mechanic friend to look at it for free when he visits some time. You need it fixed right away or you miss work hours and wages.

A reliable used car is still going to run you around $10K in the US. Anything under and you're likely going to have some unreliability and repairs. And that's 10 grand in cash, which many font have on hand. If you need financing, you'll have to buy a used car from a dealer for more money.

Absolutely and ridiculously false. You can pick up a very reliable, relatively low mileage, 10-year-old SUV for about $5k, and that's a lot more than most people need. This isn't the 1980's. You can get a 20-year-old car for $2-3,000 and have it be pretty reliable. There are plenty of $500 cars and $1,000 cars out there. If you're worried about reliability, buy two cars and make one of them a $500 junker and disconnect the battery when you don't need it. I've bought and driven plenty of junkers that I picked up for under $1k and it was completely fine.

By the way there are a lot of other options for transportation like UBER, the bus, carpooling.

A 10 year old SUV for $5K is going to have around 150,000 miles on it. It's going to have problems if not already then down the road.

About the only reliable 20 yr old car is going to be a Toyota, a Honda with a manual tranny, or a Nissan from before the Renault merger. Also Crown Vics that haven't been too beat up, and the Mercury Grand Marquis and Lincoln Town Cars. Maybe a Buick with low miles that's been babied by an old person. Anything else and you're asking for trouble and getting money pits.

I prefer junkers myself, but I'm fairly well off. I can afford to drive junkers. Paradoxically, those who should drive junkers can afford them least.

You need that SUV so you can move the goal posts as far down the field as you have (from a new $20K Corolla to a decent used car for less than half of that amount).

Poor people can't afford 10 year old SUVs no matter how much cheaper they are to buy than a Corolla, because 10 yr old SUVs are money pits. 10 yr old SUVs are for well off people to play around with on weekends.

Maybe government needs to be employer of last resort for workers who have a bit of trouble in the workplace. Beats welfare.

And as a bonus, "plantation style" housing.

http://www.kahauiki.org/

Yes let’s give anyone who wants one a job at $15/hr regardless of whether he shows up at all, adds value, shoots up heroin at work, sexually harasses women, drinks on the job, steals, engages in criminal activity...

Brilliant.

You are naming your plan there, troll, not mine.

The $2 per day figure is shockingly dishonest. When people say there are poor people in third-world countries living in extreme poverty on $2 a day, that is the dollar value of all their consumption, not just cash income. People shouldn’t use this same widely accepted language from development economics to talk about poverty in America that is not remotely comparable. If people believe relatively poor Americans deserve more help than extremely poor people abroad, they should make that argument explicitly, not try to draw a misleading equivalence between the two.

I can certainly believe that the reported figure of 3.6 million in extreme poverty is largely wrong due to the methodology of how in kind support is calculated. How much money are they living on? Three, ten, or twenty dollars per day?
The number of homeless does appear to be increasing. Before thirty years ago, I rarely saw beggars on America’s streets; now there is someone with a sign at every off-ramp.
I recently traveled to Manaus, Brazil, Memphis, TN, and New Orleans, LA. I saw very few homeless and no beggars. I thought of those places as having a lot more poverty than Portland, San Francisco, Seattle, and Vancouver.
What is the impact on the overall economy of a city or region if there is a portion of extremely poor people?

"I recently traveled to Manaus, Brazil".
Thanks to President Captain Bolsonaro.

He picks up hitchhikers too?

Thanks to his reforms, order has been restored and investors' confidence is sky-high. Hence, no beggars.

Having lived in Memphis for 7 years and having visited New Orleans several times, I just don't think you were looking in the right places.

Sure, I was traveling as a tourist not as a poverty researcher. However, a casual visitor to the Pacific Coast cities is smacked across the face with the tents of urban campers.

The problem is all these measure income, not net worth. If you are an asset billionaire but have a bad year in the markets, you're technically "in poverty".

I ran into something like this when I was in a startup, moved apartments, and a bunch of entities asked me what my household income was when i set up utilities and such. As it was negative, I said $0, and they all wanted me to sign up for a bunch of poverty programs - even after mentioning my situation and my savings, etc. I naturally didn't sign up, but it was quite an eye-opener.

That's what happens when the demand for poverty exceeds the supply.

In order for someone to have high net worth but no income, that person would need to avoid interest-bearing savings and money market accounts, bonds, stocks that pay dividends, funds of any kind that pay out capital gains distributions and would have to avoid selling assets for a gain in a given tax year.

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