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Wednesday, September 3, 2008

American Poverty: How Serious a Problem Is It?

Today's Buggy Topic: US Poverty 

At Carpe Diem --- the libertarian economic site run by Prof Mark Perry of the University of Michigan, where prof bug has been posting frequently of late --- prof Perry posted a chart, some links, and comments about the measures of US poverty levels.  The Perry post and buggy prof's reply, set out at length, can be found if you click here

The Buggy Take 

As you'll see, one of the deficiencies in the poverty measures is the omission of non-cash subsidies: rent subsidies, food stamps, medicaid, and school lunches.  Taken together, these reduce official poverty from about 12-13% right now by about a third in cash equivalents.  As you'll also see from prof bug's comments, census bureau studies of consumer households yearly find that for every $1.00 of reported income, Americans in the poverty ranks spend $2.40 . . . and the buggy analysis explains why.  It also shows the diferences in poverty across ethnic/racial lines, and finally it notes that --- in the opposite direction --- poor working Americans (not necessarily in poverty) pay transportation costs and, especially if a single mother, costly day-care that aren't considered in the poverty measures or in final disposable income for the bottom 20% of income-earners. 

And as with all low-income Americans who aren't covered by health insurance, or even if covered by medicaid, out-of-pocket expenses for medicine and treatment have to be considered a problem for disposable income too.