« Post Hoc Clarification | Main | Steyn's Islamophobia » The Poor Get Poorer23 May 2007 10:02 pm Shocking but true, The Wall Street Journal editorial page's "The Poor Get Richer" characterization of a new CBO study (PDF) is misleading. Here's the real shape of things:
See Jon Chait for analysis of how they twist everything around. Brendan Nyhan has even more and I got the chart from him. Comments (11)
Forgive me, but I still am failing to see the problem. These graphs are showing growth. True, it has fallen in recent years, but its still quite high, esp for low income people. So is the point here to show that Bush has made the poor worse off than Clinton? I could see that. Is the point to show that the poor are worse off period? I dont see that, even when considering there was a recession before 1991 (unless the poor just get totally screwed in the recessions). 
The big spike in earnings growth for the poor in the '90s (compared to the middle 3 quintiles) is probably mostly policy changes that incentivized work for those recieving government benefits.
The graphs are growth relative to 1991, not annual growth. The bottom quintile actually has been losing ground since around 2000. They're still apparently ahead of where they were in 1991, but the direction is nonetheless negative, not just a reduction in the growth rate, although it seems to be stable from 2003 to 2005.
Did the poor get poorer, or did we just add millions more poor people (from Mexico)?
Confused, the problem is that growth fails to keep up with inflation, at least inflation in real terms if not in the economic sense. Those that measure inflation only measure the increase in cost some goods. Not food or services, which is what most people spend their money on. Because of this, economists like to pretend that we're in a period of very low inflation, instead of the reality which is that most Americans have seen their purchasing power drop dramatically. The result of this is a wage that slightly higher, but worth a great deal less. Harry, both. When you import cheap labor from Mexico it causes downward pressure on wages. It's not just the poor that gets poorer at this point, it's everyone but the elite.
http://conservativetimes.org/?p=643
Those graphs are incoherent. I am assuming that (once again) numbers and graphs and scientificy stuff is being presented by non-scientist/non-engineers. Read literally, the graphs claim that earnings for the lowest quintile rose 40% in 1997, an additional 80% in 1998, 100% in 1999, etc etc. Taken literally, they suggest that(for example) lowest quintile income doubled in one year (1998), more than doubled in the next year (1999), and so on-and still grew by 80% in 2005 (which, contrary to MY's vaporous exclamations, would be considered 'growth'). These numbers are impossible (did the poorest quintile's income quadruple in two years? Double in 1999, then double again in 2000? Did the poor's income grow by 80% in 2005-the worst growth since 1991?). Thus we have to read into the graph, and try to figure out what the graph makers were attempting to say with their data. Perhaps the title should be "CUMULATIVE Growth in Real Income and Earnings of Households with Children, by Quintile." This would suggest that all quintiles' income grew up until about 2000, and then all quintiles' income then fell (to varying degrees) from 2000-2005. It would by consistent with MY's argument (poor got poorer under Bush) but then MY's argument loses some steam (because ALL people got poorer under Bush). Who knows? Who knows what the graph maker means to be saying, who knows what conclusions can be drawn, who knows what really went on? Leave the numbers to numbery people. Stick to the smarmy three sentence snark. That's what philosophy is designed for. Sk
Uh, yeah. I look at this and figure that the lower and highest quintiles have fairly well matched performance, with the biggest outlier being that the earnings growth of the lowest was actually far outpacing that of anyone else there for a while. Maybe the real story is the unimpressive performance of the middle three quintiles. Not to say the poor aren't getting hosed -- 2 times shit is shit, after all. More interesting to me, though, would be if they could track the upward mobility of individuals within that span. How many people who could be counted in the lowest quintile in 1991 were still there in 05? Also, it appears they are tracking the average income of each quintile. I feel I need to raise the standard complaint about averages versus medians. It may go a long way here to explain why the middle three quintiles are so well-behaved while the extremes are so variant. The highest quintile's average can be upset by those Gates/Buffett type outliers, since there is no upper bound on income or earnings. The lowest could have a large mass clustered at the lower bound of 0. (Not to mention the process for determining quintiles is basically the same as that of medians, so it seems kinda dumb to not just give the midpoint of each quintile.)
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Comments closed June 06, 2007. |
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Heads in the Sand
So, two questions: why does income growth lag so far behind earnings growth and what happened in 1994 to make rich people to much richer?
Posted by Judah | May 23, 2007 11:10 PM