My post this past Sunday took note of a prominent Wall Street Journal op-ed last week that drove home some points that I have been making here for a few years about the measurement and incidence of “poverty” in the U.S. Most important is the systematic exclusion of some $1.2 trillion of government redistributions, $500 million of private charity, and as much as $2 trillion of underground economy from the incomes of lower income people when “poverty” is measured and reported. Since these three categories, in the aggregate, come to a large multiple of the amount that ought to be sufficient to eliminate all poverty under the government’s definition, I have long asserted that the government “poverty” data are systematically fraudulent, misleading, and useless for their intended purpose.
That does not mean, of course, that there are no people in the U.S. who remain in difficult economic circumstances even after all the redistributions. As an example, most of the government’s redistributions are in-kind, leaving many recipients who might have every basic need provided for, yet with little or no cash for incidental expenses. But the fundamental point remains that the government’s “poverty” data provide essentially no useful information as to the extent, if any, of meaningful material deprivation in the United States.
At this point the basic information as to how the Census Bureau calculates “poverty” is widely distributed, and has to be well known and understood by anyone with even a cursory knowledge of the subject. You can’t pretend to know anything about this subject unless you know that of 83 federal welfare programs, only 7 are counted into “income” when assessing “poverty,” and 76 — including massive near-cash distributions like food stamps and the EITC — are excluded. In other words, you have to know that the government “poverty” measure is intentionally structured so that no amount of government anti-poverty spending can ever cause it to go down, and so that people who live on the distributions will always be counted in “poverty” no matter how lavish those distributions may be and no matter how well the economy might perform.
Into this mix on September 12 the Census Bureau dropped its newly-released data on poverty for the year 2017. Admittedly that release does not itself contain the definitions and lists of exclusions that you need to understand how useless and deceptive this is. For that you’ll have to go on a hunt through the Census website; or, alternatively, read the Manhattan Contrarian or the Wall Street Journal op-eds, or maybe this big study from John Early for the Cato Institute. But again, if you are going to report on this subject, there is no excuse for not knowing this basic information.
So shall we take a look at how the New York Times and Washington Post reported on the Census release? In the New York Times, the big story by Glen Thrush, headlined “U.S. Recovery Eludes Many Living Below Poverty Level, Census Suggests,” appeared on September 13. The Washington Post ran an op-ed by Jared Bernstein on September 12 headlined “New census data show gains to low- and middle-income families but stalled progress on health coverage.”
Here are the first few sentences of the Times piece:
In July, President Trump’s Council of Economic Advisers declared that the country’s five-decade war on poverty was largely over and called it a success. On Wednesday, the Census Bureau released its 2017 annual report on the poor that offered a stark counterpoint, suggesting that the national recovery has bypassed many of the 40 million to 45 million Americans estimated to be living below the federal poverty level. While median household income rose 1.8 percent last year, the national poverty rate remained stubbornly high at 12.3 percent.
Yes, it’s just exactly what you would expect. There is no mention at all in Thrush’s piece about the systematic exclusions from the measure of poverty, nor of how those exclusions make it essentially impossible for the measured “poverty” rate ever to go down significantly. Instead, the small decline in the “poverty” rate in the face of strong economic growth is used as an occasion to bash President Trump. Of course!
On to some more Trump bashing:
The report comes as the Trump administration seeks to curtail safety net programs, in part by playing down the severity of poverty in the country. The White House, bolstering its case for program cuts and new work requirements for recipients of federal aid, has gone so far as to question the validity of the government’s traditional calculations for poverty.
And what might be those questions, Glen? And is there any basis for them? Sorry, you won’t find out here.
Over at the Post, it’s the same emphasis on seemingly high numbers for the “poverty” rate, with no explanation at all of how those numbers are kept artificially and deceptively high:
Just under 40 million Americans lived in families with incomes below the official poverty line last year, including 12.8 million children. (The U.S. child poverty rate is uniquely high among developed economies.) As shares of the population, the overall poverty rate was 12.3 percent, down from 12.7 percent in 2016 and the lowest poverty rate since 2006. For children, the poverty rate was 17.5 percent in 2017.
Then the Post’s Bernstein starts waxing eloquent about the so-called “Supplemental” poverty measure, statistics for which are contained in the same Census Bureau release:
Today’s release also includes an alternative measure of poverty that, while not the official rate, is superior to that rate because it more accurately measures both resources and costs faced by households, and its threshold has been updated to reflect consumption norms. One key attribute of this supplement measure is its inclusion of non-cash and post-tax anti-poverty benefits, such as the Earned Income Tax Credit (EITC), a valuable, pro-work wage subsidy that lifted over 8 million out of poverty last year but is not counted in the official rate. This alternative poverty rate was 13.9 percent last year, essentially unchanged from 2016’s rate of 14 percent. This lack of progress in the more accurate poverty measure suggests significant swaths of the poor were still left behind, even in year 8 of this longer-than-average expansion.
For those unfamiliar, the “Supplemental” poverty measure was created by the Obama administration to blunt criticisms from those (such as myself) who kept pointing out the fraudulence of the official measure due to the vast systematic exclusions from “income.” So they added back in a few of the exclusions; and then went from an absolute measure of poverty to a relative measure, in other words, making one hundred percent sure that no amount of increase in incomes could ever reduce the rate of “poverty.” Here was my comment on the “Supplemental” measure in a March 2015 post:
When you go to the so-called "relative" measure of poverty, isn't it immediately obvious to everybody that the whole idea is to have something that by its very definition cannot go down no matter how much the government spends to fix it?
Well, it’s not obvious to Bernstein. Or alternatively, he pretends it’s not obvious, in order to deceive his readers.
So as usual with the Times and the Post, you end up asking yourself that age-old question: Do they just not know anything about the subject on which they are reporting, or alternatively, are they engaging in an intentional effort to deceive the readership to gain support for their political team? I’ll let you make the call. Really, it doesn’t matter which it is.