Wednesday, February 20, 2008

Arbitrary US and European poverty lines v. a rational (?) minimum needs line?

America is the only nation whose — official federal — poverty rate is set at three times the price of the cheapest possible diet (dried beans only, no canned) — of all arbitrary things (probably was an accidental fit around ‘55 when it was developed and still close enough around ‘65 when adopted).

Europe’s poverty line -- usually measured at 50% of median income -- is somewhat arbitrary too.

50% of median income may not be an accurate way to compare poverty in America and Europe as median income in America is a lower percentage of average income than almost anywhere else — maybe much lower!

From 1973 (the beginning of inequality here — which I grandly call the Great Wage Depression) to 2005 the 50 percentile wage in America grew from $12.99/hr to 14.29/hr — an increase of only 10% while average income grew 70%. [I got the wages from table 3.4, on p. 121 of the book The State of Working America 2006/2007].

Wages don’t perfectly parallel income of course — a lot more members per family went to work over those years — but wages may more precisely be the point as to what has happened to American labor.

Table 8.14 on p. 342 shows European manufacturing workers earning 20% more than American counterparts if you leave out Spain, New Zealand and Portugal (and is an OPTIMISTIC comparison because factories are the place in American private business where unions have hung on best). British book keeping just moved away from comparing factory workers only and came up with the conclusion that Americans families are now poorer than theirs: .

Table 8.17 on p. 350 of State’ actually shows poverty in America higher than in any European state even using the 50% of median measure.

I have just worked out that 35% of American family incomes are below a “minimum needs line” (a rational poverty line? — using figures from the 2001 book Raise the Floor) without Food Stamps and other helps. Read that post here:

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