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Wednesday, October 31, 2007
Are the Poor Getting Poorer?
By Walter E. Williams
Poll
Will Hillary Clinton fight for the nomination past June 1st?


People who want more government income redistribution programs often sell their agenda with the lament, "The poor are getting poorer and the rich are getting richer," but how about some evidence and you decide? I think the rich are getting richer, and so are the poor.

According to the most recent census, about 35 million Americans live in poverty. Heritage Foundation scholar Robert Rector, using several government reports, gives us some insights about these people in his paper: "Understanding Poverty and Economic Inequality in the United States".

In 1971, only about 32 percent of all Americans enjoyed air conditioning in their homes. By 2001, 76 percent of poor people had air conditioning. In 1971, only 43 percent of Americans owned a color television; in 2001, 97 percent of poor people owned at least one. In 1971, 1 percent of American homes had a microwave oven; in 2001, 73 percent of poor people had one. Forty-six percent of poor households own their homes. Only about 6 percent of poor households are overcrowded. The average poor American has more living space than the average non-poor individual living in Paris, London, Vienna, Athens and other European cities.

Nearly three-quarters of poor households own a car; 30 percent own two or more cars. Seventy-eight percent of the poor have a VCR or DVD player; 62 percent have cable or satellite TV reception; and one-third have an automatic dishwasher.

For the most part, long-term poverty today is self-inflicted. To see this, let's examine some numbers from the Census Bureau's 2004 Current Population Survey. There's one segment of the black population that suffers only a 9.9 percent poverty rate, and only 13.7 percent of their under-5-year-olds are poor. There's another segment of the black population that suffers a 39.5 percent poverty rate, and 58.1 percent of its under-5-year-olds are poor.

Among whites, one population segment suffers a 6 percent poverty rate, and only 9.9 percent of its under-5-year-olds are poor. Another segment of the white population suffers a 26.4 percent poverty rate, and 52 percent of its under-5-year-olds are poor.

What do you think distinguishes the high and low poverty populations? The only statistical distinction between both the black and white populations is marriage. There is far less poverty in married-couple families, where presumably at least one of the spouses is employed. Fully 85 percent of black children living in poverty reside in a female-headed household.

Poverty is not static for people willing to work. A University of Michigan study shows that only 5 percent of those in the bottom fifth of the income distribution in 1975 remained there in 1991. What happened to them? They moved up to the top three-fifths of the income distribution -- middle class or higher. Moreover, three out of 10 of the lowest income earners in 1975 moved all the way into the top fifth of income earners by 1991. Those who were poor in 1975 had an inflation-adjusted average income gain of $27,745 by 1991. Those workers who were in the top fifth of income earners in 1975 were better off in 1991 by an average of only $4,354. The bottom line is, the richer are getting richer and the poor are getting richer.

Poverty in the United States, in an absolute sense, has virtually disappeared. Today, there's nothing remotely resembling poverty of yesteryear. However, if poverty is defined in the relative sense, the lowest fifth of income-earners, "poverty" will always be with us. No matter how poverty is defined, if I were an unborn spirit, condemned to a life of poverty, but God allowed me to choose which nation I wanted to be poor in, I'd choose the United States. Our poor must be the envy of the world's poor.

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About The Author

Dr. Williams serves on the faculty of George Mason University as John M. Olin Distinguished Professor of Economics and is the author of More Liberty Means Less Government: Our Founders Knew This Well.

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©Creators Syndicate
A matter of definition
Since we choose to define poverty in terms of income, the Queen of England is the most abjectly impoverished woman on earth. She has an earned income of $0, and receives $0 in investment income. The poor woman has to live on the public dole.

Then again, there are also a large number of poverty-stricken trust fund children, who have trusts that provide them with housing and purchase all their goods, but provide no direct cash income. By our definitions, these people are also impoverished.

Just wanted to point out that the statistical definition of poverty can lead to seeing some very strange results.

One disagreement
I usually agree with Dr. Williams, but I have to quibble with one thing he said at the end. He says that if poverty is defined as being in the lowest fifth of income-earners, it will always be with is. But the fact is, being in the bottom fifth of income earners does not define someone as meeting poverty guidelines. And I did some research -- the poverty threshold, as a percentage of per capita GDP, has been falling in the last twenty years. Thus, as our income is growing, the poverty threshold is also growing, but at a slower rate. But I do agree with his overall point and I think that the majority of people on this planet would trade their current situations to be a poor person in America. Why else would we have such an illegal immigration problem?
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