You probably heard reports about this story last week when the Census Bureau released its annual report on Income, Poverty and Health Insurance Coverage. The report revealed that the percentage of Americans living at less than 50% of the poverty level hit a new record in 2010. (See the above link for highlights of the report.) One out of every 15 Americans (6.7%) has an income of less than $5,570 for an individual or $11,157 for a family of four. Here’s a link to the table:
http://www.census.gov/hhes/www/poverty/data/historical/people.html (see table 5)
The percentage of Americans living at or below the poverty level rose for the fourth year in a row to 15.1%, the highest level since 1993. The Census Bureau began tracking poverty in 1959. At that time, it was over 22%. It fell steadily every year until reaching 12% in 1969. Since then, it has exceeded 15% only three times – in 1983 (15.2%) , 1993 (15.1%) and 2010 (15.1%). Here’s the chart:
Given that incomes are continuing to decline, it’s a sure bet that the overall poverty rate will rise in 2011 to its worst level since 1966.
This data is of special significance for those who understand the new economic theory I put forward in Five Short Blasts. If that theory is valid, there are a few key events that we should witness as the U.S. and the world grow more crowded. We should see unemployment steadily rising and, as a result, we should see poverty rise as well.
We’ve already seen unemployment rise dramatically with virtually no prospect of decline, at least not as long as current trade and immigration policies are maintained. And now we see that poverty is on the rise as well, hitting record levels by one measure and close to 40-year highs by another. One parameter remains – life expectancy. We should soon see declines in that measure as a result of increasing poverty. But, alas, it seems that the Center for Disease Control stopped publishing life expectancy data in 2007. One can only speculate as to the reason why, but perhaps its because the data would be too inflamatory to release to the public. It’s one thing to hear that the economy is bad. It’s quite another to hear that you can expect to die sooner.
Since developing this theory in 1993 (and finally publishing the book in 2007), I have seen absolutely nothing to call into question the validity of the inverse relationship between population density and per capita consumption, nor its implications for trade policy. Conversely, virtually everything we’ve witnessed casts doubt on the prevailing economic theories of growth and free trade – enormous global trade imbalances, the implosion of the global financial system, falling incomes, soaring unemployment, rising poverty and nations collapsing under the weight of their accumulated debts. And what do we get from the field of economics in response? Almost comical rationalizations and a shift in focus to goofy new economic theories about “happiness” and “promoting life.”
Don’t get me wrong, I’m not opposed to life. I enjoy the hell out of it. But, after centuries of promoting population growth because it seemed to make economic sense, to now divert attention from this theory’s failings by suggesting that life should be promoted for some kind of intangible, intrinsic value is indeed preposterous, goofy and comical. The other sciences once mocked the field of economics for accepting the theories of Malthus. Where are they now when economists truly deserve to be mocked for abandoning data, reason and scientific curiosity in favor of something more akin to some kind of irrational voodoo-ism?
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There are a couple of nuggets in the summary of the report that merit comment:
If you scan the highlights of the report, you’ll see that in some regions of the country or in some demographic group, the data held steady. But nowhere in the report is there a single instance of any improvement in any group or region in any of the paramters measured – income, poverty and health insurance.
Since 2007, the year before the most recent recession, real median household income has declined 6.4 percent and is 7.1 percent below the median household income peak that occurred prior to the 2001 recession in 1999.
Since 2007, the number of men working full time, year-round with earnings decreased by 6.6 million and the number of corresponding women declined by 2.8 million. (In other words, 9.4 million have gone to the unemployment line, not to mention the 6 million new workers who have gone there as well. That’s a total of 15.4 million added to the ranks of the unemployed since 2007.)
In spring 2011, 5.9 million young adults age 25-34 (14.2 percent) resided in their parents’ household, compared with 4.7 million (11.8 percent) before the recession, an increase of 2.4 percentage points. It is difficult to precisely assess the impact of doubling up on overall poverty rates. Young adults age 25-34, living with their parents, had an official poverty rate of 8.4 percent, but if their poverty status were determined using their own income, 45.3 percent had an income below the poverty threshold for a single person under age 65.
Regarding that last item, consider the effect on per capita consumption when the number of young people living at home is on the rise and their poverty rate is 45.3%. Aside from food and clothing, they consume virtually nothing. Remember, as per capita consumption goes, so too goes employment and poverty – a cycle that begins to feed on itself.