Why distort poverty figures?

A reader left a comment in my last post at Herald Watch that beat me to the punch on a point I wanted to make here. At Herald Watch I'm strictly concerned with issues of journalism not politics. But there is a political component to Ms. Menendez column that I want to address.

Ms. Menendez and a lot of people that think like her (i.e. liberals) love to use class warfare to promote their political agenda. So it's not surprising that she rolled out the old argument that the rich get richer and everyone else gets poorer.

She uses statistical sleight of hand to frame the debate and simply ignores data that doesn't conform to her preconceived notions.

For example she states that:

In the 1970s, the richest 20 percent accounted for 44 percent of the country's total income. By 2002, they accounted for 50 percent, according to census data. In the meantime, the poorest of the poor earned even less of their share.

Assuming that those statistics are correct all it means is that the rich got a bigger slice of the pie. But that doesn't mean that the pie itself didn't grow enough so that everyone ended up with more pie even if their relative share was smaller. She also ignores the disproportionate tax burden that those same people bear, but that's another story.

A quick glance at census bureau statistics show that real median household incomes have risen by 30.9% since 1967. What exactly is real median household income and why is this a good indicator?

Let's start with the word "real". In discussions about income real income gains and losses refer to those gains and losses that account for inflation. In other words if your household income increased by 2% but inflation (or the cost of living) also grew by 2% then you had no increase in real household income.

Another important word in this discussion is "median". For those of you who didn't take statistics, the median is the middle value when you arrange a series of values in numerical order. It's preferable to an average because averages can be skewed by large or small values. Here's an example using a series of 11 values.

1,1,1,3,3,3,8,9,10,10,10

The average value is 5.36

The median value (the middle value) is 3

There is a big difference between 3 and 5.36 (5.36 is 78% larger than 3). If these were household income statistics and we used an average, we might think that overall the people were richer than they truly are. What we would have here is an example of what Ana Menendez is trying to prove. That there is a population of wealthy people and poor people and really nothing in between. So we use the median houshold income to figure out what the people in the middle are making. Of course with more than 100 million households in the US, the data is much more stable than in our little 10-value model. But the point remains the same. You have to look at median not average if you want to eliminate the skewing tendency of extra large or extra small values in a series.

So what this means is that in the last 40 or so years the middle family of all the US families has had an increase in income of 30.9% even after adjusting for inflation. This despite the fact that we have allowed tens of millions of immigrants to enter the country during the same time span. Immigrants that usually bring down the income statistics but also work cheaper keeping the cost of living from exploding. It's all related but the effects of immigration are outside the scope of this discussion.

So if the middle household of all the households is doing better today than 40 years ago this puts a major chink in Ms. Menendez' argument.

But she also refers to poverty as an indicator of the poor getting poorer. But according to the Census bureau the poverty rate was 12.7% in 2004. That's approximately the same rate that it was during most of the 70s and lower than the 15% peaks in the mid 80s and mid 90s, as evidenced in this chart.

Now let's look at Ms. Menendez allegation about the increasing poverty here in south Florida. The census bureau reports that in 2005 the percentage of Miami-Dade county persons living in poverty was 17.8% compared to the US percentage of 13.3%. Obviously Miami-Dade county has a greater rate of poverty than the US. But what has the trend been? The same Census bureau says that in 2000 Miami-Dade's poverty rate for individuals was 18% while it was 12.4% for the US.

So in the 5 years between 2000 and 2005 the poverty rate of Dade county went down slightly while that of the US went up considerably. The gap between Miami-Dade and the US went from 5.6% to 4.5%.

Again you have to consider what immigration does to this equation. As the Herald itself has reported south Florida has absorbed more Cuban immigrants in the last half dozen years than in the entire Mariel boatlift. And this doesn't even take other immigrant groups into account.

It's fair to say that Ana Menendez' hypothesis has a bigger hole in it than the titanic.

So why go through all the trouble to manipulate statistics? Of course it's because of the political agenda people like Ms. Menendez have. They want to create a crisis where none exists to so that government will attempt to implement their proposed solutions. The only thing is that the medicine is often worse than the disease. Which brings us back to the astute reader that beat me to the punch. This is the same bill of goods that Cubans were sold when they were sold the Revolution. Certainly pre-castro Cuba had its troubles, just like south Florida today, but overall things were economically trending in the right direction.

I remember an anecdote that Chris Matthews, the host of cable TV's Hardball, once recounted. He said that if you go to the average American and say "I'm going to give you $500, but I'm going to give him $1000," most Americans will reply by saying "give me my $500." These liberals don't get it through their thick heads that everyone in this country aspires to be rich. That's why these class warfare tactics always blow up in their face. The people that generally buy their line of thinking are limousine liberals themselves. The kind that bought into and financed the Cuban revolution.

Posted by Henry Louis Gomez at February 22, 2007 01:54 PM

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