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The End of Poverty in America

Figures don't lie.

by
Charlie Martin

Bio

December 5, 2013 - 1:00 pm

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President Obama, on Wednesday, made a big speech about “economic inequality” and vowed to spend his last three years in office working to increase the federal minimum wage, as well as a lot of other things.

Just as an aside, every time I hear talk about increasing the minimum wage — there’s a strike on today at some fast food places to raise their wage to $15 an hour as well — I have a conversation something like this.

“I think increasing the minimum wage is a wonderful idea. In fact, let’s raise it to $100 an hour.”

“Oh, you’re being silly.”

“No, imagine. Raise minimum wage to $100 an hour. That way, everyone will be making $200,000 a year. We’ll all be rich!

“Racist.”

Okay, I’ll grant that it usually takes two or three more exchanges before someone calls me racist, or a tea-bagger, or even an economic royalist if they’re of a classical turn of mind. The one thing I’ve never had anyone do is explain to me why if a $15 an hour minimum wage is a good idea, a $100 an hour minimum wage is a bad idea.

I suspect it’s because they realize that if they do, the jig is up: if they raise the minimum wage that high, companies won’t be able to pay the wage, and either there will be massive unemployment or massive inflation, as companies try to make up the difference. Mostly unemployment and shutdowns, because the money supply can’t grow that fast without a Weimar meltdown. But the trade-off is basically a linear function — raising the minimum wage by a lesser amount just means fewer people lose their jobs or go out of business. In the case of fast food workers, what would happen is that hamburger-making machines would become cheaper than burger-flippers. (In fact, that break-even is already past, the burger-flippers just don’t know it yet.)

In any case, though, this seems to be a solution in search of a problem, because there is no poverty in America, and I can prove it. According to a Cato Institute study published last year, the combined expenditures for federal and state governments directed to means-tested public assistance — “welfare” — is approximately $1 trillion (yes, with a “T”) a year.

There are approximately 48 million people in the U.S. with incomes at the poverty level or below.

The application of advanced mathematics — long division, and I did it in my head thank you very much — tells us that’s about $21,000 per person per year. Obviously, that’s $84,000 for a family of four.

That’s got a problem, though. According to the 2013 Federal Poverty Guidelines, the poverty level for a family of four is $23,950. The total of $84,000 is roughly 380 percent of the federal poverty guidelines.

Obviously, there’s no poverty left in America.

Unless, of course, that money isn’t actually being spent on the poor people at all. I wonder where it goes?

More: 

Striking Wendy’s Worker: Hike the Minimum Wage, and I Can Work Fewer Days

Charlie Martin writes on science, health, culture and technology for PJ Media. Follow his 13 week diet and exercise experiment on Facebook and at PJ Lifestyle

Comments are closed.

Top Rated Comments   
Your wife gets paid to treat adults like incompetent children. Yeah, that's not furthering the cycle of infantilizing our citizenry at all. Great use of my tax dollars.

Life is a much better teacher than she could ever be. Don't figure out how to navigate the health care system, don't get healthcare. Being stupid should hurt.
41 weeks ago
41 weeks ago Link To Comment
I think I've come up with a solution.

I understand the economic simplicity of a guaranteed minimum income, but as a libertarian I've always opposed it on philosophical grounds, and on practical grounds, I think it would reward indolence and irresponsibility at least as much as the current system.

But, imagine everyone had a choice: in any given year, you can have the guaranteed minimum income, or you can vote. Pick one.
41 weeks ago
41 weeks ago Link To Comment
We need to stop calling it minimum wage and start calling it by its True Name: minimum employable productivity.
41 weeks ago
41 weeks ago Link To Comment
All Comments   (67)
All Comments   (67)
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Charlie,

To answer your question:
"Unless, of course, that money isn’t actually being spent on the poor people at all. I wonder where it goes?" The government spends $60,000/ year per family on welfare; however, the recipient only receives 40% ($24,000). 60% is spent on bureaucratic overhead to administer to said welfare recipients. Private charities only spend 20% or less on overhead.

The reason leftists and government workers have such a vested interest in "helping" the poor is that most of the allocated sums are used to perpetuate the fiefdoms and pension schemes from which these apparatchiks benefit. Each budgetary increase for the poor actually disproportionately profits the public unionists.
40 weeks ago
40 weeks ago Link To Comment
Please tell us your credentials since you are apparently an expert on science, health, culture and technology.
40 weeks ago
40 weeks ago Link To Comment
Charlie, that is quite an accusation. You just stated that every government worker only cares about keeping his job and not about doing a good job, being fair, and helping citizens. Please supply some evidence. Any.
40 weeks ago
40 weeks ago Link To Comment
Um, are you under the impression that 3131F is me, Ray?

In any case, what credentials do I need? I link my sources and I can do long division.
38 weeks ago
38 weeks ago Link To Comment
Or I guess you mean only leftist government workers, while rightist ones likely all honest, hardworking, patriotic paragons of virtue.
40 weeks ago
40 weeks ago Link To Comment
"The application of advanced mathematics — long division, and I did it in my head thank you very much — tells us that’s about $21,000 per person per year. Obviously, that’s $84,000 for a family of four."

Let this public school teacher educate you about the uses and misuses of the mathematical average, or mean. There's this big problem called outliers. Suppose there are five individuals receiving at least one form of public assistance. Persons A and B get about $2,000 a year in food stamps, persons C and D get $6,000 a year in various benefits while person E, a middle-aged disabled man racks up $40,000 a year in health care costs covered by Medicaid plus $12,000 in payments from SSI and food stamps. The mean annual benefit per person is $12,000, yet four out of five beneficiaries receive less than the mathematical average, thanks to the outlier, E. This hypothetical example is relevant to understanding why the $21,000 per person figure is misleading. According to the charts included in the Cato study, Medicaid is the largest expenditure among public assistance programs. Whether public or private, health insurance costs are driven by a small number of heavy users, in the case of Medicaid, the elderly and the disabled. Moreover, our high health care costs, #1 per capita globally, also inflate spending. Federal and state governments spending $60,000 for a knee replacement that costs $10,000-15,000 almost anywhere in the EU does not leave the recipient $45,000 richer. The misuse of a mathematical average to represent a typical person is a favorite trick employed by researchers and pundits. Figures DO lie.
41 weeks ago
41 weeks ago Link To Comment
To cloudbuster:
The one advantage of a guaranteed income is if it replaced all the other fed poverty programs it would get rid of much of the bureaucratic overhead and anti poverty patronage, and more of the money would actually reach the poor, although it would also make it more likely they would misuse it.
I do love your idea of either getting a minimum income or voting. It would ensure that somebody was really poor and really needed the money if they were willing to trade their right to vote to get it. It would also stop politicians hiking the level in exchange for votes, since it would cost them votes not get them. Thus when a politician hiked the level, we would have some confidence they really believed it needed hiking, and were not just doing it to get votes from the poor.
41 weeks ago
41 weeks ago Link To Comment
So basically the total amount of fed money going for poverty is more than the poverty income cutoff times the number of people on poverty. So if the money was actually going to the poor, we would no longer have any poor, since just what they get from the fed gov (not even counting what else they earn) is already enough to completely lift them out of poverty. Obviously we are either spending far too much, or we are not spending it very well.
41 weeks ago
41 weeks ago Link To Comment
I think we just need to eliminate some inefficiencies from the system. My proposal is that rather than run that money though the government, the poor receive a certificate that allows them to go to any person and request payment. That person is obligated to either give until they've satisfied their tax obligation or, even if they owe no tax, sign a personal promissory note up to their pro rata share of that year's deficit. The note can then be cashed with the government. Imagine how the youth would vote once they saw how much debt they personally incurred each year.
41 weeks ago
41 weeks ago Link To Comment
As an economist who uses government data, I must say it is absurd to suggest economic data is suspect, other than the stated limitations related to factors such as sampling error. The primary purpose of much of the data is to help businesses make decisions. Believe it or not, government wants businesses to succeed, particularly in the global economy.
41 weeks ago
41 weeks ago Link To Comment
You are familiar with the scandal involving the census data on employment being faked, which resulted in an underestimate of the unemployment rate just before the 2012 election. And some people in gov may want business to succeed, but many appointees under Obama, and Obama himself, are often actively hostile to business. Wait, let me revise that, they are actively hostile to anybody in business who are not his cronies, if you are a crony you get taxpayer subsidies.
41 weeks ago
41 weeks ago Link To Comment
Another scandal that never was, started by one "anonymous"
s source. Actually, the Bureau of the Census has nothing to do with unemployment data. That is the Bureau of Labor Statistics.
41 weeks ago
41 weeks ago Link To Comment
In response to Ray Rand,

If what you state is true, then why all of the insane regulations and rules? Why the arcane and byzantine tax laws? Because govt wishes to pick the winners and losers in the marketplace.

I would suggest that you only have to look at shadowstats.org to see that our wonderful and supportive govt is treating you like a mushroom. (for those who do not get the alliteration: Keeping you in the dark and feeding you bullshite.)

Sorry Ray, your whole world is make believe...
41 weeks ago
41 weeks ago Link To Comment
Next to climate scientists, economists are the biggest idiots and crooks. It's really quite breathtaking.

As one tiny example, government spending is included in GDP. Therefore, whenever our masters want to juice GDP (which is a very important factor used by all sorts of businesses), all they need to do is print some "stimulus".

And the idiot economists go right along with it.

As another example, reflect upon our fantasy "unemployment" statistics, which are essentially a job protection program for mafia congressmen. Again, no peeps from the economists who oversee the data, and not much from the other idiot economists who use the data.

Need we mention Keynesian economics?

There are thousands of other examples.
41 weeks ago
41 weeks ago Link To Comment
Unbelieveable
41 weeks ago
41 weeks ago Link To Comment
It depends on the data. Given the regular, significant revisions to some government data, we can only assume the error associated with it is material.

And, having worked a short time for the government, I can assure you that there are plenty of people in the government who don't care whether businesses succeed or not.
41 weeks ago
41 weeks ago Link To Comment
So instead of listening to someone who knows what they're talking about you'd prefer make up your own facts.
41 weeks ago
41 weeks ago Link To Comment
"Believe it or not, government wants businesses to succeed, particularly in the global economy."

Okay, Ray. I don't believe it. I challenge you to demonstrate that as a matter of fact. Are you going to simply sweep away our entire incomprehensible tax code, or environmental extremism (Cap and Trade, etc.), or interference in interstate commerce, or a plethora of questionable regulations of all kinds, or past wage and price controls, or affirmative action, or tort excesses, and on and on.

Sure, government wants to help businesses ..... just ask Jeffery Immelt and other crony capitalists. Then go to West Virginia and talk to a coal miner. Or someone in the homebuilding business. Or a commercial fisherman. Or anyone after the dollar and market collapses. Ask someone in the tourism business after the government drives up gasoline prices. Ever heard of Freddie and Fannie? Know anything about small business financing in the current environment? I could go on forever with this.

With all due respect sir, I KNOW that you don't know what you're talking about. Demonstrate otherwise. Are you out there, Ray? We're "listening" with baited breath (whatever that means .... I never did know but it sounds cool). In the meantime, get a job with the federal government (assuming you haven't). Surely there is a place there for you.
41 weeks ago
41 weeks ago Link To Comment
"..."listening" with baited breath (whatever that means ..."

Just an FYI: It's actually bated, a short form of abated as in lessened or reduced in force. In your context above, a case of listening so intently one almost stops breathing or pauses in breath.
41 weeks ago
41 weeks ago Link To Comment
Thanks, bobb. I always wondered why someone would want to "bait" their breath. Or how they would go about it.

Hey, Ray! We're waiting with bated breath!
41 weeks ago
41 weeks ago Link To Comment
You're welcome. #triviaisfunstuff
41 weeks ago
41 weeks ago Link To Comment
Nice take down!
41 weeks ago
41 weeks ago Link To Comment
The "new" system being unveiled at Appleby's isn't new at all. It's either licensed from "uWink" or a uWink knock off, created by Nolan Bushnell of Chuck E. Cheese, Atari fame & BrainRush fame. i understand that the uWink technology is being licensed to any restaurant who will pay. I have (in the past) worked as both a food waitress & a cocktail waitress. I never bitched about the low wages (in KS I made $ 2.01 per hour + tips in 1985)...why? Because I was a KICK @$ WAITRESS & made REALLY GOOD $, that's why!! I realized that my job represented a sort of "unspoken contract" between my customers & myself...I provide exemplary service & my customers provide exemplary tips...it's just that simple!! No customer OWES you a tip you EARN it!! Several considerations go into this equation...1) The Server MUST treat EVERY customer like ROYALTY, no matter if the last jerk just "stiffed you". 2) The Server MUST "work their way up", even if that means you start out bussing tables. 3) The Server MUST BE a "Team Player & work when the boss needs you!! 4) The Server must "move on" when there is no further room for growth. 5) IF the Server has "worked smart" they will have established a relationship with their "regulars" (much like a Hairdresser or Bartender) & they will line up their new employment BEFORE leaving their old job & time it right, so they can tell their "regulars" where they are going & when. A GOOD Server understands that they are entrepreneurs & that this is how to properly manage their "bottom line". I worked in Fine Dining & made enough money to pay my way through school by working only 2 to 3 nights per week. HOWEVER, the EMPLOYER MUST do things that DO NOT ANNOY the customer as well!! In the case of Appleby's STOP making the Servers work in such a DEMEANING manner...all that "cutesy" REQUIRED dialogue when they first meet the customer is more than most people want...just let the customer "cut to the chase" & order their food...and those STUPID LOOKING UNIFORMS!! No wonder they get less than professional Servers applying for those jobs, any self-respecting Server wouldn't be caught dead in that place or any of the Appleby's knockoffs!!
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41 weeks ago
41 weeks ago Link To Comment
gypciz, first off, I have something for you:




Those are paragraph breaks. They really help. Second, ease up on the CAPS. They make you hard to read.
41 weeks ago
41 weeks ago Link To Comment
Got sloppy on the paragraph breaks & I do know better. Point heeded on the caps. Thanks for bothering to reply. :)
40 weeks ago
40 weeks ago Link To Comment
To state the obvioius, figures don't lie. Of course they don't.

They are functions and creations of humans. Humans with interest. For good or ill.

But ALWAYS with interest. It is that interest that must be considered when assessing the figures.

As such it is not the figures as the people who have configured them, their reasons and their interpretations to ensure their interests that have significance.

IF the people are known generallly to be truthful and trustworthy in ALL their transactions and with people, we suppose the fiigures to be trustworthy. If on the other hand they are known to lie and twist the facts about their transactions then how and why should we trust anything about figures and interpretations based on those figures produced by them.

So what ought we make of figures from government agencies whose agents we know to be not only interested in growth and development of their own powers but in virtual immortality of the agency. Who in pursuit of same we akready have informaiton that ANYTHING GOES. The ratonal conclusion then is to proceed with caution.

Yes that is stating the obvious. But sometimes the obvious must be stated otherwise it gets lost among the trees.
41 weeks ago
41 weeks ago Link To Comment
What?
41 weeks ago
41 weeks ago Link To Comment
I think the short form of what he is saying is that while figures don't lie, liars can use figures. So when you hear somebody spouting numbers, that is not enough to make them truthful, as we know well from some of the figures Obama spinners will give us.
41 weeks ago
41 weeks ago Link To Comment
"Unless, of course, the money isn't actually being spent on the poor at all. I wonder where it goes?" The same place all the money spent on non-performing public (government) schools goes. To support overpaid government administrators to "mis-manage" those funds, leaving little to "trickle down" to those legitimately in need. Factoring in the scam artists who "work the system" & there is little left for those who truly need "a hand up until they can get on their feet"!! I know someone in legitimate need but the system has basically stacked the deck against hr while she watches her neighbors scamming the system & getting more than they need. To her credit, she won't compromise her morals, & game the system, so she suffers. She can't get a job because no one will hire her with several front teeth missing & our precious "system" will only pay for her to get 1 tooth at a time pulled, when ALL her teeth are bad & need to be pulled & she needs dentures. The "system" won't pay ANYTHING for dentures!! Now you have to ask yourself WHY would the "system" stack the deck AGAINST those who would work if they just got a small "hand up"? Because, the "system" DOES NOT WANT ANY OF US to be independent!! My Husband says this is because "beggars can't be choosers"!!
41 weeks ago
41 weeks ago Link To Comment
Oops, I meant to say that, while there are a few exceptions, in the great majority of these instances there was little or no effect on employment.
41 weeks ago
41 weeks ago Link To Comment
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