Tuesday, September 24, 2019

[NJFAC] Poverty Rates are Pretty Low, but So Are Poverty Lines

by Frank Stricker

Some highlights from Income and Poverty in the United States: 2018, at https://www.census.gov/library/publications/2019/demo/p60-266.html.
 
1. The 2018 poverty rate--the percentage of the population under federal poverty lines--was 11.8%. Since 1959, the rate has been under 12 eleven times: seven times in the 1970s; three at the end of the Clinton-Greenspan boom (1999-2001); and then only once more, in 2018.
 
2. Of course, poverty rates are much higher for some social groups. The black rate in 2018 was 20.7%, the Hispanic rate 17.6%. Even after a decade-long economic recovery, one in five black Americans and almost the same fraction of Hispanics were poor.
 
3. Since they became official policy in the 1960s, poverty thresholds have not been changed much except for inflation adjustments. National wealth and average real incomes have advanced substantially, but poverty lines have not. Today, if you are officially poor, you are farther below average incomes than was true in the 60s. You are relatively poorer.
 
4. Looking at the dollar amounts of poverty lines is instructive. If you were a single person under 65 in 2018, you were not considered poor if you had an annual income over $13,064 a year. If you were a family of four with two children under 18 and income over $25,466, you were not counted as poor. Really? Many families with $30,000 or even $40,000 are quite poor.
 
5. The current lines tell us how far we have come using constant-dollar thresholds. But as a measure of deprivation in our time, they are grossly deficient. Why not have poverty thresholds A, continuing the current numbers, and B, for realistic thresholds. We could try B-lines that are 25% or 50% higher. We have the information in Table B-3 of the poverty report. At lines that are 50% higher, the threshold for a family of four with two children is $38,198 and the poverty rate for the U.S. population is 20.1%. (And $38,198 is still not very high.)
 
6. The poverty report has tons of useful information. For example, on household incomes, Asians lead the pack, with $87,194, and African Americans trail everyone with $41,361. And we are not even talking about wealth and assets, where African Americans are even farther behind.
 
7. Are female earners catching up? The ratio of female to male median earnings for full-time, year-round workers has increased from 60% in 1959-1960 to 81.6% in 2018. Women's real annual earnings have about doubled since 1959; men's have increased by less than 50%.
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Frank Stricker is emeritus history professor at California State University, Dominguez Hills, and a member of NJFAC. The  views in this article are those of the author and not of his organizations.
 

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Friday, September 6, 2019

[NJFAC] Tighter labor markets, looser rules

To expand the pool of workers, companies are recruiting stay-at-home parents, retirees and people with disabilities. Will they keep it up if the economy sours?

....With the national unemployment rate now flirting with a 50-year low, companies are increasingly looking outside the traditional labor force for workers. They are offering flexible hours and work-from-home options to attract stay-at-home parents, full-time students and recent retirees. They are making new accommodations to open up jobs to people with disabilities. They are dropping educational requirements, waiving criminal background checks and offering training to prospective workers who lack necessary skills.

Those policies are having an effect. In recent months, nearly three-quarters of people who have become newly employed have come from outside the labor force — meaning they hadn't even been looking for jobs.....

"We increasingly hear reports that employers are training workers who lack required skills, adapting jobs to the needs of employees with family responsibilities, and offering second chances to people who need one," Mr. [Jerome] Powell said.

....Data from ZipRecruiter shows that more companies across industries are offering on-the-job training or tuition reimbursement to help open up jobs to candidates who might not have the necessary skills. A rising share of companies are advertising that their jobs are open to people with no experience.....

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June Zaccone
National Jobs for All Coalition
http://www.njfac.org

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Thursday, September 5, 2019

[NJFAC] Why Pushing on a String Has Never Worked--Servas Storm

Summers and the Road to Damascus Servaas Storm 

In what constitutes a volte-face, Lawrence Summers openly admits that monetary policy is ineffective in the current environment of secular stagnation and argues that what is needed instead are "efforts by governments to promote demand through fiscal policies and other means." Summers and co-author Anna Stansbury write that they have come to agree with "the point long stressed by writers in the post-Keynesian (or, perhaps more accurately, original Keynesian) tradition: the role of particular frictions and rigidities in underpinning economic fluctuations should be de-emphasized relative to a more fundamental lack of aggregate demand."

Pushing on a string

Summers and Stansbury are right in pointing out that the U.S. is suffering from a fundamental lack of demand. But they are wrong in believing that this is somehow only now showing up in a decline in the power of monetary policy to stimulate the economy. Monetary policy has never been robustly effective in promoting economic recovery or growth. While restrictive monetary policy, when credible, may be effective in slowing down economic growth and reducing inflation, this does not mean that monetary stimulus has the capacity to promote growth and raise inflation — if anything, post-2008 monetary policy experience provides an acid test of this asymmetry in policy effectiveness.....

Summers' U-turn appears to be motivated by a fear of the negative and destabilizing macroeconomic consequences of further interest rate reductions by central banks, and especially by the European Central Bank (ECB), which is currently charging commercial banks a penalty interest rate of 0.4% if they park surplus liquidity in Frankfurt; the ECB's refinancing rate is zero.....

But wait a minute: isn't the U.S. economy at full employment right now?....

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June Zaccone
National Jobs for All Coalition
http://www.njfac.org

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