More bad news for John Edwards in particular and liberals in general. The poor are getting richer. (Link through Flopping Aces to a Wall Street Journal article hidden behind a subscription wall).
The CBO results don't fit the prevailing media stereotype of the U.S. economy as a richer take all affair -- which may explain why you haven't read about them. Among all families with children, the poorest fifth had the fastest overall earnings growth over the 15 years measured. (See the nearby chart.) The poorest even had higher earnings growth than the richest 20%. The earnings of these poor households are about 80% higher today than in the early 1990s.
What happened? CBO says the main causes of this low-income earnings surge have been a combination of welfare reform, expansion of the earned income tax credit and wage gains from a tight labor market, especially in the late stages of the 1990s expansion. Though cash welfare fell as a share of overall income (which includes government benefits), earnings from work climbed sharply as the 1996 welfare reform pushed at least one family breadwinner into the job market.
Earnings growth tapered off as the economy slowed in the early part of this decade, but earnings for low-income families have still nearly doubled in the years since welfare reform became law. Some two million welfare mothers have left the dole for jobs since the mid-1990s. Far from being a disaster for the poor, as most on the left claimed when it was debated, welfare reform has proven to be a boon.
This doesn't stop the bottom 20% from being the bottom 20%. Statistically, there has to be some bottom 20% regardless of how wealthy that group may be. But we've known for some time that being poor in America isn't really poor, at least by comparison with most third world countries. When roughly 3/4 of the poor own a car and have air conditioning, you start to wonder if we really have a poverty problem.
The difference, according to the Wall Street Journal, was welfare reform. Giving people incentive for going to find a job was the best way to increase their wealth. It makes sense, given that even starting at minimum wage, very few people will stay at minimum wage for more than a few months. As I've argued in other places, I rarely see a sign for a job that starts at minimum wage here. Most start between $7 and $8 an hour.
I wouldn't argue that $8 an hour is going to make you wealthy, but for a single person, it is livable. Besides, not having the government pay you to stay home and watch Judge Judy is the best incentive I can think of to get better skills to get a better job.
|