Don't Try To Draw Any Conclusions From Government Poverty Data

One of my favorite sites, Instapundit, has two links today to posts that attempt to draw conclusions from government poverty data.  Unfortunately, as I have discussed many times, the government poverty data are completely fraudulent.  These data provide no meaningful information as to how many people suffer from some kind of financial or physical deprivation or hardship.  If you attempt to draw conclusions about deprivation or hardship from government poverty data, you are just showing that you don't know what you are talking about. 

In linked article number 1, we have Jordan Weissmann of the Atlantic opining that "Yep, Being a Young, American Adult Is a Financial Nightmare."   That's a proposition I could agree with, but I would base my agreement on the fact that young adults are getting buried by student loans, and they also have to pay for their parents' social security and Medicare, and they are set to be gouged by Obamacare, and then none of the entitlements will still be around when today's young adults need them.  But Weissmann has something completely different in mind -- he's talking "poverty." 

Poverty is an astonishingly common experience here in the world's richest country. As I wrote this morning, almost 40 percent of American adults experience it for at least a year by age 60.

Jordan, it's only "astonishing" because government-defined "poverty" has nothing to do with poverty.  Weissmann presents some graphs based on government "poverty" data that he claims "illustrate the difficulty of making ends meet in your twenties and early thirties."  Along the way he calls living "under the actual poverty line" the equivalent of being "really truly broke."  The key statistic he cites, from a forthcoming book by Rank, Hirschl and Foster called "Chasing the American Dream," is that some 41.3% of Americans will "spend at least a year earning less than 150% of the poverty line" between ages 25 and 34.  

Sorry, you've just been duped by the government's fraud.  By the way, his article has over 300 comments as of this writing, and not a single one of them has picked up on the problem.  The big problem here is that the "poverty" data count most adult students as being in "poverty."  Federally-measured "poverty" is determined by "cash income" of your "household."  If you are over 21 and living apart from your parents, then your "poverty" status turns on your own cash income.  Of course, students don't have much of that.  Are you a medical student whose parents pay for everything?  That's poverty.  A graduate student with a fellowship?  Fellowships don't count as income -- you're in poverty.  Getting a big government-subsidized student loan?  Doesn't count -- poverty!  Harvard Law student who works for "Big Law" for the summer at $3000 per week?  OK, you will earn enough to not be in poverty.  Harvard Law student who takes one of those really nifty unpaid internships with a federal judge for the summer?  Poverty!  Parents send you an allowance of $300 per week?  Doesn't count -- you're still in "poverty."  You get food stamps?  (Why not?  You qualify!)  They don't count either.  You're in "poverty."

Are there really enough students in the 25-34 age group to swing these data meaningfully?  Absolutely.  According to Education Department data here, the number of 25-34 year-olds enrolled in a degree-granting institution in any given year is about 4 million, out of total population in that age cohort of about 40 million.  That's about 10% in any given year.  But Weissmann is quoting a statistic based on being in "poverty" or "near-poverty" in any one year out of the ten from 25 to 34.  So how many people will be a student for at least one year out of the ten between 25 and 34?  It could easily be 25% or more, plenty to swing Weissmann's statistic by as much as half.  (Think about this:  if everybody were a student for the one year from age 25 to 26 and not after, and therefore in "poverty" for that one year out of the ten from 25 to 34, then the education statistic would be exactly as we see -- 10% of the 25-34 cohort in school each year -- and Weissmann's statistic would show that 100% of 25-34 year-olds spent "at least one year in poverty" during that decade.)  

And of course that's far from the only problem with the government "poverty" data.  As big problem number 2 we have the failure to count in the measure of poverty all in kind handouts.  As relevant to young adults, these include not only food staps but also educational grants, even the part of the educational grants that pay for housing and food.  Weissmann's statement that being in federally-measured "poverty" means "difficulty in making ends meet" is just appallingly ignorant. 

As with my previous posts on poverty, I am not saying that no young adult in the United States suffers from real poverty, by which I mean financial or physical deprivation.  I'm only saying that the official "poverty" data are wildly inflated and do not provide any useful information on how many people are in the category of actual deprivation.  Nobody can say how inflated the data are, because the government does not provide enough information to figure it out.  I'm just trying to educate people a little so that they can stop making fools of themselves.

Then in Instapundit-linked article number 2, we have reporting on September 17 on the Census Bureau's release that day of the household income and "poverty" data for 2012.  The official number of people in "poverty" in the U.S. in 2012 was 46,496,000.  That represented an increase of 6,667,000 people in "poverty" from 2008 to 2012. 

Now that's rather a large increase on Barack Obama's watch -- almost 17% in four short years.  Can you recall reading about this a month and a half ago when it came out?  It did appear somewhere in most major news sources, but somehow was not really big news.  Am I just a cynic in thinking that if there were a Republican president a 17% increase of people in "poverty" during his first term would be gigantic news?  

On the other hand, I also don't think that the increase in Census-definition "poverty" has much if anything to do with real poverty, in the deprivation sense.  Far more likely that it derives primarily from people's efforts to manipulate their reported income and/or their family definition in order to qualify for various handouts.  The hugely anomalous statistic from Obama's first term is the explosion in food stamp recipients from under 30 million to almost 50 million, with recruiters combing the country looking for people to sign up.  Could there be some family re-definition going on?  (Hey, if sonny is away at college, he could qualify for food stamps if we say he is not part of the family!) 

If I'm right about why "poverty" has increased (and I am), better look for more big increases to come.  Obamacare gives tremendous incentives to manipulate income below thresholds and/or define families into smaller units in order to qualify for subsidies and "free" plans.  I'm predicting a very big jump in "poverty" in the coming few years.