Michael Hicks is director of the Center for Business and Economic Research and an associate professor of economics at Ball State University. His column appears in Indiana newspapers.
There is a certain poignant irony in the U.S. Census release of 2010 poverty statistics this Christmas week. It reminds us that, behind the green eyeshades of professional data collectors, the folks at the Census have an acute marketing sense.
The Gospel of Luke tells us that Mary and Joseph traveled to their familial birthplace as part of a census. The details and timing of the Roman census are hazy, but the intent of these counts was to levy taxes for Rome. This is a rich story and serves as a high point of the New Testament's beautifully subversive backdrop of freedom from tyranny. Unlike the Roman census of Quirinius, the modern U.S. Census affects the distribution, not collection of tax dollars. It is understandably a bit more welcomed.
Among the first of the big Census releases (that will continue for years) are local poverty rates for 2010. These are widely reported, but what do the data tell us? The sad truth is almost nothing of consequence. Here's why:
According to international measures of poverty, the U.S. has none. The rest of the world measures poverty by how much your household consumes in goods and services, not how much it earns. So, the seven students who work in my research center slip into the ranks of the impoverished, according our Census. None of my students are rich, but to place an MBA student alongside the 2 billion or so people in the world who subsist on a couple dollars a day is morally vacuous. This is equally true of the poorest of Americans, whose average Medicaid costs alone places them squarely in the world's middle class. So, how then to think about and measure poverty in America?
I think it is better to sidestep the official poverty statistics and focus on the problems of the poorest quarter of Americans and ask: How can policy help? The answer isn't encouraging. While maybe half of the poorest quarter are there temporarily -- due to school or job change -- almost everyone who is truly poor possesses one or more of three common characteristics: disability, drug addiction or teenage parenting. I could include quitting high school, but there is nearly a perfect overlap between these categories. These things need to be said to drive our policy response, not to append a morality tale. It is devilishly hard to make the lives of the poor more tolerable, much less improve their future. The same lack of judgment that leads to drug addiction and teenage pregnancy is unsurprisingly not well rewarded in labor markets. Disability is even less easily remedied.
We'd do best by recognizing that poverty in America is wholly a relative thing. This makes it far less onerous than true poverty around the world. This recognition shouldn't changes materially our wish to see it go away -- that is a more enduring lesson from the time of Quirinius. But understanding the problem might better help us with its fix and prognosis.