Tuesday, January 16, 2018

Lies, Damn Lies and Government Poverty Statistics

I am getting inundated with emails pointing me to a Los Angeles Times op-ed, Why is liberal California the poverty capital of America? 

The essay reaches this conclusion by using data from the Census Bureau’s Supplemental Poverty Measure. In other words, consider this government drama. Don't come to California expecting to see 20.6% of the population living in shacks without running water and, heaven forbid, no cable or cell phones.

The only time I have ever seen shacks in America was in the 1960s when I was very young and my mother and grandmother took me by Greyhound bus from
Boston to Miami Beach. I saw real poverty back then somewhere in the south as the Greyhound rolled on down the highway.

I have passed through some of those areas since under more comfortable conditions and I have kept an eye out for those shacks and they are long gone. There appear to be some very small houses that might have been the shacks but they don't look anything like what was burnt into my mind when I was probably about 5 years old. At 5 years old you can miss a lot but not real poverty.

There is nothing like this in current day California. For sure there are the homeless of San Francisco's Tenderloin and the same type druggies and drunks on Skid Row in Los Angeles. But if you can function as human being to at least respond to an alarm clock, you are not living in poverty in California.

Every other store or restaurant I pass in San Francisco has a "help wanted" sign out. No one is without a job in California unless they don't want a job.

That said, there are some major wage earners in California. The top earners in Silicon Valley, San Francisco, Beverley Hills and Bel Air have serious buying power. They are going to bid up prices for the land and labor around them.

These super wealthy are probably the reason that the SPM ranks California at the top of the poverty scale. There are just a lot of people that can't compete to live in the super high rent districts. (And, of course, rent controls make the supply of available housing even tighter) but the average warm body wage earner is living just fine in the outskirts---or otherwise they would move to areas where the SPM claims the poverty rate is much lower.

Two things are going on here. The first is that value is subjective and if warm body earners prefer to live in this "poverty region" they are getting something out of it that is greater than what they would get by living in Oklahoma or Mississippi, where the SPM claims the poverty rate is very low.

The second factor is that the super-wealthy areas are really skewing the data as to how expensive it is to live in these states. The SPM report claims to divide the data into subregions but that raw data is not provided so it is impossible to know how it is really broken down.

Also curious, the SPM map provided in the report, tends to show the high poverty areas around high-density populations where there are sectors of far above average incomes. It suggests a general distortion of the poverty measure in high-density areas

But the key is that if there are warm body wage earners in the SPM designated "high poverty regions" the Census data is missing something, somehow, otherwise the warm body wage earners would move to the regions where the SPM report claims they would get more bang for their buck.

In other words, don't take this wacky government poverty measure as though Murray Rothbard calculated it himself.

BTW, the median household income in California is $64,500.


  1. You are really talking out your ass on this RW. I have lived on LA streets and for every 1 homeless you may encounter there are at least 20 more that you dont see blending in as best they can in the face of homeless harassment. Some living out of cars or shopping carts etc Many more working and living in the street as well.

    What they may get out of the arrangement is a survivable year round climate or active community trying to help the homeless in some high density cities. You dont get that in states like Oklahoma or Mississippi.

    You can speculate all you like about "No one is without a job in California unless they don't want a job." Unless you have done it while living on the street you have no reality about it and should try harder to be open minded to those that have.

    Your viewpoint narrows by the day and its a shame to see.

    1. maybe some of these people who can't survive or live in their car or street should be more "open minded" about where they should live or what kind of job they work at.

  2. "You don't get that in states like Oklahoma and Mississippi"

    Yeah, because they're impoverished. San Francisco gets all the homeless people because San Francisco is the highest bidder.

  3. Some reasons California is “the poverty capitol of America”.

    The method to measure poverty seems a bit arbitrary to me. “Income thresholds by the official poverty measure are established by tripling the inflation-adjusted cost of a minimum food diet in 1963 and adjusting for family size, composition and the age of the householder.”

    California is expensive. MIT has a living wage calc: http://livingwage.mit.edu/. They rank California 7th highest. For the area I live in (middle class San Diego County) the amounts MIT lists under Typical Expenses for Food and for Housing are about 50% too low.

    California has high tax rates that certainly contribute to poverty figures. California has the highest Sales Tax at 7.25%. The average local tax is anther 1% which puts California combined sales and local tax rate ranking 10th worst in the country. California's top income tax rate of 13.3% is the highest in the nation, but only if you earn $1 million or more. At $50,000 a year the rate is 9.3%. California has the most tax brackets – 10 of them in all. The lowest tax bracket is 1% for income less than $8,015. See: https://taxfoundation.org/

    California has the largest agriculture production of any State. It is reasonable to assume that this would result in California having the most agricultural workers of any State. The majority of jobs in agriculture are very low paying. Some of these workers live in the fields they work (at least temporarily) in makeshift shelters. Agriculture is only about 2% of the GDP of California. Also agricultural jobs and workers are more likely to go unreported. So the impact of California’s relatively large agriculture economy on poverty stats is hard to determine but I assume it is relative when comparing to other States.

  4. "There are just a lot of people that can't compete to live in the super high rent districts."

    Compete for access to the federal reserve money spigot that drives up the bidding.