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The Rise Of the Bottom Fifth [the poor are getting richer - welfare was holding them back]
The Washington Post ^ | May 29, 2007 | Ron Haskins

Posted on 05/30/2007 10:59:09 AM PDT by grundle

Imagine a line composed of every household with children in the United States, arranged from lowest to highest income. Now, divide the line into five equal parts. Which of the groups do you think enjoyed big increases in income since 1991? If you read the papers, you probably would assume that the bottom fifth did the worst. After all, income inequality in America is increasing, right?

Wrong. According to a Congressional Budget Office (CBO) study released this month, the bottom fifth of families with children, whose average income in 2005 was $16,800, enjoyed a larger percentage increase in income from 1991 to 2005 than all other groups except the top fifth. Despite the recession of 2001, the bottom fifth had a 35 percent increase in income (adjusted for inflation), compared with around 20 percent for the second, third and fourth fifths. (The top fifth had about a 50 percent increase.)

Even more impressive, the CBO found that households in the bottom fifth increased their incomes so much because they worked longer and earned more money in 2005 than in 1991 -- not because they received higher welfare payments. In fact, their earnings increased more in percentage terms than incomes of any of the other groups: The bottom fifth increased its earnings by 80 percent, compared with around 50 percent for the highest-income group and around 20 percent for each of the other three groups.

Low-income families with children increased their work effort, many of them in response to the 1996 welfare reform law that was designed to produce exactly this effect. These families not only increased their earnings but also slashed their dependency on cash welfare. In 1991, more than 30 percent of their income was from cash welfare payments; by 2005, it was 4 percent. Earnings up, welfare down

(Excerpt) Read more at washingtonpost.com ...


TOPICS: Miscellaneous
KEYWORDS: demographics; subsidies; thepoor; welfare
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To: grundle
so IOWS....the middle class is still getting the shaft from the ultra rich and now the "poor"...

I'll bet these "poor" get food stamps, free college, free bus passes, free summer camps for their kids, free medical or greatly discounted medical care, and then of course they all get a big chunk of tax money from people like me in the form or "earned income" credits..which means they never paid in this money yet they're getting it just the same.....

of course, TPTB want the middle class gone...they prefer a struggling working class that depends on the govt for survival and votes for DIMS every time...

21 posted on 05/30/2007 12:42:02 PM PDT by cherry
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To: Mr. Jeeves

And there is another factor - what was the net increase, not just after inflation, BUT AFTER TAXES?


22 posted on 05/30/2007 12:42:15 PM PDT by dirtboy (A store clerk has done more to fight the WOT than Rudy.)
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To: dirtboy
This author assumes that the person who entered the workforce 10 years ago is still making the $8/hr he started at. No raises or promotions? I doubt that.

The lowest income people are the old women on Social Security who get $450/mo. Dems won't reform that, for a reason.

23 posted on 05/30/2007 1:00:41 PM PDT by ClaireSolt (Have you have gotten mixed up in a mish-masher?)
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To: Mr. Jeeves
since the top and bottom 5-10% will always be pulling away from the pack in oppoisite directions

Almost, but remember the bottom can only "pull away" a little bit, or else they hit 0 and aren't even counted anymore. While the top theoretically has no limit to how much they can go up.

Which is why the top will almost ALWAYS go up the most. The bottom is pegged to the minimum of zero, or more accurately the minimum income you would accept before you quit your job and gave up. The middle if they increase too much fall into the higher brackets, and only the top gets to rise without limit.

The actual movement of quintiles is very complex, because individuals move up AND down the scale, and so when you compare "quintiles" over time you aren't comparing the same workers.

for example, suppose there are 5 people. So 1 in each quintile. They make 1,2,3,4, and 5 dollars. Now, give the middle class a 100% raise, while holding everybody else constant.

Now your wagest are 1,4,6,8,5, which is 1,4,5,6,8. The increases by quintile were: 0%,100%,66%,50%,60%. Notice that even though your top quintile got NOTHING, after you were done the STATISTICS show the "top qintile" did BETTER than the 4th quintile. And only 20% show a 100% increase, when in fact 60% got one.

So you shafted the rich, and yet it looks like the rich got ahead on the backs of the upper middle class.

24 posted on 05/30/2007 1:13:10 PM PDT by CharlesWayneCT
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To: grundle
1) See Robert Rector's The [positive] Impact of Welfare Reform

2) When the hell did the Washington Post start publishing good news?

25 posted on 05/30/2007 1:38:23 PM PDT by KayEyeDoubleDee (const Tag &referenceToConstTag)
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To: CharlesWayneCT
Here is the actual graph from the cbo report: There are good things and bad things here. The good is that the earnings level of this group has indeed gone up. It rose steadily during the 90s. This is what you'd expect on a booming economy. It peaked in 2000 and started to fall off. This is what you'd expect when a recession hits. The problem is what happens next. As the economy recovers, the earnings level does not. It has stayed pretty much flat along it's 1998-1999 level.
26 posted on 05/30/2007 1:53:57 PM PDT by truthfree
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To: truthfree

And sorry for the bad format of the above, but hey.....

First Post!


27 posted on 05/30/2007 3:32:40 PM PDT by truthfree
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To: dirtboy
So in other words, the middle 60 went up 20 percent, the bottom 20 went up 35, and the top went up 50 percent.

Which makes my point - the current structure hoses the middle class.

Hardly. Don't you think there is a significantly larger population in the middle 60% than in the bottom or top quintiles? Moving that many people (60%) the same percentage as one quintile (20%) might prove just a little bit harder, don't you think? Bottom line, the middle class is doing just fine despite all the hand wringing.

28 posted on 05/30/2007 5:13:15 PM PDT by Mase (Save me from the people who would save me from myself!)
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To: CharlesWayneCT

I understand what you are saying CharlesWayneCT, but you are misreading the study. Your example shows that people can move among which “quintile” they are in. The study specifically removes that possibility by tracking the families from the quintile they were in when the data was first collected. In your example, the study would show the quintiles, after the 100% increase for the middle class, as 1,4,6,8,5. It would correctly show all 3 middle quintiles getting a 100% increase.


29 posted on 05/31/2007 5:57:26 AM PDT by truthfree
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To: truthfree
I didn't see that from the study. The preface mentions tracking particular families over a "3-year" period, but that doesn't cover the 15 years of the study. The article doesn't mention it at all.

The 35% increase cited seems specifically based on a comparison of the 1st-Q numbers from the first and last years, NOT a comparison of the earnings of the 1st-Q group from the 1st year at the last year.

In fact, this paragraph from the summary tells the scope of the study in regard to tracking individual families:

The 35 percent real income growth between 1991 and 2005 for low-income households with children—considered as a group—does not describe changes for individual households over time. Surveying such households at a specific point (in this case, 2001) and following them over the next two years provides a different perspective.

The average income for those households increased by nearly 45 percent from 2001 to 2003. (By contrast, average income for low-income households with children— that is, the households constituting the group as a whole—fell over that same three-year period.) Six in 10 of the surveyed households experienced a substantial increase in income, while 1 in 4 experienced a substantial decline.

Realise that tracking the same people over time is ALSO has it's problems. An individual is expected to increase their salary over time, as they become more experienced in their job and older and more mature and therefore more trusted with more important jobs. So individuals will tend to move up the quintiles over their lifetime, with the highest number of people in the higher quintiles near the age of retirement.

Worse, when you survey individual households, such that they know they are being measured, that knowledge effects the measurements. Especially in an area of "pride" like income. Those who know they are being tracked for "improvement" will work harder, try harder, and make more effort to get increases that make them "look good". So I don't trust that the 45% number is a valid one.

30 posted on 05/31/2007 6:17:42 AM PDT by CharlesWayneCT
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To: CharlesWayneCT

Oops, you’re right. I must have read the 2001 number as 1991. I stand corrected.


31 posted on 05/31/2007 10:20:22 AM PDT by truthfree
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To: grundle
Despite the recession of 2001, the bottom fifth had a 35 percent increase in income (adjusted for inflation), ...

The bottom fifth increased its earnings by 80 percent, ...

So is it 35% or 80%?

32 posted on 05/31/2007 10:28:09 AM PDT by <1/1,000,000th%
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To: grundle
Importing poverty

Since 1980 the number of Hispanics with incomes below the government’s poverty line (about $19,300 in 2004 for a family of four) has risen 162 percent. Over the same period, the number of non-Hispanic whites in poverty rose 3 percent and the number of blacks, 9.5 percent. What we will have with amnesty is a policy of creating more poverty in the United States.

33 posted on 05/31/2007 10:40:29 AM PDT by anglian
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To: <1/1,000,000th%

Income included stuff not included as earnings, that didn’t go up as much.


34 posted on 05/31/2007 11:17:20 AM PDT by CharlesWayneCT
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To: truthfree

No problem. BTW, here’s another strange “artifact” of statistical analysis. When there is a recession, sometimes the numbers get driven UP, while the tendency in the “boom” part of a recovery is to drive the numbers down.

This is because we usually speak of “wage-earners” (Note that in THIS study, it was only wage-earners with FAMILIES and CHILDREN). Recessions and their job losses tend to hurt those at the lower end more than the upper end, as those workers are more easily done without, and more easily brought back. So we lose a lot of low-wage-earners, which RAISES the wage averages in all the quintiles. Sure, some higher earners are effected, but so long as a larger number of lower-income workers leave, it raises the averages.

When the hiring first starts up again, it’s never across the entire spectrum of wage-earners, and tends to be concentrated at the lower end of the spectrum. So the unemployment rate drops, things are “better”, but the wages for the lower quintiles drops.

Except not the lowest quintile as much, beause it is effected by the fixed-benefit model driven by tax dollars. The bottom quintile was pretty much at the lowest end of the plausible pay range, so whoever gets added back can’t really draw the lowest quintile down that much.


35 posted on 05/31/2007 11:23:16 AM PDT by CharlesWayneCT
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To: Mase

Thanks, I’m about to be visiting a bunch of liberal in-laws and this will come in handy.


36 posted on 06/01/2007 3:02:04 PM PDT by expat_panama
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Comment #37 Removed by Moderator


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