Poor or Not Poor? Depends on Who you Ask . . .

Poor or Not Poor? Depends on Who you Ask . . .

Bruce Bartlett: What is poor?

In a supplementary report that got no press attention, the Census Bureau looked at some of these new necessities and their ownership by the poor. It turns out that many poor people today own appliances that were considered luxuries when I grew up, and some would still be considered luxuries today. For example, 91 percent of those in the lowest 10 percent of households -- all of whom are officially poor -- own color TVs; 74 percent own microwave ovens; 55 percent own VCRs; 47 percent own clothes dryers; 42 percent own stereos; 23 percent own dishwashers; 21 percent own computers; and 19 percent own garbage disposals.

When I grew up in the 1950s, only the wealthy owned color TVs, clothes dryers, stereos, dishwashers and disposals. These were all considered luxuries. We got by with black and white TVs, hanging our wet cloths on a line to dry, washing dishes by hand and throwing our potato peels in a pail instead of down the drain. So did most other middle-class families. Not even the wealthiest people owned microwave ovens, VCRs or computers. . . .

The Census Bureau itself acknowledges serious limitations to its calculations. One problem is that it is required by law to use a measure of inflation that is known to overstate price increases. Using a corrected inflation measure would have lowered the poverty rate from 12.1 percent to 10.8 percent last year. The inclusion of income that is not now counted, such as noncash income transfers like food stamps, would lower the rate to just 7.5 percent.

Lastly, it is worth noting that few of the poor remain poor for very long. According to the Census Bureau, over half of all those classified as poor between 1996 and 1999 were so for less than four consecutive months. Eighty percent were poor for less than a year. This sort of income mobility means that our measures of income inequality are also overstated, according to a new Federal Reserve Bank of San Francisco study.