Here’s your fucking latte, sir

Real income growth of 0.3% per year? That really is a trickle, isn’t it — so there’s a reason they don’t call it “torrent down” economics.

Can you supply comparison figures from some economy not organized on trickle-down principles? France, Germany, Scandinavia? I’d be curious.

Not to show any disrespect for economists, but for the longest time I felt a strong distaste for measures showing that average wages haven’t risen, that the rich are getting richer while many of us, especially the poor, are no better off than we were 25 years ago. I had never seen any evidence, though, that my distaste was anything other than a gut feeling, and having discovered time and again when I came to put my brainstorms down on paper that gut feelings are not particularly reliable, I just suffered.

Then I stumbled across measures of how many households own what (see, for example, http://www.dallasfed.org/fed/annual/1999p/ar97.pdf), and my suffering ended. The average Joe, and the poorest Joes, are economically far better off than they were 25 years ago. The cost measures are just plain wrong – the old complaint that economists do not sufficiently account for quality differences is true.

Your example is a perfect example. Just where (in the U.S.) was anyone, rich or poor, to get a cup of frothy coffee 25 years ago (beyond the stray Italian restaurant)? Less glibly, poor people own better TVs, VCRs, better shoes, video games, better cars (1970 Beetle anyone?), and on and on and on.

While it’s still horrible to be poor, it’s less horrible than it used to be.

Packets of Doritos? Twinkies? Big Macs? Cans of beer? Cigarettes? Cable TV subscription? What units would not seem odd for measuring benefits for poor people?

Surely the contrast is interesting and important.

Michael, this is the lowest *quintile*; I’m talking about 20% of the population of the USA here. If you’re claiming that one in five Americans regards a Starbucks latte as an impossible luxury on a par with champagne and truffles, then you’re off your trolley.

This echoes the Economist’s Big Mac index (their purchasing power parity measure, based on the fact that the tasty and nutritious Big Mac is available worldwide and is made from local ingredients: no imports or other hidden costs): I’m not quibbling with the conclusion here but some seem to be focusing on the latte and not on the measly $2 and change improvement.

Arthur, you have the wrong end of he stick, or am I missing the irony?

30 years of economic progress = 1 cup latte/weekday.

Wouldn’t thrill me if I was in the lowest quintile. Per capita real gdp growth over 30 years might be say 80 per cent. Lowest quintile growth = 8 per cent. Better than nothing but hardly a glorious triumph.

Bull, would you mind if I indexed your retirement fund by the deflator that does buy equivalent sneakers, VCRs etc?

Alex Knapp appears not to have noticed that the stats Daniel links to are _household_ income figure.

robert,
In 2002, Dr. Alan B. Krueger of Princeton did a writeup in the New York Times about income mobility and some of the recent research that challenged the idea of high income mobility in the US. It might help you get at the data so you can make your own judgement …

The poor may be better off than they were 30 years ago but they are still poor. They can afford a latte but can’t send their kids to college. They can rent-to-own a big screen TV. Meanwhile, Dick Cheney is getting million dollar kickbacks from Haliburton and saying that one day, it’ll all magically “trickle down.”

“Trickle down” is what that nice warm stream of piss he just shot on the downturned necks of the poor does; it is not an economic tool, but a euphamism Robber Barons use to keep the morons in line.

Is income mobility increasing or decreasing in the US?
Is wealth inequality increasing or decreasing in the US?

Rather than saying it might not be that big a train wreck, would some of those contesting Daniel’s point care to provide a guess about trends in these two areas?

asg says

Rather than restate it here, I’ll just mention that the point made in the Crescat Sententia post linked via trackback is a very good one, and somehow no matter how often it gets made, folks who share Daniel’s worldview seem to ignore it.

OK, let’s play that game. The article tells us how wonderful tech progress has been in the last twenty years and how even poor people can now afford cell phones and internet, and that makes up for their lack of money.

OK, now let’s look at other things, In particular medical expenses are far higher than they were twenty years ago, and the nature of medicine being what it is, you don’t really have the choice of buying 1978 style cheaper medicine, if that’s all you can afford, rather than 2001 style medicine.
Secondly, as others have pointed out, the thrust of politicall/economic developments in the last twenty+ years has been to offload uncertainty from the govt and corporations to individuals. Again, the poor don’t get the option to go back to their 1978 collection of implied and real benefits, rather than the 2001 collection.

Have you ever thought that maybe, for most of the poor, those two changes cancel out and more cell phones and internet?

CD players and computers have gotten cheaper for a comparable product. I don’t know about cars. But has housing? Has college education? Has medical care?

My understanding is that it’s done the opposite.

Jack’s comment reminds me of the Thomas Pogge/Sanjay Reddy point about the way in purchasing power parity calculations can misrepresent the plight of the world’s poorest because the assumed consumption bundle includes many things the poor can’t or don’t actually buy. There must be similar within-country distortions when comparing 1978 dollars to 2001 dollars, assuming that the bundle used to measure inflation again includes many things (chauffeurs, pedicurists, I don’t know) that the poor don’t actually consume. But I’ve no idea whether a realistic, poor-specific consumption bundle would make thinks look better or worse for the poorest than these figures. Daniel?

Exactly. The ability to buy cheep consumer gadgets–TVs, video games, or other stuff at Walmart does not matter that much to a person’s quality of life. To add to Russel’s point about healthcare, we should be looking at the percentage of income the poor pay in housing, medical, transportation and other costs that they cannot do without. Even then, we might have too little data to talk about the effectiveness of trickledown economics (other forces, could be a t work), but at least we would have a starting place.

But through SCHIP, Medicare and Medicaid, the poorest quintile have health care. Health insurance is actually a concern of the middle class, not families living under or near the poverty line.

In one sense, the lives of the poor are slightly more unstable, in that they cannot indefinitely draw government benefits. But for those on welfare, life tended to be stable in a very bad way — enough money to eat, but no hope of anything better. Now, their income can vary more, but it seems to vary around a higher mean, which means that the majority are better off.

And it’s simply not true that the poor have been thrown out on their butts. As Cato complains, five years after getting off welfare, 35-45% of former recipients are still getting some form of government assistance, from food stamps to medicaid to day care to various forms of “emergency assistance” such as help paying an apartment deposit or buying a car. And 80-90% of children continue on medicaid for at least a year after their mothers leave the rolls, with many more transitioning to SCHIP. If they have a serious illness that prevents them from working, they can transition to disability, remaining medicaid-eligible, or go back on welfare with a health exemption.

The idea that cheap consumer gadgets don’t matter that much to a person’s quality of life seems, on the face of it, absurd when you consider that even people with very little money spend quite a bit of it on cheap consumer gadgets. I know all the problems with revealed-preference, but I hardly think it’s Catfish’s place to tell people what does and doesn’t make them happy. There’s also no question that both the quality and choice of food and clothing have improved dramatically since the late 1970s, regardless of what class you’re in. And as for health care, as more than a few people have pointed out, health-care benefits are not included in the numbers Daniel uses. And a significant percentage of that bottom “quintile” gets full health-insurance coverage, while a significant percentage of the people in the next two quintiles don’t. Given the remarkable improvements in health-care technology over the past twenty-five years, that certainly makes a material difference to people’s quality of life.

Thanks Jane! Now we know only 2/3 are completely thrown on their butt while some other get a bit of benefits!

I suspect that some of the people – myself included – who react negatively to purchasing power parity calculations really want the measurements to be done against an adjusted culture-neutral Maslovian Hierarchy of Needs. This is unfortunately impossible, so it’s not fair to try to use it as a basis for dispute.

However in response to Sebastian’s last remark, I strongly suspect that (say) in 1980 the lowest quintile of wage earners had a variety of intangible social assets within their communities that helped them raise their children and somewhat enjoy their nasty, brutish and short lives in ways that are now not possible. The disappearance of these assets is not being properly appreciated.

What academic work has been done that tries to address this sort of thing? I haven’t found any, but maybe I’m not looking in the right places.

The recognized international unit of comparison for poor people’s consumption possibilities should be scratch-off lottery tickets paying off in sum at $.60 on the dollar (or -$.40 on the dollar if you want to be picky). A luxury the poor can afford.

I thought that DD’s latte unit of comparison was mildly funny, and the objections profoundly stupid.

Is “They don’t need cake” better or worse than “Let them eat cake”?

More pople are saying this isn’t as bad as it looks because inflation figures are too high and then picking the areas where that appears to be the case. Unfortunately either inflation figures are completely wrong or there are other things which are more expensive. That is to say they can afford a CD player but college, medicine and coffee are now out of the question.

It might be worth considering how much they can afford only because it is imported from China and what that means.

Nobody has stepped up to the plate to answer my question about what is happening in hte US.

I claim that:

the poorest quintile have grown richer far more slowly than the richest quintile

The effect is far more marked in wealth terms as opposed to income.

Social mobility in the US is falling

Does anyone disagree or are the best points of disagreement with Daniel that it isn’t quite as bad as he makes out and that poor people don’t need Latte anyway?

That the poor are better off now because they can buy better manufactured goods is a very shallow look at the economy and at some of the decisions that economic and political leaders have made that bring us where we are today.

Most economists will say that mild inflation is good and deflation is bad, except in the case of manufactured goods they say that deflation is good, and have strongly promoted world trade and cheap foreign labor to achieve that.

Also, in the case of an inflationary environment where people do not save the money from buying cheaper goods, the deflationary savings from the manufactured sector will be sucked up by the other sectors, mainly service. In our case it is housing, insurance, education. So they will rise at the rate of inflation plus manufactured goods savings.

Also the idea of promoting an inflationary economy seems like it would naturally lead to income inequality, given that most people when they negotiate a raise want to get at least a cost of living, so that compounding over time the differences in income will become greater. Plus, the workers at the lower end are more likely to be competing at a world level and not as likely to get raises.

At that income level most money will be going for food and rent, and usually bus transportation. Rent is $500-$1000/ month here. A lot of people at this level do not even buy much manufactured goods they just get them at rummage sales or other charity organizations. The waste of the upper and upper middle classes is incredible.

I’ve spent a fair amount of time in poor communities in the US, both urban and rural, as a volunteer and working for a social service organisation that provided Tier II housing to intermittently homeless families.

Jack, college and medicine have always been beyond the means of the poorest quintile — they’re certainly more easily in reach than they ever have been before, with more generous cutoffs for medicaid, and aggressive federal education programmes. And whatever you may have heard, all the poor people I worked with drank just as much coffee as the middle class workers who helped them.

Actually, D, I believe that there are “bookends” — big improvement from 1967 to 1975 in material progress, and big improvements again from 1993 to 2000, with nothing much happening in between. But that does nothing to address the larger point that the measure you’re using is flawed in important respects. For example, the progressive economists want to include rent, and yet between the elderly poor who generally own their homes, and the urban poor on housing assistance capping rent at 1/3 of their income, that wouldn’t be a very accurate measure of the actual cost structure facing poor families, would it?

As for the idea that the mistakes the poor made consist of acts of God, that’s arrant nonsense. Any poverty expert I’ve ever spoken too, left or right, has acknowleged that the three largest factors explaining poverty are failure to marry, failure to complete high school, and failure to work full time. While the third category does include those with mental or physical illness, those people qualify for disability and medicaid. It includes more drug and alchohol addictions, poor planners, and violent boyfriends than either sort of illness, from what I understand. Moreover, it explains much less of the variation in poverty than the first two, which take a pretty deterministic frame of mind to attribute to someone other than the person who decided to drop out of high school and/or have a baby out of wedlock.

Not that I’m wanting to divert the thread or anything, but apropos Jane’s last comment, does anyone ever use the phrase “out of wedlock” except when preaching about those of whom they disapprove?

Come on guys, do you mean you think the way things have turned out is fair? Impressive? You seem to be saying “its not black its charcoal”.

The young of the bottom quintile are indeed not doomed to remain there and probably should get off their butts but they will have to work harder than everybody else to reach the middle quintile say and the middle quintile, let alone the top one, is further away than it used to be.

Also think of the effect on living conditions of the rent cap.

A look at the third and fourth quintiles would also be interesting and will become more so as tax burdens get shifted from efficient wealth taxes to ineficient income taxes.

Chris, you malign me. I don’t give a toss whether people are married when they have kids or not, except insofar as it degrades their prospects, and those of the children–and only then in a sympathetic, rather than moralistic, fashion. Having kids without being married (or something very like marriage, such as the permanent cohabitation now common in Sweden), is the best predictor we have of poverty, especially child poverty. “Out of wedlock” is a succinct, if old fashioned, term for reproducing without society’s Good Housekeeping Seal of Approval. Is there a technical term that would make you more comfortable, and doesn’t require that I give myself carpal tunnel typing nine words where three would do?

Not to mention the phrase “failure to marry” – as if there were no such thing as simply not choosing to, not wanting to.

Funny how slyly coercive libertarians can be just via their choice of words.

the urban poor on housing assistance capping rent at 1/3 of their income

Jane, can you provide a link giving statistics on how many urban poor are actually receiving such assistance? The last time we were in a discussion about this, I later did some Googling that seemed to indicate that Section 8 isn’t the magic bullet it might seem, because there isn’t enough housing for those who need it.

Just ran across this link, which claims that:

The limited level of housing assistance means that most poor families and individuals seeking housing assistance are placed on long waiting lists. For the largest public housing authorities, a family’s average time on a waiting list rose from 22 to 33 months from 1996 to 1998 – a 50% increase. The average waiting period for a Section 8 rental assistance voucher rose from 26 to 28 months between 1996 and 1998.

and

A recent HUD study found that 5.4 million unassisted, very low-income households had “worst case housing needs” — paying over half their incomes for rent, living in severely substandard housing, or both. This figure is at an all-time high, and is even more startling considering that 40% of such households have at least one working person

though the latter study doesn’t mention whether the households are urban or rural.

Nothing is a magic bullet, Matthew. Like most Americans, I favour support to the working poor, although being libertarian-ish, I’d much rather see an expansion of the EITC than, say, an expansion of Section-8 vouchers — I’m an advocate of Milton Friedman’s negative income tax. Certainly, I’m not claiming that everyone who is poor has access to supportive housing — only that adding average rents to a metric, without discounting for those who own their homes (40% of those below the poverty line) and those who are in supportive housing. I’d also like to see more rigorous checks on those who are in section 8, in order to free up the vouchers of those who no longer need them for those who do. (Section 8 recipients are required to re-certify their status every year, but according to –sigh–a colleague who wrote our lead note on homelessness in America a while back, little to no auditing is done, leaving those in serious need out in the cold while wealthier residents continue on in subsisdised apartments.)

I’m not claiming that the state of the poor is peachy-keen; I certainly wouldn’t want to live on $9 an hour. I’ve been uninsured, and don’t think it’s much fun–although I also knew that what I was facing, if I got sick, was personal bankruptcy, not lack of medical treatment. I’m merely challenging the specific assertion that Daniel and various others are making, which is that the lot of the poor is unimproved, or even worse, since 1975.

Ophelia, this is trivial. I’m not a social conservative, and I have already said that I have no moral objection to not marrying — indeed, I myself have failed to marry thus far, and don’t think that it makes me a worse person for it. Is it worse to use moralistic language, or to waste time bickering about terminology rather than addressing the matter at hand? I believe it was Milton Friedman who said that when your opponent starts quibbling about word choice, it’s a pretty good sign that he knows he’s lost the argument.

David, I’m a journalist. I’m afraid that calling up experts and asking them to tell me about issues is what I do for a living. If it bothers you, I suggest you stop reading newspapers and magazines, as their methodology is exactly the same as mine. In fact, the reason I’ve been talking to all these experts is that I’m working on a story about poverty and inequality in the US. You can replicate pretty much everything I’ve said by going to the websites of Heritage, Cato, Brookings, RAND, the Economic Policy Institute, the Census Bureau, the Department of Labour, the Department of Health and Human Services, and the National Institute of Health, and looking for their sections on poverty/inequality — or you can wait until my article comes out. If you’ll email me, I’ll be happy to send you a copy. As for working with the poor, I have worked with the poor. A poster asked, I answered. It gave me rather limited insights into cures for poverty, but it did at least make me familiar enough with the problem to know that the main issue poor people face today is not lack of access to adequate coffee.

Daniel: There was a serious point which prompted my postings: Take a household whose income is sufficiently low that they haven’t got enough for everyone to be properly nourished. If their income increases by $726, that might make a huge difference to their lives in terms of the quality of the food they’re able to buy — a lot more of a difference than one cup of Starbucks latte or one sip of fine wine a day. But an extra $726 would make such a difference only for people in a pretty bad way measured in terms of the things they can’t afford to buy which many take for granted — homes in relatively safe surroundings which are properly heated and not falling apart, a car that works, etc. So we should acknowledge that for people on the lowest quintile an extra $726 is a lot less trivial than a cup of latte a day. But, more importantly, you wouldn’t ever want to be in circumstances where it would be so much less trivial. You wouldn’t want to be in such circumstances either before or after the extra $726. I think that last point is a good deal more relevant to how little the poor have benefitted from 25 years of economic growth than a translation of $726 into daily cups of Starbucks latte which only someone on a significantly higher income would be likely to purchase.

Even more importantly though, I feel that the comparative differences in wealth are extremely important. In our society, wealth gives people a greater voice and access to important information and services that the poor have no access to. I would in fact argue that the one dollar that the CEO of Halliburton has is qualitatively different than the one dollar of the panhandler in terms of what it can do. As the numbers in the account book rise, the quality of the sums change (This fact makes the Libertarian view especially problematic.)

Jane Galt writes: _There seems to be two classes of poor people now — the truly immiserated poor, who tend to have two or more of a cluster of problems including … poor impulse control, and so forth, and the working poor, who are indisputably doing much better than they ever have before. … The latter group is not as mobile as we want, but we’re still groping for programmes that work: so far our drug treatment … and so forth programmes are a bust._

I had assumed from the pseudonym this was all coming from the Ayn Rand gestalt, but instead it’s the “Clockwork Orange” gestalt.

Sebastian: “You work from the rhetorical position that households spend 30 years in the bottom quintile, when quite clearly they do not normally do that.”

The great Myles Burnyeat, in marking papers, is wont to underline such uses of clearly and note in the margin, “Meaning, you’re not in a position to back up the assertion.”

Regarding the poor having lots more stuff than they used to (or, in fact the middle class), I would also suggest a couple of things y’all haven’t mentioned.

One is something that Terry Pratchett explains very well in, IIRC, Night Watch (although it might be Guards! Guards! or another of the earlier Vimes-ish books). Captain Vimes, having married well, reflects on why the rich manage to stay rich, while the poor, in his case, working poor, can’t get ahead. The boots sum it up — the rich can afford to buy AM$50 boots, which are well-made and last for years and years, while the poor, who can’t afford the initial investment, have to make do with buying AM$5 boots, which are shoddily made and last only months, so that, in the same period, the poor have actually spent more money. (apologies for any inaccuracies to TP fans)

So think about cell phones. I’ve got a good credit rating, so I needed no deposit to get on a reasonably priced cell-phone plan. I don’t need a lot of minutes, because I have a job with an office and voice-mail and a land-line with voice-mail. The Step-child, who has no credit to speak of and works for about $7.50 an hour plus tips, or about $400 a week before taxes, needs to put down an average of $250 as a deposit, depending on the cellular company. TO have a landline, she’d need another $150 deposit. SO she does what her cash flow allows, and has a pre-paid cell phone that ends up costing her far more than mine does per month. The same is true for transportation — she takes a bus, but it’s easier to come up with $5 a day than it is for the $95 in a chunk bus pass.

To be fair, she isn’t the best example, because she only has to support herself and she might be able to budget better. However, the short-run long-run argument is pretty true, from what I remember.

Also, nobody has mentioned the credit thing. It’s a lot easier to buy (or rent) on credit than it used to be, and there’s a lot less social stigma to being in debt. This is equally true for a lot of people who aren’t poor. In terms of being better or worse off, I’d argue that the fact that both the poor and the middle class are much worse off in the long run, because, despite the apparent increase in material possessions, the increase is 1) not always true, ’cause the stuff isn’t paid for and; 2) savings and retirement accounts and access to medical care have gone way down. Again, short-run, long-run.
Finally, and this is smoething I remember from being poor and on welfare as a kid — assistance has changed a lot. We got food stamps and actual surplus food. Food stamps only paid for staples, so we got junk food only as a treat. But that was ok, because between the minimal amount of alimony my mom got and AFDC, (not to mention school breakfast and lunch programs) plus the fact that she was allowed to go to college while on public assistance, my mom didn’t have to pay for day care and had the time to cook decent meals with what we we got. Most of the food stamps went for veggies and fresh meat and dairy (not milk — nasty dried stuff we got from the government).

Today, food stamps can be used for junk food and easy-prep food. Partially, this is because there was a push in the 80s to allow the poor control over their eating habits, partially, it was because many of the subsidised food programs have been cut. But the last wave of welfare reforms doesn’t help, either — if welfare recipients are expected to get off welfare by taking any job they can get, they often end up paying out more in transport and child care costs than comes in. Add to this the lack of time (and sometimes knowledge, because we’re now into the second or third generation where kids of all classes are often brought up by commuter parents who don’t cook as a regular thing, plus home-ec classes are being cut all over) and it makes sense that people on the edge would do as their economic betters and try to save time by buying what’s convenient.
I hope that made sense.

As for subsidized housing — it’s a joke. There isn’t enough, housing projects tenf to be unsafe, and a whole lot of people who might otherwise be termed middle-class get public assistance that most people don’t know about. For example, I have a relative who lives in a “low income” condo unit in a very nice town in southern-central California — nice colleges, beach, north of Los Angeles … He was able to get assistance and a “low income” price on his condo — about $200k instead of the market price of about $275k because he onle (at the time) made about $65k a year and had a kid living at home. The truly low income people don’t get those chances.

Well … this is falling into organizational chaos, isn’t it? Anyway, those are some things that popped into my little pea brain.

The following article, sent to me by a friend a few days ago (and as text, not as a URL, so I’m afraid I have to include it directly) seems relevent to this discussion, especially since it has now veered off into such issues as people “deserving” what they get.

———————

Crucial Unpaid Internships Increasingly Separate the Haves From the Have-Nots
By JENNIFER 8. LEE

ASHINGTON, Aug. 9 – Susan Lim, a 20-year-old Georgetown University student, is working 89 hours a week this summer: two part-time jobs and an unpaid internship offered through the Public Policy and International Affairs Program.

Her schedule – working for money as a clerical assistant and a summer school resident adviser and without pay as a researcher at the public policy program – is a sharp contrast to that of her Georgetown classmates. Many of them have parents who support them through unpaid summer internships, or they have qualified for paid internships because of experience as unpaid interns during high school.

“I have to do the same things they do plus more to get to the same place,” said Ms. Lim, whose mother and father each work two jobs, including running a Laundromat, to support a household of 14 people. But Ms. Lim says she has no choice on performing her summer juggling act, which includes taking a class at Georgetown, where she is studying at the School of Foreign Service. She believes she needs an internship to be competitive with her peers. “If you go and apply for a job and/or apply for graduate school and all you have are grades, the next person has the same grades or better and has done other things,” she said.

The focus on internships as a tool for professional success has never been greater, according to Mark Oldman, co-author of “The Internship Bible” and co-founder of Vault Inc., a career counseling company. About 80 percent of graduating college seniors now have done a paid or unpaid internship, according to surveys by Vault, compared with about 60 percent a decade ago.

“The interest in internships is at a fever pitch,” Mr. Oldman said. “It used to be that internships used to be a useful enhancement to one’s résumé. Now it’s universally perceived as an essential stepping stone to career success.”

But as internships rise in importance as critical milestones along the path to success, questions are emerging about whether they are creating a class system that discriminates against students from less affluent families who have to turn down unpaid internships to earn money for college expenses.

“It’s something that really makes me nuts,” said Cokie Roberts, an ABC News correspondent who spoke out about the problem on Capitol Hill several weeks ago at a gathering of Congressional interns. “By setting up unpaid internship programs, it seems to me that without completely recognizing it, it sets up a system where you are making it ever more difficult for people who don’t have economic advantages to catch up.”

Dalton Conley, a sociology professor at New York University who has studied how people get ahead, said: “It moves the clock back when you need connections. It makes it doubly hard for social mobility and equal opportunity, because of the connections that it requires at an earlier age, the financial sacrifices and also the culture savoir-faire.”

While half of internships nationwide are paid or have at least a small stipend, according to national surveys conducted by Vault, unpaid internships are concentrated in the most competitive fields, like politics, television and film.

“The more glamorous an internship, the less likely it is paid,” Mr. Oldman said. “Washington in general has high-demand internships. In most cases they don’t have to pay or they don’t have to pay much.”

The White House does not pay the hundred-plus interns who work there during the summer. The Supreme Court does not pay its undergraduate interns, who work 12 to 16 weeks, although in some cases it will give a $1,000 scholarship. And a vast majority of Congressional offices do not pay the 4,000 summer interns who pass through Capitol Hill, though a few, mostly on the Senate side, provide a limited stipend. Congressional offices once each received $3,000 to pay summer interns, but the money was eliminated by budget cuts in the 1990’s.

And since Washington internships serve as a pipeline that brings policy makers into the nation’s capital, some people fear that over the long term, internships will be another means, like the rising costs of college tuition, of squeezing voices from the working class and even the middle class out of high-level policy debates.

Adam King, 19, a student at Brown University who is an intern in a Senate office, said, “Dealing with the interns of our office, they were of a class that was extremely privileged.” Mr. King got into a heated debate with fellow interns who disputed Michael Moore’s portrayal of military recruitment in disadvantaged neighborhoods in the film “Fahrenheit 9/11.”

“They don’t understand the issues, that the Army recruits poor people; there are Army recruiting people who say, ‘Don’t go to college, travel around the world,’ ” said Mr. King, who is working on Capitol Hill through a program that provides a stipend and housing. “That combined with the fact that so many interns wind up back on the Hill makes me scared that these people could possibly be making policy without understanding where so many of their constituents are coming from.”

In some cases, students who take the unpaid internships get financial help from their universities or other programs, like the Washington Center, a nonprofit organization that prepares college students for civic leadership.

But such programs always receive many more applications than they have available money. The University of Virginia student services center received 10 times as many applicants as it could give summer stipends to this year. “It was heartbreaking because I couldn’t give one to every student who applied,” said Carrie Rudder, the university’s senior assistant director for student services. The stipends are modest at best, often at most $2,000 or $3,000, which is less than students can earn in basic summer jobs.

“This program, it’s a pay cut,” Mr. King said. He is receiving $2,000, or $250 a week, for his internship, part of which he sends home to support his mother. “I could make a lot more bartending or waiting tables or even in a supermarket,” he said.

The high cost of housing in Washington helps widen the gap between the haves and have-nots in the internship world here.

Some interns are able to live at home and commute.

Others find creative solutions. Wes McKain, a 19-year-old intern on Capitol Hill, lived free in housing belonging to the Church of the Nazarene in Washington in exchange for helping with chores.

Mr. McKain, who is from Kansas City, was surprised by how expensive food is in Washington. He takes a one-hour bus ride to shop in Langley Park, Md., where he can buy a loaf of bread for 70 cents and a gallon of milk for $2.95. “It’s hard-core cheap,” said Mr. McKain, whose father is a minister.

Spelling: Ehrenreich.

For some reason (I’m not saying it proves anything) some of this discussion is reminding me of a great passage from Deborah Eisenberg’s “Under the 82nd Airborne”:
“Still–I mean, look: Two batteries for my radio cost me thirteen lempiras. Now, that simply has to affect the people in–what did you say? Choluteca.
“Well, no. Because my point is, the people in Choluteca don’t have radios.”

dsquared – regarding the “big freaking building”:

1. The whole freaking building has been wringing its hands for years over the issue of how to quantify quality improvements in inflation data.

2. Your freaking post has a whiff of “the government is always right” about it that is, uh, surprising coming from you.

The dawning of honesty in an economist: bite some of the others.

Whatever happened may be contagious.

“….and yet between the elderly poor who generally own their homes”

Whoa, wait a minute. Got a citation for this, Jane?

“You work from the rhetorical position that households spend 30 years in the bottom quintile, when quite clearly they do not normally do that.”

I dunno, Sebastian, I’ve known a few. What’s your evidence for this? And don’t give me those college-student including numbers.

The University of Michigan Panel Survey on Income Dynamics study, which controlled for age, found that 47% of the individuals (not households) in the bottom quintile in 1975 were still there in 1991. Other studies have found that, over the course of a decade, around 45% of the people in the bottom quintile make it out (60% of people on average move from one quintile to another in a decade), so a guess that around 55% of people make it out of the bottom quintile in 15 years seems reasonable. (These are all survey studies, so they have statistical flaws, but the results are pretty consistent.)

What we don’t know is what happens over 30 years. I think intuitively most of us would think that if you hadn’t made it out in 15 years, another 15 years wouldn’t help, but I’m not sure whether this is true.

One other thing to note about these studies: there’s little or no evidence that mobility has decreased meaningfully over the past three decades, and no evidence that it’s increased, either.

Isn’t it rather dishonest that the year 1978 is specifically chosen, when the income figure declined for four consecutive years after that, and in fact does not reach 9,400 again until 1989?

Datsun and Toyota were both making durable vehicles in 1970, inexpensive, relatively thrifty to run, built to last. Like mid-century American trucks.
That the poor today have more and better home entertainment systems than “they” did 30 years ago is sardonically amusing. The cocaine available in urban ghettos has risen in quality and gone down in price as well. Hurray for that, eh?
Again there’s a reduction-to-integer process, like with the “blacks-in-prison” issue, where all the individuals with their individual lives are seen as replaceable parts of some mysterious whole. One “poor” integer exchanged for another. But there’s a broader tendency – scarier and way more murky – toward rebellion, despair, subservience, dull-minded obedience, etc.
Those have an effect even more pronounced than deprivation, on the young.
A culture of hopelessness isn’t static, it weeds out the rebels then becomes a culture of apathy; and then a caste.
30 years isn’t long enough to see that shift complete, and there’s lots of other threads running through it, but it needs saying – people are only units to the Insect Lords and their minions. The distinction, between the attitudes of high-function autism and pragmatic social theory, seems to blur now and again.

I don’t understand how the conclusion isn’t sensitive to the start date. If your start date is 1993, then the mean real income of the bottom quintile rose around $1200 — from a starting place of less than $9000 — in eight years. That’s not dazzling, but it’s hardly “fucking latte” territory.

The reason this matters is that it’s hardly news — and hardly worth a post — that poor people in America make little money. Your substantive point, given your references to the Internet, peace dividend, etc., was that given all the economic growth over that twenty-three-year period, the poor should have done better. True enough, and the comment about trickle-down economics stands (the eighties were terrible for the poor). But again, it won’t do to say that the poor have been shut out of the benefits of economic growth for this entire period. In fact, between 1993 and 2001 their real incomes grew steadily — not as fast as the very rich, but not much slower than the rest of the country, either. Which seems decidedly contrary to the general impression your post meant to convey.

I apologize in advance for spouting without data to support my opinions, but the data haven’t carried us too far yet, so…

It seems to me that the larger question here is inherently overwhelmed by the use of household income data from 1978 to 2001 – a period during which the makeup uf the ‘household’ has changed dramatically.

Am I wrong in thinking that the number of two-earner households has risen over that period? Am I wrong in thinking that the single-earner household in 1978 was more likely to have a parent at home? If I’m not, these factors far outweigh the value of a latte a day.

During my stint in the bottom quartile, I was lucky enough to have a safe, nurturing, FREE place to stow my little kids during the day. Right now, our school district charges $55 per week for “after the bell” afternoon daycare for one kid in school. Just about any kind of fulltime daycare for two preschoolers would run about $10,000 per year. I don’t know how people survive.

Another factor that probably makes 1978/2001 comparisons difficult is the rise in ‘predatory lending’ during that period. In the late nineties, it was absurdly easy to obtain unsecured credit at high rates of interest, and I assure you that people who were in real need of immediate cash were prime marketing targets for this. Take out a loan of $7500 at 19.5% annual interest against a household income of $12,000 a year if you want an inducement to learn some math. Then break an arm, drop a transmission and get pregnant. Oh, it will be okay, because you can get another loan.

I’m trying to hold my temper in this post, but please don’t talk to me about what a nice freekin’ DVD player people can buy now on their $10,136 per year.

Here is a link to an Arnold Kling article demonstrating what many on this thread have mentioned: that if you look at how much the poor consume in America, they are far, far better off now than 30 years ago.

Strangely, most people here suggest that either the numbers are (interpreted) wrong or that it doesn’t matter because people will move out of the lower income group.

My subjective impression is that many people here don’t like the (simple) solutions to make the lower income group grow along with general GDP growth. Like raising minimum wages, affordable health care, more generous unemployment benefits etc.

Even more subjectively, I would suppose that it is because some here are “libertarian”, or otherwise opposed to government action to change this situation.

Huh? A philosopher attacks an economist for not providing data, and then doesn’t provide any data, presumably because offhand, I’m pretty sure that at least two of his metrics would in fact favour Kling’s argument if the data were provided — individual working hours have decreased since the 1970’s, and though household numbers have increased, the increase is much larger at the higher income levels. Not exactly a devastating rebuttal.

Frank wrote:

_My subjective impression is that many people here don’t like the (simple) solutions to make the lower income group grow along with general GDP growth. Like raising minimum wages, affordable health care, more generous unemployment benefits etc._

… or making taxation somewhat more progressive and improving social security. That’s what Blair did. Mean income has grown by the same amount per year on average (2.9%) under Blair as under Thatcher. But the growth has been shared relatively equally under Blair, whereas the poor received a minute trickle under Thatcher. (See my post above from earlier this morning for the figures.)

And what Blair did wasn’t terribly radical. It wasn’t even enough to make society more equal in 2002/03 than it was when he took office in 1997. It was just minimal decency rather than anything approaching socialism.

I stand corrected, but note that on a population basis, all of the increase seems to come from women working, which progressives should think is a good thing.

I stand corrected, but note that on a population basis, all of the increase seems to come from women working, which progressives should think is a good thing.

We think it’s a good thing that women be able to work as much as men can–but that has no bearing on how well the poor are doing. Other things being equal, you’re economically worse off if your household is doing more work for the same amount of money, even if you’re a two-earner household. I don’t think we’re talking about Feminine Mystique victims here.

I said “on a population basis”, which adjusts for the fact that fewer men are working; on a population basis, only female hours have increased. Whether that represents a net increase in welfare (earlier retirement) or a net decrease (incarceration or other involuntary unemployment) is not mentioned. I do know that the top quintile works dramatically more hours than the bottom (I believe the figure is more than twice the number of hours annually, but I don’t have a cite for it.) I believe the gap has widened since 1975, but I could be wrong, with welfare reform.

Matt, I think that that depends on a given definition of economically well off. Poor women were able to consume very little in the way of attractive leisure opportunities in 1975. All of the experts I’ve talked to so far, and all of the studies I’ve read, indicate that women who were long-term welfare recipients (a very good proxy for long-term poverty, as opposed to, say, a family that had a serious illness wiping out their bread earner for a year or a college-educated woman recently abandonned by a jerk husband), have dramatically increased both their work and their income. There is another subset of women and families whose welfare has dramatically dropped since welfare reform, those with the cluster of problems I was excoriated for describing above. They’re about 20% of the former long-term welfare population, and they’re not working. That second group is indisputably worse off since 1975; the former group is probably better off even under your definition, given that decreased leisure has brought net economic gains. Their children also appear to be staying in school better and so forth, though such findings are early yet.

It should always have been clear that working women’s families were not going to be able to consume twice as much with twice the reported income, simply because women were already doing a great deal of work (particularly those with small children), and the work they were doing was not easily amenable to productivity increases. (Although the restaurant and food-processing industries have certainly done their part, child care and house-cleaning have been very resistant, and few new labour-saving appliances have been invented since 1970). Their presence in the labour force also depresses the wages of men, to the extent that they are working in jobs of similar productivity; to the extent that they have colonised lower-productivity, lower-skilled areas, it may act as a drag on net productivity. So the effect is likely to be very complicated. But most women I know with children under school age report that, on net, their working results in either a net loss, or a very small gain, for the family, because of the increased expenses of clothes, transportation, food, and child care — plus, of course, decreased leisure time for both parents, which doesn’t show up in the statistics, but is a real economic loss. That’s not someone’s fault; it’s simply the result of the fact that women were already doing work that wasn’t showing up in the statistics, so much of the GDP increase is likely to be a statistical artifact rather than representing real income increase.

Chris,

Frankly, I think the Leiter article you link to is “pathetic ideologically-driven tripe” rather then Kling’s article!

Kling shows that the percentage of households owning most domestic products (telephone, tv, vehicle, refrigerator, stove, plumbing, washer, dryer) in the 1970s is roughly the same or less than the percentage of poor households owning those items today. Leiter has two arguments in response:

It might have occurred to the author, but apparently did not, that one explanation for these changes might be that (1) prices of many of these items went down, and (2) individuals and households now work more.

The second of these arguments is rebutted in a Federal Reserve study here – a link one of the early commenters on this thread posted. Basically, measured in worker-hours the price of the goods Kling cites has decreased much as well.

The first isnt even an argument, in that it in no way counters Kling’s poins. Leiter discovers this point belatedly in an update:

A law colleague elsewhere writes: “If desired consumer goods are indeed getting cheaper, that is in fact a rise in the standard of living for both rich and poor.” To which I replied, in part: “There is more to the standard of living than color TVs.”

Weak, cheap answer – Kling cited lots of different households goods, not just tvs. Kling’s point stands: the affordability of many different household goods crucial to living has increased dramatically for the poor over the past 3 decades.

And I’ll remind you that the trend is non-negative and non-zero which proves that things are better than in the 1940-75 era.

Dsquared wrote “Every twenty posts or so, I’m going to remind readers that the majority of the improvement “over the last three decades” took place either in the first half of the seventies or the last five years and the actual period of twenty years during which “trickle down” economics was in vogue was quite astonishingly dead for the poor.”

So?

The relevant claim here is, economic growth has been good for the poor, not reaganomics has been good for the poor.

My sister went on disability in 1995. At that time, she got $640-some per month for disability, which was her only benefit. In Minnesota, which is a relatively generous state, that was too much for her to qualify for Medicaid.

They adjusted that figure in the late 90s. Now her $700 per month (rise due to COLAs) does qualify (though of course there are still co-pays). But getting seen as a Medicaid patient is very difficult because reimbursement is so low.

As for housing, the market here for subsidized housing is extremely competitive and rent in general is high (though not as high as it is on the coasts). The housing that she did get into cost $450/month, was in a high-crime area, and she was robbed several times. I am finally in a position to intervene, but that’s due to sheer luck.

There is no doubt that this is still a better situation than people in more-desperate countries face, but isn’t the point that the US is not one of those desperate countries? Isn’t the point that the US is quite the opposite?

Until she fell ill, my sister put herself through a good college working 40 hours per week, graduated with a double degree, and then got a decent job in the computer field. I hope that qualifies as decent enough to earn some consideration in this crowd.

I casually invite Jane Galt or any of the other libertarian posters on this board to try the kind of life that a mentally-disabled person in the US gets.

To make that clearer, I can think of two reasons why the improvement, if any, will always be small. 1. Limited acceptance of redistribution. 2. Increasing real incomes may require too much personal effort and may counterproductive as it increases unhappiness.

brian –

Okay, let’s look at this in terms of redistribution. Here is a table from the US census that shows the share of aggregate income for each quintile from 1980 to 2000.

It shows that for four quintiles, their share of the pie has shrunk, both before and after taxes. Does this mean that the relative “personal effort” of 80% of the country has dropped? I don’t think so. I think it means that we’ve been steadily reallocating the benefits of our economy toward the very top, and I think that’s what lies at the core of Daniel’s complaint.

brian –

“Rising inequality” is just another way of looking at what Daniel’s original post discussed – that is, an extended period during which the “rising tide” was quite dramatic overall, but the little scows in the bottom quintile barely lifted at all (which reverses the trend seen from the end of WWII to the early seventies). I merely extended the point to include the 2nd, 3rd, and 4th quintiles (to varying degrees).

It’s true that I have not specifically addressed most of what you wrote, but things like “If you have no children, having more income than is necessary to subsist doesn’t buy happiness” and “If lottery tickets and cab rides to the liquor store make people happy then let’s leave it at that” didn’t seem to call for a response.

I just don’t accept the moral implications of a tight focus on the wealthy countries. Besides, it’s not like the lowest quintile in the US is much worse off than the same in Sweden.

Sebastian: I wasn’t claiming, and don’t need to claim, that the American poor are worse off than the poor in the other 16 countries even if you ignore inequality. This revisits the exchanges you had with Harry “here”:https://www.crookedtimber.org/archives/002218.html , and I take Harry’s side in that debate.