A year ago today, of course, Hurricane Katrina hit New Orleans. I don't have much to add to all that's been said so far, except for that we don't really know how the federal government has been spending the money it allocated for the relief and recovery effort.

Amy Liu, a researcher for the Brookings Institute who's been tracking the recovery for the last year, should know what the federal government has been spending the money on. But as she said on the Tavis Smiley show in July, nobody really does.

Tavis Smiley: So, let me ask whether or not Brookings or anybody else, to your knowledge, has any idea of how much of that 100 billion the government did not allocate back to itself, but really does have a chance of landing and being used on the ground in the rebuilding effort in New Orleans.

Liu: Tavis, I wish I could answer that question, but it’s so hard to track that money. But I will have to say that I think we’re only now beginning to see money being spent on the actual rebuilding effort. A lot of that money, I have to say, has gone to the emergency response right after the storm. And only now are we seeing money go into infrastructure building, into housing, and into job creation. And again, I hope that that money can be seen hitting the ground very soon. But I agree with you. The recovery and the evidence on the ground is still very thin.

By almost all accounts, the recovery has not been going well. More transparency on how the money's been spent would help the public hold public officials accountable for what they've done wrong. And maybe more pressure on the administration would speed the recovery, once the anniversary is over and the media spotlight shifts back other matters of national importance.

This morning, the Census Bureau released its report, Income, Poverty, and Health Insurance Coverage in the United States: 2005.

Nationally, 2005’s 1.1 percent increase marked the first time that real median household income showed an improvement since 1999. The poverty rate remained statistically unchanged from 2004, which marked the end of four consecutive years of increases. That’s one tale of the economy.

But, as OMB Watch noted yesterday, the raw numbers are misleading unless historical benchmarks are taken into account. The economic tale that does so is not as sanguine.

For average workers, incomes are still below the 2001 pre-recovery level. In fact, 2005 marked the first time in at least 40 years that medium income fell in the fourth year of a recovery:

Change in Median Income During First Four Years of Economic Recoveries: Dollar Change by Fourth Year of Recovery (In 2005 Dollars) and Percentage Change

(Source: Center on Budget and Policy Priorities)

And you’d think the poverty rate would have to decrease four years after the economy had bottomed out and begun to recover. Again, for the first time in at least 40 years, not so today:

Change in Poverty Rate During First Four Years of Economic Recoveries' Four Year Period: Poverty Rate At End of Recession -- Poverty Rate Four Years Later/Percentage Point Change

(Source: Center on Budget and Policy Priorities)

The famous jobless recovery is becoming an increasingly unequal one.

Coming soon...

On Labor Day 2006, the Economic Policy Institute releases its advance edition of The State of Working America 2006/2007.

Prepared biennially since 1988, EPI's flagship publication sums up the problems and challenges facing American working families, presenting a wide variety of data on family incomes, taxes, wages, unemployment, wealth, and poverty — data that enables the book's authors to closely examine the impact of the economy on the living standards of the American people. The State of Working America 2006/2007 is an exhaustive reference work that will be welcomed by anyone eager for a comprehensive portrait of the economic well-being of the nation.

In his speech (text; video) to the NAACP last month, President Bush implied that the estate tax discriminates against black entrepreneurs.

Darius Ross, himself a black entrepreneur, shredded that absurd, if not vaguely racist, hypothesis in an incisive TomPaine.com commentary last week.

Ross cites a stat suggesting that the estate tax may actually be roughly ten times more burdensome on whites: “The median net worth of African American households was $19,024, compared to $120,989 for whites in 2001,” he writes.

Tomorrow morning at 10 a.m., the Census Bureau will release its annual report card on the nation's economic well-being, with a consolidated report on personal income, poverty health insurance coverage and other data for 2005.

Last year, the New York Times reported, was the first time on record that household incomes failed to increase for five straight years. Median pretax income, $44,389, was at its lowest point since 1997, after inflation. And OMB Watch noted that poverty rose for the fourth straight year. Will these sad trends continue?

Excellent materials that provide a context and benchmarks for the figures to be released are available from the Center on Budget Policy and Priorities (CBPP) and an article by EPI’s Jared Bernstein in TomPaine.com

CPBB focuses us on the appropriate historical point of comparison — other years when the economy was in its fourth year of recovery:

2005 marked the fourth year of an economic recovery. History shows that by the fourth year of a recovery, median household income always is well above — and poverty always is below — the levels attained when the economy was in recession and the recession hit bottom.

How will 2005 measure up? It is distinctly possible that the new Census data will show that poverty declined and median income rose in 2005, but that poverty still was higher — and median income lower — than in 2001, when the last recession hit bottom. If so, this ... will mark the worst performance in recent decades for poverty and median income during an economic recovery.

Bernstein uses the same benchmark and remarks on how unlikely we are to see a return to the low poverty rate and high median income levels of the pre-Bush days:

2005 is the fourth full year of an economic recovery that began in late 2001.... Poverty rose and household income fell in that recessionary year. But the negative trend has persisted in each recovery year since, and that has taken us by surprise.

The poverty rate, for example, rose each year from 2002 through 2004, a historically unprecedented trend. Since 2000, when poverty bottomed out at 11.3 percent, it has climbed to 12.7 percent in 2004, adding 5.4 million persons, including 1.4 million children to the ranks of the poor.

But there is almost no way the 2005 results will repair the damage done thus far. The income of the median household is down $1,700 (in 2005 dollars) since 2000, and it would take an unusually large gain to make that up in one year. Poverty is likely to decline by only a few tenths of a point, and will remain well above its 2001 level of 11.7 percent.

The Grey Lady leads today with a great story on how wages are not keeping up with inflation or productivity growth. The whole thing is worth a read, but I thought this section drew an important distinction between average and median income:

Average family income, adjusted for inflation, has continued to advance at a good clip, a fact Mr. Bush has cited when speaking about the economy. But these gains are a result mainly of increases at the top of the income spectrum that pull up the overall numbers. Even for workers at the 90th percentile of earners — making about $80,000 a year — inflation has outpaced their pay increases over the last three years, according to the Labor Department.

“There are two economies out there,” Mr. Cook, the political analyst, said. “One has been just white hot, going great guns. Those are the people who have benefited from globalization, technology, greater productivity and higher corporate earnings.

“And then there’s the working stiffs,’’ he added, “who just don’t feel like they’re getting ahead despite the fact that they’re working very hard. And there are a lot more people in that group than the other group.”

The Coalition for Human Needs just put up an excellent database of links to resources on Katrina and welfare reform issues. Take a look if you're interested in learning the latest about these milestones in the fight against poverty.

Ezra Klein, writing on Tapped, points us to this Bloomberg article about an emerging consensus among economists regarding the minimum wage:

Aug. 7 (Bloomberg) -- Prominent economists of all ideological persuasions long believed that raising the U.S. minimum wage would retard job growth, creating unintended hardship for those at the bottom of the ladder.

Today, that consensus is eroding, and a vigorous debate has developed as some argue that boosting the wage would pull millions out of poverty.

A moderate increase in the minimum wage won't raise unemployment among low-skilled workers, according to recent studies, many economists say. They are joined by some business executives who say they can live with that, especially if it's coupled with tax relief.

[...]

"My thinking on this has changed dramatically," says Alan Blinder, a former Federal Reserve vice chairman who teaches economics at Princeton University in Princeton, New Jersey. "The evidence appears to be against the simple-minded theory that a modest increase in the minimum wage causes substantial job loss."

A 1978 American Economic Review survey found that 90 percent of economists said the minimum wage boosted unemployment among low-skilled workers.

Today, that number would probably be cut in half, says Robert Solow, an economist at the Massachusetts Institute of Technology in Cambridge who won the 1987 Nobel Prize in economics.

Bloomberg: Higher Minimum Wage No Longer Seen as Sure-Fire U.S. Job Killer

Fantastic op-ed article from William Spriggs, chairman of the economics department at Howard University and former executive director at the National Urban League, on the chutzpah President Bush displayed urging help in repealing the estate tax in front of the NAACP. Spriggs finds Bush's tactics insulting, and pulls no punches in suggesting so:

There's a sense of pandering in his tactic of identifying a prominent black, Robert L. Johnson, who is wealthy and who supports repealing the estate tax, and then pretending that the group of intelligent, educated blacks in the room before him doesn't know about the budget choices repealing the estate tax would entail. It is disturbing, to say the least...

...It's too easy to mention Robert Johnson and then not have to mention the facts of wealth inequality or the budgetary impacts of estate tax repeal.

It is a disturbing disconnect that the president would talk about the difficulty his party has in reaching blacks — and then give an economic example that benefits no blacks, at the cost of great benefit to programs that serve blacks well.

The full article is worth a read

Sacramento Bee: Bush, Blacks, and the Estate Tax