McClatchy reports today on a study of 2005 census figures which found that "the number of severely poor Americans grew by 26 percent from 2000 to 2005. That's 56 percent faster than the overall poverty population grew in the same period." The McClathy article also draws on other studies to underline its point - that severe poverty, not just poverty, is growing and growing at an alarming rate.

The share of poor Americans in deep poverty has climbed slowly but steadily over the last three decades. But since 2000, the number of severely poor has grown "more than any other segment of the population," according to a recent study in the American Journal of Preventive Medicine.

At a time when corporate profits are at forty-year high and CEOs are paid over 260 times more than the average worker, it's rather startling to read that the fastest growing segment of the population is that composed of households earning less than half the federal poverty line. Also sobering are these facts:

One in three Americans will experience a full year of extreme poverty at some point in his or her adult life, according to long-term research by Mark Rank, a professor of social welfare at the University of Wisconsin, Madison.

An estimated 58 percent of Americans between the ages of 20 and 75 will spend at least a year in poverty, Rank said. Two of three will use a public assistance program between ages 20 and 65, and 40 percent will do so for five years or more.

The American Prospect's Harold Myerson has a op-ed piece in that publication today, Can Free Trade Be a Fair Deal?. In the op-ed, he links American middle class wage stagnation to globalization, specifically, to global wage convergence.

The one policy proposal he offers seems paradoxical. For what would the global minimum wage policy he advocates do but hasten global wage convergence?

At the same time, he rejects the proposals offered by former Treasury Secretary Robert Rubin and his fellow Hamiltonians at Brookings

• providing wage insurance to help workers who've been compelled to take lower-paying jobs than the ones they lost
• extending trade adjustment assistance to service as well as manufacturing workers
• adopting a universal health-care system delinking insurance from employment, so that U.S. companies can compete globally without having to be the only corporations in an advanced economy that cover their workers' medical costs.
• reforming our education system so that American workers can be more competitive

as not "remotely sufficient to the challenge of a globalized economy."

Maybe not. But they sound like promising places to start. And they would probably have an easier time getting through Congress than a global minimum wage would in the next round of GATT talks.

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OMB Watch issued a press release that describes the updates and improvments made to the site, and you can learn and see more about FedSpending v2.0 in the About This Site section, or by exploring the site yourself.

We welcome your feedback, comments, and questions about the new website, so please go to the Contact section of FedSpending.org and send us your thoughts.

A set of Wall Street Journal graphics under the heading "Minimum Wage Debate" provides the following data:

• minimum wages by state
• median income by state
• poverty rates by state
• proportion in each state directly affected by minimum wage

Among other things, the graphics make clear that a majority of states now have minimum wage rates greather than the federal standard, that the nation's wealthiest cities and states tend to have the highest minimum wage rates, and that workers in the poorest states are most affected by changes in the minimum wage rate.

Federal Reserve Chairman Ben Bernanke has spent this week on Capital Hill addressing various Congressional committees on the state of the U.S. economy (we're doing OK). The topic du jure (de la semaine?), however, has been wealth and income inequality. Senate Committee on Banking, Housing and Urban Affairs chairman Chris Dodd's (D-CT) first question to Bernanake was:

Do you share Chairman Greenspan's concern, Mr. Chairman, that continued economic growth of inequality is a significant threat to our nation's fundamental promise of economic opportunity?

Sen. Chuck Schumer (D-NY) followed suit and opened his line of questing with this:

My first question deals with the issues of income inequality and the speech you gave yesterday, where you pointed out that this is just in an ideas, almost instantaneous economy, wealth agglomerates to the top.

Wealth and income inequality is a real and growing problem (despite the carping of the Wall Street Journal's editorial board). Policy makers are now in hot pursuit of the causes and possible remedies (if any).

Bernanke believes "[t]he very important drivers of economic growth and prosperity in this country include free and open trade and technological progress," but that the gains from these changes will have deleterious effects on some workers while "those who are going to benefit the most from globalization and technology are those who have the skills." In other words, income inequality is the result of an unequal distribution of education and skills.

Certain policy goals and objectives are supported by the premise that the American middle class is broadly participating in and benefiting from the nation's steady economic growth of the last generation on an equitable basis. Another set of goals and objectives relies on the notion that persistent wage stagnation, debt burdens, and a growing sense of class inequality afflict much of today's middle class.

Even within the progressive movement, such a division exists today, and it was out in full view for all to see this week.

On Monday, the Third Way, a for-profit Washington-based "strategy center for progressives" that advises red state political candidates, released a report finding that the "middle class is far wealthier, more stable, and more optimistic than most progressives believe, [that its] median income was around $70,000 per year, not the $45,000 that most progressive economists cite. The typical household also held no credit card debt, experienced relatively little income volatility, and was satisfied with its economic circumstances."

Really, $70,000? That's far higher than the national median household income of $46,242. What's going on here?

Harvard Law Professor Elizabeth Warren steps into the breach, examines the Third Way report, and provides this explanation:

The numbers cited by "progressive economists" are plain old Census numbers, not some flukey, small-sample study. [The] Third Way ... arrived at the new $70,000 number by cutting out all young earners and all old earners. Since those age groups tend to have lower incomes, income for the remaining subset increases. This is just a third-grade math trick: cut out those who make less money, and the median rises. Third Way might have added that if you cut out those who earn more money, the "median" income is lower.

Astoningly, a fitting synthesis (and self-indictment) comes from the Third Way itself: "Each side of the economic debate gets some things right, but on the whole they mischaracterize the state of the middle class and the challenges they face. That leads to the wrong policy choices."

Maybe an analysis and debate starting with a definition of terms that includes the entire middle class, that accounts for family and family size, urban vs. rural economic conditions, and states the definition clearly will be more satisfying and fruitful.

The behind-the-scenes struggle over the shape and size of the minimum wage tax package (covered here, here, with an outside critque here) is intensifying, with the White House weighing in heavily and a group of GOP senators raising new objections.

The Admin's Feb. 13 Statement of Administration Policy on H.R. 976 endorses the $8.3 billion small business tax cut adopted by the Senate in S. 2. It is not surprising the president favors more tax cuts, but the timing of this release throws more fuel on the fire heading into a conference negotiation between the two chambers.

Making things even worse for the minimum wage, 10 conservative GOP Senators sent Senate Finance Committee chair Max Baucus (D-MT) and ranking member Charles Grassley (R-IA) a letter ($) last week opposing S. 2's retroactive shutdowns of tax shelters in the sale-in, lease-out (SILO) and corporate inversion provisions.

What does this inside-tax-baseball all mean?

If nothing else, it means more delays for the minimum wage bill and may reinforce the public's view that Congress and the President are far more pre-occupied with corporate tax policy than with updating a wage floor that has gone untouched over the last decade. Over that decade, the minimum wage has lost more than a quarter or its purchasing power as politicians have squabbled - it seems some in Congress have already forgotten the mandates from last November's elections.

POSTSCRIPT: Today's New York Times editiorial, Minimum Wage, Minimum Tax Cuts, makes a point worth noting: if the cuts in the S.2 package were not just extended but renewed for 10 years, the cost would be $47.5 billion.

Posted by Dana Chasin, 12:40:29 PM

Wednesday, February 07, 2007

Monday, February 05, 2007

Thursday, February 01, 2007