Skip to main content

View Diary: Democrats introduce bill to raise minimum wage to $9.80 (99 comments)

Comment Preferences

  •  Poverty level always goes up. (0+ / 0-)

    The War on Poverty isn't winnable because they keep moving the benchmark.

    •  We move the benchmark (0+ / 0-)

      Because the bench (aka the cost of living) keeps moving.

      There's no point in a program that's supposed to help people survive, if the program doesn't count the actual cost of survival when setting a dollar amount on what it costs to survive.

      •  The poverty line does move for cost of living. (0+ / 0-)

        However, the actual cost of living is a relatively small part of the poverty threshold.

        Noncash benefits being excluded is a major part of why the measure is significantly flawed.

        The government doesn't make any attempt to actually adjust the threshold to the cost of living in any given area.

        For the FPL, they originally based it on one-third of your income being consumed by food, and then adjusted it by the CPI.  That's the sum total of the actual thought that goes into the process.

        If they actually recalculated it so that it still represented spending 33% of your income on food, it would drop very dramatically.

        And compared to other countries, there’s no other place on the planet that has cheaper food than the U.S. (2008 data here). The 5.5% of disposable income that Americans spend on food at home is less than half the amount of income spent by Germans (11.4%), the French (13.6%), the Italians (14.4%), and less than one-third the amount of income spent by consumers in South Africa (20.1%), Mexico (24.1%), and Turkey (24.5%), which is about what Americans spent DURING THE GREAT DEPRESSION, and far below what consumers spend in Kenya (45.9%) and Pakistan (45.6%).

        •  The point here is that at the time the formula (1+ / 0-)
          Recommended by:
          radical simplicity

          was determined, groceries did in fact account for roughly 1/3 of a typical household's non-discretionary expenditures. Since then, the cost of food has dropped drastically in relative terms, while the costs of housing, medical care and education have risen drastically in relative terms.

          As such, pegging the cost of living to food prices no longer makes any sense. Lowering the poverty threshold based on lower (relative) food prices makes even less sense.

          If you integrate fantasy with reality, you do not instantiate reality. If you mix cow pie with apple pie, it does not make the cow pie taste better; it makes the apple pie worse. --Mark Crislip

          by ebohlman on Fri Jul 27, 2012 at 02:00:16 PM PDT

          [ Parent ]

          •  The equivalent costs of almost everything have... (0+ / 0-)

            ...fallen.  The only thing you'd get even a slight rise from would be housing and energy, and even then, if you normalized for housing size, you'd probably see a decrease.

            Refusing to include both non-cash income and refusing to realistically recalculate the base measurement have left it little more than a tool for political posturing.

        •  And they've screwed around with the CPI (0+ / 0-)

          To make it look like it has fallen or stagnated, by changing the products in the "basket of goods" used to define those prices.

          Beef prices rise, so people start buying chicken instead? Change to chicken as the protein source in the "basket." Regular retail stores too expensive when eeking out a living on minimum wage? Change to thrift shop prices as the cost of clothing in the "basket."

          The food appears cheaper under the CPI, because we continually change the definition of "food" to match the best food people can afford on falling wages. The cost of quality, fresh food, new clothing, fuel, etc. have all risen dramatically since the 1970s. I dare you to find a $1 gallon of milk, anywhere in the developed world - we're over $4 a gallon for commercial highly processed ultra-pasteurized milk that took nearly a month to get to market, and $6 a gallon for the kind of fresh milk people used to get from local dairies/processors in the 1970s. So milk is now 4 to 6 times as expensive as it was in the 1970s, but the average salary for low and lower-middle income workers is barely 5% higher. In inflation-adjusted dollars, that's a 395% to 595% increase in the cost of milk (depending on whether you think the nutritional advantages of fresher milk should be considered). As a result, people switch to juice and soda. Guess what the next update to the CPI will reflect as the basket of goods? I guarantee milk will hold a much reduced position in the basket.

          People are getting lower quality, unhealthy food, lower quality clothing, and lower quality services in almost all aspects of life - a clearly declining standard of living. However, since the substituted items are "cheaper" than the items that originally filled the basket (of course, cheaper doesn't count the externalized costs to health and well-being), the CPI looks like the costs have been stable or falling.

          From http://www.capital-flow-analysis.com/...

          Substitute Cheaper Goods. When the price of sirloin gets too high, most people will substitute a cheaper cut of meat. The economists call this the 'substitution effect' and the Boskin Committee recommended that every time something gets too expensive, the economists who calculate the Consumer Price Index should substitute cheaper goods or services to reflect consumer behavior.

          Obviously, this makes it appear that living costs have not increased. Even if the cost of food climbs to such a degree that people live on starvation diets, these economists will ignore increased costs and switch to measuring the cost of living at ever-lower standards.

          Buy In Cheaper Stores. The Boskin Committee said that if people can no longer shop at Macy’s but now shop at the flea market, in less comfort, the government should use flea market prices in the CPI.

          ...

          It's well worth the read for people who recognize that there's something nonsensical in the claim that the official dollar value that specifies the poverty level is too high.
          •  Another good read on the subject (0+ / 0-)

            http://seekingalpha.com/...

            While some might say this is a silly thing to track, we believe the increase in the price of a classic Thanksgiving dinner indicates a great deal about rising prices.  

            ...

            According to the American Farm Bureau Federation ("AFBF"), the cost of a classic Thanksgiving dinner increased by about 13 percent in 2011. The cost of a feast for 10 was $49.20 this year, the farm group found, up $5.73 from last year. The AFBF shopping list includes turkey, bread stuffing, sweet potatoes, rolls with butter, peas, cranberries, a relish tray of carrots and celery, pumpkin pie with whipped cream, and beverages of coffee and milk.

Subscribe or Donate to support Daily Kos.

Click here for the mobile view of the site