Another Look at the 2007 Census Bureau Statistics
Firstly, my quibbles:
rising health spending is eroding take-home pay, and immigrants are boosting both poverty and the lack of health insurance. Unless we control health spending and immigration, the economic report card will continue to disappoint. Unfortunately, neither Obama nor McCain seriously addresses these problems.
OK, controlling health care spending is needed. And I agree, neither candidate (surprise, surprise!) is dealing with it in an effective manner. So far so good. However, the fact that immigration are boosting poverty and the lack of health insurance, whether it's true or not, doesn't mean much to me. If he means that immigrants come here and are generally in poverty and lack health insurance and that this is making stats on poverty and health insurance look bad, well, that's an explanation of the stats. Treat it as an asterisk, if you will, that taints the numbers. It is NOT a reason, IMO, to control immigration.
I didn't realize we were working so faithfully to improve stats so that they look better upon cursory examination. That misses the point. It's about people. If new arrivals from poor countries are bringing down our precious stats, then so be it. As Samuelson says elsewhere:
For most Americans, living standards are increasing...
Not the top 1% or top 2 or even 10%....no: MOST. "Most" means "all but some". Like I said, if that "all but some" is skewed higher by more poor immigrants, then so be it. That means we let them in from illegal margins of the black market. Period.
Many immigrants don't have health insurance for several reasons. One reason is that most are not here legally and couldn't really buy even if they wanted to or could afford to. And they are here illegally, quite frankly, because we make it so with our laws. It's also why many don't have driver's licenses and car insurance. When they can't mesh into the system because the law says they shouldn't be here, well, we have found the problem: Make them legal and let them go through the same motions that legal residents go through.
And immigrants are generally poorer because they come here with nothing and take low end jobs. That is unavoidable. But it is not a bad thing. Let them work. It's all that most of them wanted to do anyway. They won't be so poor for long.
But again, controlling health insurance costs...one way or another...is a key to removing some lead from people's economic feet. I agree. But that can be done with immigrants entering the country. They are not mutually exclusive.
Further along, Samuelson does bring about some very good points in the form of caveats about the ensuing disappointment from analyzing and comparing the stats without considering some basic factors:
First, comparisons are made to an artificially high benchmark -- the late 1990s "tech bubble."
Yes. This matters. Comparing everything to a pinnacle always makes everything that follows look bad.
Remember the dot-com binge. Wages rose sharply; bonuses and cash incentives mushroomed. Unemployment and poverty dropped. In 2000, the jobless rate among white men 20 and over was 2.8 percent. But all these gains reflected a boom that, though pleasurable, was temporary and unsustainable. Stocks are now trading below their 2000 highs....Picking 1997 -- the last pre-boom year -- is more realistic. From 1997 to 2007, median household income rose $2,600, roughly 5 percent. Though hardly spectacular, that's not stagnation. The poverty rate in 2007 was slightly lower than in 1997.
So, when we compare non-boom years to non-boom years, the numbers don't look quite as bleak. Even poverty is lower now.
On the immigration issue, he come back and make a very sensible second caveat:
Second, immigration distorts commonly cited statistics.
Yes. But like I said earlier: accept it. Don't make it an excuse to control immigration.
On this note, he makes some good observations when we control for immigration groups:
Consider non-Hispanic white families. From 1997 to 2007, their median incomes rose about $6,000, to $69,937, a gain of about 9 percent. For black families, the increase was also about 9 percent, though only to $40,222. Again, not stagnation.
So, when looking at non-immigration-intensive groups from a pre-boom '97 to 2007, the numbers uncover much more progress than would have otherwise been seen by an opaque scan that doesn't account for unique realities within the population. And I say again, I'll bet Hispanic wages would rise faster if we simply matriculated more of them into the system.
On health insurance, the immigration issue is even more startling:
Since 1990, Hispanics numerically account for all the increase in the number of officially poor. Similarly, immigrants represented 55 percent of the increase of the uninsured from 1994 to 2006
Yikes! On a personal and political note, I find it irritating that some political factions would use the unrefined numbers to condition your average American Tom, Dick and Harry into thinking his own life sucks and is getting worse. Again, when we consider the effects of immigration and control them out of the picture, we see more clearly what our priorities should be...and shouldn't be.
And finally, we see a similar point that I and others have made in the past with regard to wages:
Third, the census figures understate income gains by not counting fringe benefits.
This is common error of exclusion. Benefits are part of compensation. To not include them is to miss the whole picture. Hypothetically, if John Doe starts working at a job at age 18 in 1997 with no benefits and a pay $29,000 and is then making the average increase in 2007 at age 28 of 9%, or $31,610 and has full health insurance as well as 2 weeks paid vacation, his increase in compensation is far more than 9%. If he is married now and his insurance is worth, say, $800 per month, that paid premium plus two weeks paid vacation is worth another $10,816 per year in compensation ($42,426) that is not reflected in the Census numbers. His "full pay" didn't simply increase the 9% figure of $2610. It was much, much more.
Granted, this a special case where we look only at a young, below average earner during a period where he goes up dramatically in pay.
More mundanely but no less noteworthy, says Samuelson:
Census counts only money income -- wages, salaries, dividends, interest payments. But compensation growth is increasingly channeled into fringes. From 2000 to 2007, only 53 percent of the increase in average compensation came from wages and salaries, says economist Gary Burtless of the Brookings Institution. The rest went to health insurance (21 percent), pension contributions (19 percent) and payroll taxes (6 percent). Americans understandably feel they're on a treadmill. They don't see fringe benefits in their paychecks, and small year-to-year cash gains barely register.
Overall, a good, lucid account of the economic state of America free of the all sensationalism and panic. It's far from perfect but not nearly as bleak as some would like to believe so they can get you on board for massive top down changes.