Sunday, December 2, 2012

Why Doesn't Poverty Rise During a Deep Recession?

Because government benefits replace almost every dollar that people (in the neighborhood of the poverty line, at least) lost in the labor market. That's a 100 percent tax -- for every dollar a person earns (loses) he loses (gains) a dollar in government benefits, respectively.

Jared Bernstein presents the facts, especially this chart.

The official measure is cash income, and the alternative measure adjusts the official measure for all of the government taxes and benefits people pay or receive.

Bernstein thinks that the government has done well here, when it fact this reveals how excessive the benefits are.

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