Wednesday, October 26, 2011

Less than 1 percent of the American population is in the bottom income quintile for that duration (15 years)

From Black and right by Ray Sawhill.

We tend to think of poverty as a static condition whereas, in the US, it is highly dynamic. People move up and down over the course of a lifetime. Poor students become rich doctors. To understand poverty we have to understand durations and behaviors. What mires people in poverty and for how long. These are much more troublesome issues. As Sowell indicates, we are blessed with the fact that few are truly fated to live in poverty for lengthy durations.

And while we should rejoice in that figure of 1%, I don't think it lets us off the hook completely and for two reasons. Most people that manage to avoid poverty are highly dependent on various transfer programs that take money from one group and give to another. A safety net, and one that is necessary. However, the real goal is to be sufficiently productive that you are not in poverty. If you are not in poverty because of the generosity of others, you have mitigated a problem, not solved it.

The other issue is that you can avoid being in poverty and still be leading a frustratingly meager existance. Someone who is able to hold a job for a year or two may not be in the bottom quintile but if they are constantly gaining and losing employment, oscillating between quintile four and quintile five, they are still both unproductive and in sad material circumstances. No, they don't live continuously in quintile five but they are a frequent inhabitant.

I suspect that our problem is sourced in a much larger population than 1%. Those who are ill equipped in terms of knowledge, will, decision-making and values to sustain themselves in a productive fashion and who spend a life time floating between quintiles four and five and with no real prospects of either freeing themselves from dependency on others or of achieving sustained productivity.
You write in the new book that only 3 percent of Americans spend as long as eight years in the bottom-fifth income bracket.

That study has now been extended to 15 years. And when you stretch it out to 15 years, you find that less than 1 percent of the American population is in the bottom income quintile for that duration. Add to that the fact that most of our millionaires have made their money themselves, and you realize that it’s a tremendously fluid system.

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