In an op-ed for the New York Times, Jared Bernstein discusses the relationship between GDP and poverty. He explains that growing inequality, not slowing GDP, led to a higher  poverty rate than we would have had if economic growth were broadly shared. We create the same graphic in The State of Working America. Not surprising as Jared is a co-author on previous versions. I’m replicating the same idea below using the historical relationship between GDP and poverty from 1959 to 1979 to predict poverty to 2012. As you can see, poverty hits zero by the early 1990s. We choose a different end date in creating the prediction, which changes the estimated date poverty falls to zero, but the same basic fact remains: Poverty falls fast and would be erased from the United States had economic growth been as broadly shared as it had been in the years leading up to the late 1970s.

Many commentators, researchers, and others have argued that the official poverty measure fails to fully take into account the government tax and transfer system, which has accomplished much to reduce absolute deprivation. Some transfer programs are accounted for in the official poverty measure,including Social Security and unemployment insurance. Others, such as food stamps, housing assistance, and the earned income tax credit are not included in the official poverty measure. The Supplemental Poverty Measure (SPM), created by the Census Bureau, effectively takes many of these into account while simultaneously altering the threshold at which poverty is measured against.

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This post originally appeared on The American Prospect.

The Vice-President for Governmental Affairs has just finished his report to the corporate board of directors. “Thanks, Ted,” says the Chairman. “You and your Washington staff have done a great job. Getting that little amendment inserted in the budget bill will save us at least $25 million next year. …. Questions or comments? Paul?”

Paul, the hedge fund CEO: “I’m worried about the big picture down there in Washington, Ted. It’s a mess. Deficit out of control.The anti-business attitude. Not to mention incompetence. Can’t even run a website for their own health care program. Pathetic.”

“Amen,” says Hank, who used to run a tobacco company. “What bugs me is Obama’s complaining about inequality. Just whips people up. Saw them last night on the TV news, in front of a McDonald’s somewhere, screaming for more money. Makes you sick. Want money? Get a job!”

“Actually Hank, those people already have a job,” says Cliff from Silicon Valley. “And lucky to have it. Plenty more out there ready to take their place.”

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Whenever a new law is passed (usually before it passes), well-placed lobbyists attempt to make exceptions to the general rules, to insert exemptions for their clients. Thus, the federal Fair Labor Standards Act has exceptions for companies that harvest shellfish, for summer camps, for ski resorts in national forests, and many others. Some of these exceptions make sense, but many defy logic. Why, for example, should “motion picture theatres” be exempt from overtime pay requirements?

Prince George’s County recently raised its minimum wage to $11.50 in several increments over three years, and special interest pleading has begun. The first in line is apparently Six Flags, an amusement park that claims paying a higher minimum wage would create a special burden. Why? Because it claims it won’t hire as many teenagers and seniors if their wages are increased.

The company’s argument assumes that there is a necessary trade-off between paying seniors and teens a living wage and employing as many of them as it has. But is that true? Will higher wages compel the company to reduce its staff?

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The biggest lie in Washington might be the claim that government regulation is strangling business and making it impossible to earn a profit. The clearest evidence that this is a lie is the fact that business profits are at an all-time high. The chiefs and bosses of those businesses are doing very well, too, with CEO pay soaring far beyond any rational relationship to the pay of average workers.

Yet “too much regulation” remains the cry of the Chamber of Commerce and scores of other business lobbying groups, and it gets taken seriously by the media and by Congress, which is always looking for some reward to give corporate lobbyists for their electoral support. The latest goody is a provision in the House farm bill poorly named the ‘Sound Science’ provision, which is intended to damage the ability of federal agencies to regulate anything that relies on a scientific justification.

Section 12307 requires agencies to develop guidelines not just for making scientific judgments, but for governing how “scientific information is considered.” These guidelines would be wasteful make-work in any case because the agencies are already subject to direction by OMB and the Office of Science and Technology Policy. But they are much worse than that, because they open up every regulatory action, including “the listing, labeling, or other identification of a substance, product, or activity as hazardous or creating risk to human health, safety, or the environment,” to judicial intervention.

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Fast track legislation is moving forward. Retiring Senator Max Baucus(D-MT) and Republican leaders introduced a bill to give trade promotion negotiating authority (a.k.a. “fast track” authority) to complete the proposed Trans-Pacific Partnership and a trade and investment deal (the TTIP) with the European Union. The sponsors were unable to obtain a Democratic co-sponsor in the House, and House Ways and Means Ranking Member Sander Levin introduced a strong statement calling for a better model for negotiating trade agreements.

Fast Track is a terrible idea because it’s a proven job killer. It gives the president the right to send treaty implementing legislation to Congress for a vote without any opportunity to amend or improve it. Setting enforceable job creation goals or creating effective mechanisms to deal with currency manipulation, for example, will be impossible if the legislation is fast-tracked.

NAFTA, which was fast-tracked in 1993, and which was the prototype for more than a dozen U.S. trade and investment deals negotiated over the past decade, resulted in growing trade deficits with Mexico that eliminated nearly 700,000 U.S. jobs by 2010. More recently, President Obama pushed through a new trade deal between Korea and the United States (the KORUS deal), which resulted in the loss of 40,000 jobs in the first year alone.

Fast track legislation in its current form is opposed by more than 170 Republican and Democratic House members, so this legislation might be dead on arrival. The House Republican leadership is reportedly insisting that at least 50 Democrats co-sponsor the legislation, including at least one House Democratic leader, before it will be allowed to come to a vote on the House floor. With luck, the fast track bill will die in the House. The last thing America needs is renewal of fast track and more trade and investment deals rushed through Congress.

In a teaser for a talk he gave yesterday about poverty and the congressional fight over Emergency Unemployment Compensation, Sen. Marco Rubio’s office circulated a ‘fact sheet’ that was as ill-informed and self-contradictory as the speech that followed it. For example, the fact sheet said we need unemployment assistance, but hinted that it shouldn’t be in the form of weekly benefit checks:

“Unemployment assistance must remain an important part of our social safety net, but these programs have to do more than simply provide a paycheck; they must be reformed to help people secure middle class jobs. … [W]e should redirect funds away from the federal government and steer them directly to states, while at the same time incentivizing work through a new, direct wage enhancement credit for lower income workers and the working poor.”

Unemployment insurance does not, in fact, have to do more than provide a check. It is intended to do one very important thing: provide income to people who have lost jobs through no fault of their own while they continue to search for new employment. It is not job training. It won’t provide a college degree or a license to practice a profession. It’s meant to keep people in their homes with food on the table until they can find a new job. And finding a job isn’t easy when there are three workers searching for each vacant position. UI has an ancillary benefit, in that it increases aggregate demand and supports jobs that would be lost without it, but its fundamental purpose is to help deserving people survive hard times with dignity. And that benefit depends precisely on checks being sent to the jobless, cashed, and spent.

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Tomorrow’s release of jobs data will mark six full years since the official beginning—and four-and-a-half years since the official end—of the Great Recession. Some initial (though traditionally pretty noisy) signs indicate it could be a decent month of job growth.

My colleague Heidi Shierholz released a paper today to remind job market watchers just how far from a healthy labor market we are, and how it will take a very long time for even objectively great monthly job numbers to dig the U.S. labor market out of the deep hole it remains in.

You should read it—it has lots of great labor market indicators. I’ll just highlight one—the “jobs gap.” This is a simple measure of how many jobs the U.S. economy needs to return to immediate pre-Great Recession health (i.e., the labor market conditions that prevailed in December 2007). This jobs gap (pictured below) remains enormous. With 1.3 million jobs needed just to replace those lost during the Great Recession, and another 6.6 million jobs needed to provide work to soak up potential workers added since December 2007, the combined jobs gap is 7.9 million. This is down from its maximum value of 11.3 million reached in September 2010, but it indicates we’re less than a third of the way to full labor market recovery.

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My colleague Elise Gould recently showed that to lessen poverty is to lessen income inequality by raising wages of low and moderate income workers. This post adds some more data to the argument that raising wages for low-wage workers is an essential component of any anti-poverty strategy.

The recently released Council of Economic Advisers report on the War on Poverty highlights this by noting that ‘market poverty’—measuring poverty without accounting for government aid in the form of transfers and tax credits—is higher now than in 1967, and that only increased government support allowed poverty to fall:

“A measure of “market poverty,” that reflects what the poverty rate would be without any tax credits or other benefits, rose from 27.0 percent to 28.7 percent between 1967 and 2012. Countervailing forces of increasing levels of education on the one hand, and inequality, wage stagnation, and a declining minimum wage on the other resulted in “market poverty” increasing slightly over this period. However, poverty measured taking antipoverty and social insurance programs into account fell by more than a third, highlighting the essential role that these programs have played in fighting poverty.”

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I couldn’t agree more with Paul Krugman’s blog post this morning when he says, “the main cause of persistent poverty now is high inequality of market income.” We looked at precisely this question in the latest edition of State of Working America. (And the White House Council of Economic Advisors cited our work on this in their War on Poverty 50 Years Later Report, released today.)

In the roughly three decades leading up to the most recent recession, looking at the officially measured poverty rate, educational upgrading and overall income growth were the two biggest poverty-reducing factors, while income inequality was the largest poverty-increasing factor. Relative to these factors, the racial composition of the U.S. population over this period (the growth of nonwhite populations with higher likelihoods of poverty) and changes in family structure (the growth of single mother households) have contributed much less to poverty, particularly in recent years.

The figure below plots the impact of these economic and demographic factors on the official poverty rate from 1979 to 2007. The impact of income inequality and income growth were quantitatively large, but in the opposite directions. Had income growth been equally distributed, which in this analysis means that all families’ incomes would have grown at the pace of the average, the poverty rate would have been 5.5 points lower, essentially, 44 percent lower than what it was. 

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In the current issue of The American Prospect, I review Patrick Sharkey’s Stuck in Place, a 2013 book that helps explain the persistent failure of educational policy to spur the upward mobility of low-income African American youth.

It is now well understood that many characteristics of children from low-income families—poor health, housing instability, inadequate pre-literacy experiences when young and inadequate after-school enrichment opportunities when older—make it difficult to take advantage of even the best classroom instruction. A quarter of a century ago, William Julius Wilson’s The Truly Disadvantaged showed that the harm is magnified when children with these disadvantages are concentrated in urban ghettos where jobs have vanished, violence, drugs, and stress are commonplace, and there are few adult role models of academic success.

Building on Wilson’s work, Sharkey demonstrates that the harm is exacerbated when families live in such low-income neighborhoods for multiple generations. Indeed, a child’s chance of success may be harmed as much or more by having a mother who grew up in a poor neighborhood than by growing up in a poor neighborhood him or herself. And, Sharkey shows, between black and white children who live in poor neighborhoods, blacks are more likely to have done so for multiple generations.

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