Stagnation Nation: Census Analysis

America’s wealthiest citizens are far richer than their compatriots but are still feeling hard pressed these days and America’s poorest citizens are much better off than very grim statistics seem to indicate. That is the conclusion of some of the most interesting data crunching since the U.S. Census Bureau released its household income data Tuesday.

The headlines report that median household income fell to 1996 levels, that the income of all socioeconomic groups declined–with the gap between best and worst off Americans essentially the same–and that the poorest group of Americans now total 15.1% of the population, up from 12.5% in 2007.

Forbes contributor Tim Worstall explains in his blogpost that the statistics on the poorest Americans are misleading in a very significant way because they measure poverty prior to all the U.S. government programs designed to relieve poverty. These include substantial and very expensive programs such as food stamps, Medicaid, Section 8 housing vouchers and the earned income tax credit.

Says Worstall: “How on earth can the US be spending hundreds of billions of dollars a year on beating poverty without actually beating poverty? Simple, we spend the money but don’t measure how much poverty we’ve beaten by spending it.”