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Comment by refurb | Hacker News Reader

Pretty dense report with lots of interesting statistics.

These got my attention:

The 2019 poverty rate of 10.5 percent is the lowest rate observed since estimates were initially published in 1959

The 2019 real median incomes of White, Black, Asian, and Hispanic households all increased from their 2018 medians [between 5.7% (Blacks) and 10.6% (Asians)]

Percentage change in share of aggregate income was highest for the lowest income quintile (+1.8%). High income quintile saw decrease in share of aggregate income (-0.6%)

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The poverty line has not scaled with the increase in expenditures associated with modern living, nor increased worker value. The only adjustments made in the last half-century have been for inflation and bare-minimum at that.

America is a lot more poor than these statistics let on when compared to the rest of the first world. Furthermore debt is not considered in many such analyses.

> America is a lot more poor than these statistics let on when compared to the rest of the first world.

Source?

Definitely need some support for that claim. I've heard the opposite claim that poor Americans are better off (save healthcare) than poor in other countries. But like the above, that was hearsay and I'm not sure I would believe either claim without some stats to back that up.

You'll see a lot of empty claims that the US has practically no social safety net. That's plainly false. That it's not as good/effective as eg France, Sweden, Denmark, Norway, etc., that much is true. Poor Americans get free healthcare, around just over 1/4 of all Americans receive free healthcare. ~24% of Americans are receiving Medicaid.

The US spends more on its social welfare programs, as a share of GDP, than Canada does, and it matches what Australia and Switzerland are spending. The US is close to the OECD middle and a bit behind the UK (OECD figures below):

https://i.imgur.com/5GnDdTp.png

And when it comes to improvements in poverty thanks to our vastly expanded social safety net, you can see that very strikingly represented when you drop out those programs from the calculations (childhood poverty shown below, with and without government aid):

https://i.imgur.com/hqTS3Ck.png

https://i.imgur.com/9aEi2sL.png

The same thing shows up in our homelessness improvement figures from the past 20 years. The housing first program implemented by the Bush Administration and sustained by the Obama Administration - aka a government program - was almost solely responsible for the huge decrease in US homelessness.

The US social safety net has expanded rather massively in the past 40 years. Structurally the biggest problem the US has when it comes to its social safety net, is it's all haphazard and often poorly administered. The US isn't very good at running social safety nets, it's chaotic and critical parts of it are managed in very different ways state to state. We're not getting enough bang for our buck on that spending, we need to do better. We're spending a lot of money and the results are often not good enough (which we frequently see with government spending in the US). For example, if the US were spending per capita on our healthcare system what the UK is, we could nearly double - maybe up to 40%-45% - the number of people we're covering with free healthcare at minimal additional cost.

It’s telling that your well sourced and cited post is getting downvoted.

"well sourced" would be linking to the actual source with the citation, not expecting us to dig out the information. I'm not sure how they got to near 20% of US gdp being spent on social programs.

US GDP is 21 trillion, social program spending is under a trillion.

The images say the source is OECD data. The OECD tracks various indicators like this in a comprehensive database: https://data.oecd.org/

Social expenditures are here: http://www.oecd.org/els/soc/OECD2016-Social-Expenditure-Upda...

As defined by the OECD, social program spending includes social security, Medicare, and education (each of which are $700-900 billion expenses).

Third diagramm: how can it be below 0% before 1970?

That is confusing, but it’s before and after “benefits and taxes”. So I assume back then some families didn’t qualify for benefits (but were above the poverty line), but after accounting for taxes, they slipped below the poverty line.

This is a very accurate summary of the US social safety net. It’s very large, but some European countries spend more. But it’s also a bit of a bureaucratic mess and not that easy to navigate.

Not sure why you’re getting downvoted.

> The US isn't very good at running social safety nets, it's chaotic and critical parts of it are managed in very different ways state to state. We're not getting enough bang for our buck on that spending, we need to do better. We're spending a lot of money and the results are often not good enough

Typically, when someone is complaining about the lack of a social safety net in the US, they mean in terms of services received, rather than money spent.

As the above quote shows, you obviously know that because of various insane inefficiencies (often caused or abetted by perverse incentives at the interface between the public and private sectors) the point you're making of how much is spent in terms of % of GDP doesn't actually refute the complaints (about how little is being done for those in need) that you are objecting to.

So. We spend a heck of a lot, and we don't have a decent social safety net.

It's also worth noting that where social safety net programs are being poorly run by the government, this can sometimes be traced to politically motivated shenanigans and deliberate mismanagement.

There is no source for that, it is not true. The world bank’s preferred metric for material welfare is PPP adjusted consumption (because for instance, food stamps aren’t income), and because poverty measurements are only relative to people within one country, not between multiple countries.

When you measure that, the poorest 20% of Americans have a superior level of welfare to the average person in most OECD countries.

You can see on table 6.5 in the study linked below that lowest quintile households (by income) consumed an average of $57,049 goods and services per household, which is just under $22k per person. Putting the lowest 20% of the US in the top half of OECD countries for that year.

https://www.nber.org/chapters/c12831.pdf

I think you misread my comment like many others. I made no claim we're doing worse than other developed countries. I just pointed out that these statistics don't capture the entire picture and we're worse off than they let on.

What? America is like the top 3 in median disposable income in the world: https://en.wikipedia.org/wiki/Disposable_household_and_per_c...

US wealth per adult is higher than Finland, Sweden, Denmark, Germany, and the Netherlands: https://en.wikipedia.org/wiki/List_of_countries_by_wealth_pe...

Does it take into account purchasing power / cost of living? That seems relevant when comparing across countries and talking about poverty.

Yes. It’s based on OECD data, which uses PPP dollars. (Purchasing power parity dollars.) The US makes a classic average case versus worst case trade-off. The bottom 20% in the US are poorer than in other Western countries and there is less of a safety net. But in terms of material lifestyle, the median is better off.

I'm not sure I'd say the US has consciously made that tradeoff, though maybe you aren't claiming that. If anything it's likely a side-effect, imo.

The median at any snapshot in time is materially better off, but also much more stressed out than people in other wealthy countries about whether they might end up in a very bad economic situation, due to how there is barely any bottom. Subjectively, middle-income Americans don't feel well off and don't feel secure in even what they have. For example, numbers vary based on the specific survey, but about 60-70% of Americans consistently feel high levels of stress about money. I'm not sure that's a course that would've been taken by a 50th-percentile person trying to optimize their own well-being?

One reason Scandinavian countries tend to come near the top of those "happiest countries in the world" surveys (though I don't like the term "happy" for it) isn't from any particular joyfulness, but because the typical household subjectively has very low levels of economic fear or stress. Some of the survey questions that go into that score include things like, do you feel economically secure, do you worry about losing your housing, etc. A huge percentage of even middle-class Americans spend a lot of their time worrying about that (including my family), while the majority of middle-income people from say Denmark don't consider it a big risk to worry about.

> I'm not sure I'd say the US has consciously made that tradeoff, though maybe you aren't claiming that. If anything it's likely a side-effect, imo.

The US has consciously made that trade-off. See how even Sanders doesn't propose to raise taxes on people making under $250,000, and Biden is up at $400,000. The top income tax rate in the Scandinavian countries kicks in at around $70,000.

Maybe I'm being trolled, but this is a Markov chain non sequitur response I have no way to interpret.

In Maryland, you have to make $350,000 before you’re taxed at similar rates to what an entry level white collar worker pays in Germany. (I know this because our au pair paid a similar percentage rate at her job in Germany to what my wife and I pay as two attorneys working in private practice.) It’s impossible to provide a safety net like they have in Europe while simultaneously promising not to raise our extremely low tax rates on people making $250,000 or $400,000. When even Sanders makes that promise, that is an indication of how strongly voters choose to keep taxes low versus investing in a safety net.

How does this explain why, compared to middle-income Germans, middle-income Marylanders have low life satisfaction, feel economically insecure, and die younger?

Maryland has among the highest HDI’s in the Union: https://en.wikipedia.org/wiki/List_of_U.S._states_and_territ....

It’s not dissimilar from that of Germany (0.935 vs 0.939), and it’s higher than that of most other OECD nations.

As for average life expectancy: the average is brought down by outliers. In general, the US has a higher homicide rate, a higher motor vehicle death rate, a higher obesity rate, and a higher opioid/drug death rate. These external factors all bring down the average life expectancy number more substantially than in other countries: https://randomcriticalanalysis.com/2017/05/16/the-explanator...

I’m referring to your specific point here: “I'm not sure I'd say the US has consciously made that tradeoff.”

Even if you assume the lack of a safety net causes the symptoms above, my point is that the lack of a safety net is deliberate, because even our left wing party promises not to raise taxes enough to actually fund a more robust safety net.

Apart from that, the life expectancy of white Marylanders is 80 years, just a bit shorter than for Germans (80.9 years). But 30% of our state’s population is from a minority group that was enslaved on Maryland plantations, and then denied civil rights until very recently. If bill gates had been born in the county where I live as a Black kid, he would have gone to a segregated school until middle school. Their life expectancy is several years lower, due to the legacy of those injustices.

Many of the differences between the US and European countries are misdiagnosed as matters of general policy (safety net, healthcare). But when you break it down, much of the difference is actually the result of the country’s history and large Black-white gaps in many indicators. The median white household, for example, has 10 times the wealth of the median Black household—a fact that plays a huge role in people feeling economically insecure. But those gaps can not necessarily be fixed with the same policy choices that European countries apply to their general populations. That wealth gap, for example, has not changed since the 1960s, when Maryland schools were still segregated—despite a large growth in general social welfare spending since that time. It is a unique challenge that requires targeted solutions, and there is no political will to implement those policies. These policy challenges simply have no parallel in Germany.

They include retirement income as income, but do they exclude retirement savings? In US there’s a huge burden to save for your own retirement, and modern retirement vehicles (e.g. 401k and IRA) pay out in full even if you die young (no longevity risk pooling), so they’re a lot more expensive to fund.

It's PPP adjusted disposable income after all taxes and transfers, so that includes Social Security, welfare, etc.

It's debatable if this is able to adequately capture all forms of non-cash transfers (like food stamps). To get around this, the World Bank uses consumption as a metric for well-being. By that metric, the poorest 20% consume more than the average person in most OECD countries[1][2], including Canada, the UK, Sweden, Australia, Japan, Denmark, New Zealand, and Iceland.

[1] https://www.nber.org/chapters/c12831.pdf

[2] https://fee.org/articles/the-poorest-20-of-americans-are-ric...

I was referring to money set away for retirement. Since moving from Norway to US, I can’t really spend all my disposable income, given that maximum social security benefits are so low.

Using my google skills it looks like the maximum supplemental pension in Norway is NOK 293 583 or $32,216 USD.[1]

The maximum US social security pension is $49,680 USD.[2]

Obviously it scales based on income, but at least for US tech workers, you're likely to get close to the maximum amount since you'd be earning over $110,000 for a significant chunk of your career.

The US has a much higher maximum pension amount than Canada, where it's $1,176 CAD or $889 USD. You do get an old age benefit on top of $613 CAD, which bring it up to $1,351 USD or $16,212 USD per year.

[1]https://ec.europa.eu/social/main.jsp?catId=1123&intPageId=47...

[2]https://www.ssa.gov/policy/docs/progdesc/ssptw/2010-2011/ame...

You shouldn't look only at supplementary pension for Norway. Everyone gets the basic pension as well, and if you're employed your employer must also contribute on your behalf.

So what is the maximum for someone with a high income? I'm not that familiar with Norway's pension system, so definitely open to being educated on it.

It's complex, but if you have a high salary it looks like the basic pension is NOK 89 872, so another $9,889 USD, for a total of $42,105 USD?

Disclaimer: this is awfully complicated, and I’m not an expert

What’s most relevant for this discussion is the system for people who are earning now for retirement in the future. The amounts are adjusted yearly, but the current maximum rate is about $14300. This is tax funded, and so doesn’t come out of your disposable income. Gaps from illness, unemployment, military service and caregiving are covered. When you start withdrawal, the accrued amount is adjusted for changes in the average national income and your life expectancy based on your age. I.e. the money is paid back to you at a rate that draws your balance to zero at the expected date of your death. If you live longer, it keeps going of course, funded by the people who die earlier. The maximum rate is therefore achieved by retiring at the oldest age (74), or roughly $97000/year with today’s numbers. This would require making well above the national average salary starting at age 13.

If you max out your income based pension described above, the base pension gets reduced substantially. Looks like it can go as low as $4300/year of benefits currently.

On top of these two pension types, your employer must save at least 2% of your income up to $134000, and pay for insurance that covers contributions if you become disabled. The employer must cover all associated costs. These plans vary a lot and have no maximum.

I will add that you need substantially less income in retirement in Norway since you won’t be paying for healthcare, and property taxes are extremely low.

And its easily higher is what people don't know. I feel like people don't understand living here that the issue is life is generally just hard. If you are having issue in the US good luck everywhere else in the world and even the first world.

I didn't say America's median population or poverty class was more poor than other developed countries, I said they're just a lot more poor than these statistics let on. Big difference.

You literally said: "America is a lot more poor than these statistics let on when compared to the rest of the first world." (emphasis mine)

That is demonstrably false.

Your interpretation of what I said is incorrect, I don't know what to tell you. Read it a few more times. That sentence makes no claim that America is poorer than any other country.

So adjusting for inflation, which tracks the relative buying power of the dollar across common goods and services, is not representing the cost of modern living?

I know it has some areas that may be under-represented, but in general it tracks the same changes in the power of the dollar across multiple categories. Changing what the inflation metrics track would make it an even poorer standard for comparison/tracking.

What would make a better metric?

One argument is that increases in necessities like healthcare, and rent are offset by decreases in things like the cost of consumer electronics.

So the inflation rate doesn’t give you a good picture of the actual increase in the cost of living.

People measure many things. For example, you mention that debt isn't considered here; wealth metrics are widely studied, the poverty line just doesn't happen to be a wealth metric, but rather an income measure.

I am not sure I fully comprehend the remark "The poverty line has not scaled with the increase in expenditures associated with modern living." It adjusts with inflation, and the inflation metric tries to stay relevant: the CPI basket includes housing, medical treatment and drugs, tuition, TVs, cell phones, etc. I guess the criticism comes down to the idea that somehow a cell phone should somehow adjust from an assumption of 0 from times before cell phones were popular?

If we do something like that, it sounds really hard to get things right (CPI is already pretty hard to get right). What would it mean to say that standard of living improvements are outpacing alleviation of poverty? That sort of metric seems something suited for sophisticated research, not a standard government metric.

Another important thing to do, one might note, that addresses some of the concern about losing track, is to take a fixed proportion of people - e.g. the bottom quintile of income earners - and study various aspects affecting their lives. This is, as I understand it, really widespread.

Lol americans are much much richer compare to the rest of the world especially the first world. And debt is considered.

For those interested, here's the upper / lower half split chart on hourly wage growth going back to 2007.

Wage growth for the lower half had been consistently outpacing wage growth for the upper half since 2014.

https://i.imgur.com/tXv4jr7.png

https://www.cbpp.org/research/poverty-and-inequality/faq-the...

Did that change actually go through? Your link says it was just a proposal.

And from the report, it seems like poverty had been decreasing for years.

Since 2014, the poverty rate has fallen 4.3 percentage points, from 14.8 percent to 10.5 percent

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