Sunday, September 9, 2012
OECD Data On Poverty Rates
This article provides a graph that shows the poverty rates in OECD countries. Poverty is defined as income below one half of the median household income. In the US that would put households with incomes below around $28,000 in the poverty category. The data show poverty levels before and after the use of transfer payments that go to low income households. The US is close to the OECD average in pre-transfer poverty rates. It is much below the OECD average in post-transfer poverty rates. That does not stop Republicans, however, from blaming poverty on the use of transfer payments which reduce the incentive to work. The Ryan/Romney plan contains large reductions in transfer payments on the premise that we can't afford the cost and/or that it will encourage individuals to work harder. The GOP premise is an article faith. It is certain, however, that cuts in transfer payments will increase the post transfer payment poverty rate in the US. That is what happens when the magic of the labor market determines the poverty rate.