Poverty Increasing--Education is the Answer

News from the Census Bureau is a must read. Half the people of this country are in poverty or are approaching poverty. Really? In America, the land of opportunity? Something must be done, but what? The Census Bureau states:

About 97.3 million Americans fall into a low-income category, commonly defined as those earning between 100 and 199 percent of the poverty level, based on a new supplemental measure by the Census Bureau that is designed to provide a fuller picture of poverty. Together with the 49.1 million who fall below the poverty line and are counted as poor, they number 146.4 million, or 48 percent of the U.S. population. That's up by 4 million from 2009, the earliest numbers for the newly developed poverty measure....The new measure of poverty takes into account medical, commuting and other living costs. Doing that helped push the number of people below 200 percent of the poverty level up from 104 million, or 1 in 3 Americans, that was officially reported in September.

So the Bureau has made it easier to be considered poor or near-poor. If you own a home, a car or two, and have heat in the winter and air conditioning in the summer you still qualify. If you make $45,000 a year and have four kids you qualify. That's a far cry from the third world. When one realizes what the poor look like in Manilla, Cairo, Nairobi, or Port-au-Prince, all the developing world, really, this report makes you want to laugh (or cry). Those unfortunates would love to be an American poor person. See what a typical American poor person owns here.

Still, the long-term news is not good.

Paychecks for low-income families are shrinking. The inflation-adjusted average earnings for the bottom 20 percent of families have fallen from $16,788 in 1979 to just under $15,000, and earnings for the next 20 percent have remained flat at $37,000. In contrast, higher-income brackets had significant wage growth since 1979, with earnings for the top 5 percent of families climbing 64 percent to more than $313,000. 

 It has become harder over time to make a good living with just a high school education. The trades (carpentry, plumbing, electrical), energy and, of course, starting your own business, are what still works well for those without a college degree--69 percent of the workforce. The surefire way to expand your earnings potential is to increase your education. (See http://gregmankiw.blogspot.com/) Pollster Gallup writes:

Apart from their bank accounts, Gallup finds education to be the greatest difference between the wealthiest 1% of Americans and everyone else. The Gallup analysis reveals that 72% of the wealthiest Americans have a college degree, compared with 31% of those in the lower 99 percentiles. Furthermore, nearly half of those in the wealthiest group have postgraduate education, versus 16% of all others.

For further proof, see the chart below.