By Juan Gelman
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Half of all families always get by on less than the median income, because that is what median means. Yet the Working Poor Families Project defined any income below 60 percent of median income as poor. If median income doubled in real terms, that relative definition of poverty would also double. And because that definition of poverty was based on earnings alone—regardless of the Earned Income Tax Credit, Medicaid, and other transfer payments—the problem was defined in a way that ensured it could never be solved.
The Census Bureau likes to group people on the basis of where their ancestors lived, for example. This makes it possible to discover that median income among Americans whose past or present generations came here from the highly varied nations of Asia is higher than the incomes of those rooted in such different ‘‘Hispanic’’ places as Cuba, Brazil, Puerto Rico, and El Salvador. To unravel possible reasons for such differences economists have to first ‘‘control’’ for many ‘‘variables’’ such as differences in work, age and education between these diverse groups.
If you believe Krugman and others who say the Piketty-Saez estimates measure family income (they do not), then these estimates say that 45 percent of American families had incomes below $25,000 during the cyclical peak year of 2000. S. 30 As we found to be the case with related claims that 80–90 percent had no real income gains from 1973 to 2000, the Piketty-Saez estimate that 45 percent earned less than $25,000 a year is totally inconsistent with Census Bureau estimates. Median family income in the year 2000 was $50,732, according to the Census Bureau.