The New York Times (6/4/14) took a look at one of the economic puzzles of the last few decades: If growth has been strong, why aren’t we seeing a greater reduction in poverty? Interestingly, the research the Times is relying on offers some explanations–ones the paper doesn’t see fit to mention.
The story by Neil Irwin–“Growth Has Been Good for Decades. So Why Hasn’t Poverty Declined?”–notes that it’s considered conventional wisdom that the “surest way to fight poverty is to achieve stronger economic growth.” But since the mid-’70s, the US economy has grown, but the benefits of that growth have not been shared. He writes: “The mystery of why–and how to change that–is one of the most fundamental challenges in the nation’s fight against poverty.”
The piece is based on research from the left-leaning Economic Policy Institute. As Irwin sums it up:
If the old relationship between growth and poverty had held up, the EPI researchers find, the poverty rate in the United States would have fallen to zero by 1986 and stayed there ever since.
So what has happened to explain this? Irwin gives only a hint, writing that “liberal-leaning group’s policy prescriptions are open to debate.” Click on the EPI link in the Times piece, though, and you’ll see the researchers offer some pretty clear ideas about why they think this has happened:
Direct evidence highlights the key roles of the two most-visible and well-documented changes in labor market policy and practice over the past generation in driving wage trends: the erosion of the inflation-adjusted value of the federal minimum wage and the sharp decline in the share of the American workforce represented by a union.
Most specifically, EPI notes:
- Between the 1970s and the late 2000s, the eroded minimum wage explains roughly two-thirds of the growing wage gap between low- and middle-wage workers, and weakened unions explain a fifth to a third of the entire rise of wage inequality.
The point of the piece is to think about what happened from the late 1970s onward. And Irwin does a good job of explaining how Paul Ryan-esque rhetoric about the need to get poor people to work misses the point, since “the reality is that low-income workers are putting in more hours on the job than they did a generation ago–and the financial rewards for doing so just haven’t increased.”
So why didn’t Irwin talk about the minimum wage or unions–the factors EPI singles out as being especially important to understanding this story?
This piece appeared in the print edition of the Times, but it’s part of The Upshot, part of a new breed of data-rich, “explain-the-news” sites. In this case, there does seem to be an explanation for the story it’s trying to tell. And for some reason, the Times doesn’t want to talk about it.