Monday, February 3, 2014

MIT's living wage index

Follow the link to see a much more complicated-- and presumably more sophisticated-- measure of poverty standards put out by MIT. (Hey, it's put out by smart people. That's good news!) By focusing on local costs-of-living and breaking out expenses into many categories, the authors are presumably trying to be much less arbitrary than our current method. (I say "much less", because they put a lot of work into this!) Paraphrasing Jeff Foxworthy, "redneck" can be defined as a "glorious lack of sophistication"-- and the poverty lines/rate are definitely redneck by that standard.

1.) But I'm not sure it's more accurate. Looking at the numbers for Jeffersonville, IN: monthly food costs rise by $115 when you add one child; $179 when you add a 2nd child and $213 when you add a 3rd child. When a 2nd parent is in the household, you add $109, $160 and $191 per child. Those 3rd children must really eat a lot! (I also wondering if they're shopping at Krogers or Aldis.)

For housing, a first child costs $107-185 more, depending on that 2nd adult. The 2nd child is free. Nice! And the 3rd child costs $272 more per month. Huh? If I were a 3rd child, I'd be feeling insulted by now.

They assume that a family like ours would spend $1,100 per month on food. Sounds a little high, but ok.
On transport, we're supposed to spend $750 per month. That seems quite high.

2.) Now, look at the taxes. For a household with children, the taxes run from $4,800 to $8,400 a year-- $400 to $700 per month. How about we start the public policy proposals here with ending taxes on the working poor? Unfortunately, I can't get liberals to make this a really big issue.

3.) An accurate local approach would be a very nice contribution to understanding and measuring poverty. But note that, for fans of the minimum wage, it implies that minimum wages should be set at the state-- or preferably, regional or even local levels. Good luck with getting that level of sophistication or a willingness to allow local/state solutions from the most avid proponents of the MW.

4.) Proponents of a higher MW believe that there would be few if any negative effects of a higher minimum wage. So, what do you think about about this policy proposal? For two adults and two kids, one would need a wage of $16/hour to work 40 hours. (As an aside, why do we assume that the working poor should only work 40 hours to earn a "living wage"? Maybe that's part of their problem: they're only capable of working 40 per week?) How about we set the MW at $16 and get rid of all other public assistance programs for the "able-bodied"-- unless they have one of those dreaded third children?


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