Are the Poor Getting Poorer? The Answer May Surprise You.

I seem to prefer old movies to new ones. There are so many great old movies that I have watched many times. Occasionally there is a new one that I am attracted to, but usually I find myself watching something that I have already seen. Sometimes more than once. I suffer from a short attention span. If a movie does not grab me immediately, I move on to more entertaining subjects. I do not waste time with a movie that I do not enjoy…. And I mean I have to enjoy it a lot.

Old books sometimes have the same attraction to me. I recently cleaned out my bookshelves and found an old book that caught my attention. It’s titled, “Myths of Rich and Poor. Why we’re better off than we think.” It was written in 1999. The authors demonstrate, with certainty, that the poor are not getting poorer. I believe it is even more relevant today.

They analyzed and tracked 50,000 individuals over a thirty-year period. They found that only 5% of families in the lowest income bracket (lowest 20%) were still there 15 years later. More than three fourths of these families had moved into the highest income brackets. The Census Bureau reports that while the poverty rate remains consistent, it is usually different people occupying those positions.

The U.S. Treasury confirmed many of these findings. They found that 85.8% of taxpayers in the bottom bracket, had moved up to higher income brackets within 10 years. Fifteen percent had moved into the highest income bracket. Income mobility is a factor that is fluid and constantly moving.

In most places today and when this book was written, there are many who will remain in the rich or poor category. That is not true in this country. In the good ol’ USA, the classes of people who remain permanently rich or poor measure in the single digits. Very few remain in the situation they are born into.

People become wealthier as they gain knowledge and experience in life. Income nearly doubles for those in age categories 25-34 as opposed to those under 25. It jumps again by 50% for those between 35-44. As we gain knowledge and experience, we are more valuable assets.

 Another interesting statistic, households in the top income bracket have 2.1 workers per household. Those in the bottom have 0.6 workers per household. The study found that of the taxpayers in the lowest income bracket,  84% of  those workers only worked part time. The highest income bracket found 80% of workers were full time employees.

Another interesting statistic, only 7% of top income earners reside in a “non family” household. In the bottom income category, 37% of low income earners live in the “non family” category.

No real surprises here. We knew it all anyway. Traditional families usually have higher incomes and income rises as we become more experienced.

We also must remember the internal data of some poverty statistics. For example, I read a report a few years ago, that there were pockets of poverty in Cambridge, Massachusetts. This poverty was in and around Harvard University. Imagine that.

Poverty is determined by income levels. While one is a student at Harvard, income is usually very low. That might qualify one for the poverty ranks. However, I doubt that same person will remain in the low income category after graduation.

You may remember that I have written on these pages before, one can avoid poverty by doing three simple things, finish high school, get a job (even minimum wage) and don’t have children until marriage. Over and over, that simple philosophy is proven true. It sounds so simplistic and it makes one wonder why everyone would not try it.

Where you start in life, does not determine where you finish. Many of us will go back and forth from one income bracket to another. I have certainly experienced that firsthand.