최신자료
The cost of being poor is rising. And it’s worse for poor families of color.
A previous post noted that an alarming fraction of families garner insufficient resources to pay for basic necessities―more than one-third overall, and over one-half for families of color.
One reason for this shortfall of resources is that the cost of necessities―food, housing, clothing, transportation―has risen markedly faster than the cost of other goods and services. I estimate that prices of necessities have risen 36% faster than other goods and services over the past 60 years.
This implies that the purchasing power of lower income families has eroded significantly faster than is implied by using standard price indexes, which include goods and services well beyond necessities.
Combining rising prices and the more sluggish increase in low incomes reveals that use of the “wrong” price index to deflate low incomes results in an 18-28% over-estimate of purchasing power-adjusted incomes over the past 50 years. The overstatement is worst for Black families, who earn disproportionately lower incomes and spend disproportionately on necessities.
One reason for this shortfall of resources is that the cost of necessities―food, housing, clothing, transportation―has risen markedly faster than the cost of other goods and services. I estimate that prices of necessities have risen 36% faster than other goods and services over the past 60 years.
This implies that the purchasing power of lower income families has eroded significantly faster than is implied by using standard price indexes, which include goods and services well beyond necessities.
Combining rising prices and the more sluggish increase in low incomes reveals that use of the “wrong” price index to deflate low incomes results in an 18-28% over-estimate of purchasing power-adjusted incomes over the past 50 years. The overstatement is worst for Black families, who earn disproportionately lower incomes and spend disproportionately on necessities.
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