What the Left want you to think

In a column ironically written to highlight some truths about poverty and inequality, Brian Fallow quotes leftist economist Brian Easton:

The majority of the poor are parents with jobs and their children (although they may have had only one or two), living in their own home albeit usually with a mortgage.

I think that's wrong.

From the Household Incomes Report, p147

Figure H.5

Proportion of poor children who live in ‘workless’ households (AHC 60%, fixed line)

 (The top line is workless/part-time, the bottom line is workless. Reproduction has changed the line appearance.)

 Then from p138,

47% of poor children lived with their families in private rental accommodation, and another 21% in HNZC homes

How do these two pieces of information square with Easton's claim that "The majority of the poor are parents with jobs and their children (although they may have had only one or two), living in their own home albeit usually with a mortgage" ?

(I realise he is talking 'parents' whereas I am talking 'children' but there can't be much in the difference statistically.)

Child poverty and parental choice

Yesterday I referred to the mistake made by Statistics NZ/Treasury in relation to estimated household incomes. Accommodation supplement ($1.2 billion across 300,000 homes) was double-counted. That resulted in the poorest incomes being over-stated. It didn't materially change anything for people in those homes. But as I use the graphs from the Household Incomes Report quite frequently here are two of the revised.

The first shows perhaps the most commonly used measure of inequality - the Gini coefficient. Flat or "vaguely" (as Bill English puts it) downwards over the past ten years.

Figure D.17  REVISED

Inequality in New Zealand: the Gini coefficient

The next shows proportion of children living in households that fall below 60 or 50  percent of the median equivalised income After Housing Costs. The relative line shows the proportion according to that years median. The constant value line shows proportion according to the median at a fixed year. (The original graph is below the revised).

Figure F.4

Proportion of children below selected thresholds (AHC):  REVISED

fixed line (CV) and moving line (REL) approaches compared

 

The picture is not as rosy. The revised graph clearly shows the impact of the recession and increased unemployment. However the incline is nowhere near as steep as that prior to the early nineties recession and the blue and red lines seemed to have arrested.

That red line on the revised chart tells it own story though. These are mainly children in DPB homes. The proportion hovers around 20% through the 1990s and early 2000s. When we had the lowest unemployment in the OECD and what was considered an 'economic boom', the percentage only dropped to 16-17 percent. There's your 'child poverty'. The new 'normal' is one in five children born onto a benefit directly or becoming dependent shortly afterwards. That's largely a parental choice.

MSD research:

 Throughout most of the 1990s around 25% were included in a benefit on the date of their birth or very soon after. Since 2000 this proportion has declined to 20% of children born in 2005 and 2006, and 18% of children born in 2007.

Figure 2  Estimated percentage of children included in a main benefit at birth, by birth cohort¹¹

My research updated the numbers as follows:

2008 21%
2009 23%
2010 23%
2100 22%
2012 21%

The isn't a new subject for me. But it seems it needs repeating frequently. Having kids on welfare is the major driver behind child poverty.