The nation's poverty rate jumped to 14.3% in 2009, its highest level since 1994, and the 43.6 million Americans in need is the highest number in 51 years of record-keeping, the government said Thursday.
The Office of Management and Budget defined the poverty threshold level as less than $21,954 for a family of four in 2009. The poverty rate increased for all racial groups except Asians.
Clearly a lot of this can be attributed to the ever rising rate of unemployment. However, is it also possible that due to the rising rate of supply of labor coupled with the decreasing demand; the wage rate is being pushed down?
ReplyDeletei think it will be interesting to see if the unemployment rate will decrease for the holidays since usually their is an increase in seasonal employment.
ReplyDeleteLooking at the rise in unemployment adds to the nations poverty rate. I am wondering if this could be due to growth in the labor force that pushes down the MPL of labor therefor labor makes less even though productivity has climbed since 2000 when the poverty rate were at the lowest point.
ReplyDeleteThe article states that capital gains and non-cash benefits do not count as income. Also, the great variation in living standards and costs are not taken into account. Thus, the report may not be entirely accurate in defining the nations economic well-being. In 2009, the poverty rate for children under 18 may have grown because of the increasing unemployment at the time. The surplus of labor supply (with the minimum wage at a fixed rate) lead to greater competitions for even unskilled jobs thus giving preference to those with more qualifications and experience. The government needs to find a way to stimulate investment (possibly through a tax cut incentive for entrepreneurs and a tax increase for the wealthiest Americans) and hiring.
ReplyDeleteI agree that the rise in supply of labor and the decrease in demand could cause the wage rate to be pushed down. However, John Keynes said that wages are sticky in an upward direction. This shows that even in the economy we are in today prices are more likely to stay the same or rise then they are to fall.
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