Workers Will Move Up As They Age. But That Doesn't Fix Poverty.

One of the conservative lines on how to fix poverty is that you get workers into really bad poverty-wage jobs and then over time they can get promoted until their jobs are only moderately bad non-poverty jobs. Paul Ryan has been fond of this line, calling the process by which you get a terrible job and then move up the "ladder of life." The problem with this analysis is that it misconceives poverty.

It is the case that, if you wait long enough, non-poor people will tend to stop being poor. According to my calculations of the 2008-2012 ACS, the poverty rate of those aged 25 is 19.2 percent, while the poverty rate of those aged 64 is 9.9 percent. Over those 40 years, the poverty rate nearly cuts in half.

This is, in large part, because of the mechanics of how promotions work. Every year, old people relatively high in the economic hierarchy retire. That creates vacancies that those just beneath them in the hierarchy fill. That creates more vacancies, which are also filled by promoting those lower in the hierarchy. And so on.

Through this process, people are sucked up into relatively better jobs over the course of their lives.

Given the way income life cycles work, you can, for a given individual, just say "wait and probably things will get better down the line as higher-paying jobs open up because of retirements." But this does not solve poverty or reduce it in any way. Poverty is a temporally-bound phenomenon. This is why I said in a prior post that, at least in many cases, it should be measured in people-years. Someone who was impoverished from ages 25-30, but not from ages 30-64 because of their income life cycle had 5 people-years of poverty. To reduce the incidence of poverty would mean cutting that down to 4 people-years, 3 people-years, 2 people-years, 1 people-year, or ideally 0 people-years. That means restructuring our institutions so that the poverty that afflicted them at ages 25-30 doesn't happen anymore.

When someone in a poverty-level job moves up to a better position because of vacancies, some other (generally younger) person comes in behind them to take their job. We might describe the person who moved up as "getting out of poverty," but in aggregate terms poverty is unaffected. We've just moved the conveyer belt of life forward one notch, keeping in place the same locations on it that continue to impoverish those who find themselves in them.

It's important to think about poverty in this overall structural manner, if you actually want to whip it. In general, poverty is not a function of highly idiosyncratic personal situations, but of circumstances and structural positions that replicate themselves again and again even as some people move out of them and others move into them over time.

When I say that a person in their mid or late-20s shouldn't be in poverty, I don't mean that we should wait for them to get old enough so that they get promoted into a better-paying job. I mean that we need to change the way that we treat their structural location so that whoever occupies it now or later does not find themselves in poverty. That's the only way to actually bring poverty down. There are a number of ways that you can do this (the most successful being non-market distributive institutions), but waiting for people to get older is most certainly not one of them.