I mostly agree with Warren Buffett’s commentary on the minimum wage in the Wall Street Journal. Here’s one nice paragraph:
The poor are most definitely not poor because the rich are rich. Nor are the rich undeserving. Most of them have contributed brilliant innovations or managerial expertise to America’s well-being. We all live far better because of Henry Ford, Steve Jobs, Sam Walton and the like.
But, I have issues with this paragraph:
In 1982, 15% of Americans were living below the poverty level; in 2013 the proportion was nearly the same, a dismaying 14.5%. In recent decades, our country’s rising tide has not lifted the boats of the poor.
This is a good example of where statistics and real life can diverge dramatically.
How you perceive a rising tide depends on what you use to compare to. If you are on a tall boat, it’s no good to use a smaller boat to determine the effects of a rising tide as both go up. Yet, that’s what Buffett is doing. The American poverty level goes up and down with American prosperity.
To truly see the effects of a rising tide you need a better comparison. You need a GPS unit or a marker that is firmly connected to the ground so that you won’t be easily deceived like Buffett has been. This is what I like to refer to as a true measure.
So, what’s a true measure for American poverty? American poverty vs. American poverty at other times in the past or vs. poverty that exists in third world countries.
Given a choice to live in poverty today vs. poverty in 1982, most people would easily choose today for one simple reason: a rising tide has lifted all boats.The standard of living, even for the poor, has improved considerably since 1982 and that is not appropriately reflected in the statistic.
Given a choice to live in the U.S. in poverty or in third world country poverty, most people would choose the U.S. That’s yet another sign that the tide has lifted all boats in the U.S.
But, the rest of the article is worth a read.