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Doing Better Than We Thought

from the magazine

Doing Better Than We Thought

New research shows that America is still the land of opportunity. Summer 2000
Economy, finance, and budgets
Cities
The Social Order

Poverty advocates often wag an accusing finger at the United States for what they call its third-world child-poverty rates and income disparities. They might want to look, though, at Urban Institute economist Robert Lerman's recent research.

Most studies show the gap between the richest and poorest Americans widening by as much as 16 percent and the child-poverty rate worsening between 1980 and the mid- to late nineties. But, Lerman argues, these alarming trends mask a crucial point: nearly 16 million immigrants flooded into the U.S. between 1980 and 1998. Unlike immigrants who came to the U.S. before 1980, 90 percent of the newcomers hailed from dirt-poor countries. Thirty-six percent had no high school diploma, more than double the percentage of pre-1980 U.S. residents without diplomas. It's unsurprising that a country that opens its doors to the tired and huddled masses in this way would have a sizable contingent of the temporarily poor.

What would things look like if you excluded immigrants from these comparisons? Sure enough, Lerman discovered, a different, and sunnier, picture emerges. Yes, income inequality has widened, but its rate of increase decreases by as much as a quarter. The child-poverty rate actually declines over the last 20 years from 16.6 to 16.3 percent. Poverty among children in married-couple families falls dramatically—from nearly 10 percent to 6 percent.

The problem with this experiment, of course, is that if you exclude immigrants you're excluding a full 7 percent of the workforce in the late nineties. If you do include them, though, Lerman holds, a more accurate gauge of U.S. inequality and child poverty trends would compare the same people in 1980—wherever they lived at the time—with the same people in 1998. Earlier studies included Juan's 1998 salary of $15,000 in the U.S. but not Juan's 1980 salary of $2,000 in El Salvador; Lerman included both.

An even brighter picture develops. Instead of a surge of inequality in recent decades, there's only a small increase, almost entirely the result of a growing number of single-parent families. Inequality has not grown at all among married-couple families. The rate of child poverty declines from 19 percent to 17.9 percent. Children in married-couple families see their poverty rate cut in half, from 15.2 percent to 8.2 percent.

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