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The number of people living in poverty in this country has been
reduced. That is a cause for celebration in most circles, but not in
the circle around the Washington beltway. You see, many people who live
there have jobs that are tied to programs for the nation’s poor. These
statistics mean their empire is in danger of shrinking, and, in order to
justify their high salaries, they are working overtime to see that this
doesn’t happen. The poverty police have latched on to a new U.S. Census
Bureau report on income inequality.

Welfare reform has forced many people to go to work. As a result,
these people now are moving up the economic ladder. “That’s fine, as
far as it goes,” the poverty patrol tells, “but the gap between the
rich and the poor is increasing, not decreasing, and we have to do
something about this terrible inequity.”

The statisticians at the Census Bureau divide our population into
quintiles. Now you would think that each of these quintiles would
represent 20 percent or one-fifth of the population, but that’s not how
it works. No, the folks at the Census Bureau tinker with the numbers,
and the end result of this tinkering exaggerates the income gap.

According to the Bureau, those in the top quintile, the richest
Americans, earn nearly $13.86 for every $1 earned by those in the bottom
fifth. However, Robert Rector and Rea Hederman at the Heritage
Foundation have equalized the numbers in “Income Inequality: How Census
Data Misrepresent Income Distribution.” Their report shows that the
richest Americans earn only $3.18 for every $1 of income received by the
poor.

Can it be that the folks in the top quintile, which includes people
like Donald Trump and Bill Gates and Oprah Winfrey, who are worth
millions, are earning, on average, just a little more than three times
the amount of money received by folks in the poorest quintile, which
includes welfare mothers and those hamburger flippers down at
McDonald’s?

The first thing that should jump out at you in the Census Bureau
study is that the top quintile contains, not 20 percent of the
population, but 24.3 percent, while the bottom quintile contains only
14.8 percent of the population. In other words, the top quintile has 65
percent more persons in it than the bottom quintile. That’s because the
Census Bureau counts households, not persons, which exaggerate the data.

The bottom quintile contains more single adults, single parents and
single retired persons. Many single retired adults are not poor
because, despite the fact that they have little income, they own their
homes and automobiles and the government pays for most of their health
care. However, the Census Bureau does not consider the assets one has
accumulated, nor does it count many types of cash and non-cash income,
such as food stamps, public housing, the earned income tax credit and
the insurance values of Medicaid and Medicare benefits.

Rector and Hederman point out that that one frequently overlooked
dimension of the gap between the rich and the poor is how much it is
affected by marital status. Only about 30 percent of all persons in the
Census Bureau’s bottom quintile live in married-couple families, while
90 percent of the households in the top quintile contain married-couple
families. Many families in the top quintile contain not only two
full-time wage earners, but also several older children who have
part-time jobs.

Marriage is the greatest predictor of success in America today.
Married men in all age groups make more, on average, than do single men.
Children raised in intact married families are more likely to become
successful adults than children raised by single adults. Research
produced by Robert Lerman at the Urban Institute has shown that half the
increase in income inequality in recent years is due to the rise of
single parenthood.

The Census Bureau also fails to reflect the leveling effect of
taxation. While the Bureau fails to count most government subsidies
that go to the poor, the Bureau attributes pretax income to those of us
it deems as “rich,” when, in reality, one-third to one-half the money
earned by working Americans goes to pay their federal, state and local
taxes.

After Rector and Hederman made all these corrections and factored in
capital gains and losses, which are not reflected by the Census Bureau,
the ratio of the incomes of the top to the bottom quintile drops to
$4.23 to $1.00.

The remaining difference largely was due to the fact that working age
adults in the top quintile work almost twice as many hours, on average,
as those in the bottom quintile. As a result of the Rector Hederman
study, you can see that much of the so-called “inequity” is a result of
lifestyle and choice, both important elements of a free society.

A free society does not guarantee that everyone will be equal. It
guarantees that everyone will have an equal opportunity. Our country is
far from perfect but Rector and Hederman point out that today, “The
standard of living for the average American is nearly seven times higher
than it was 100 years ago, after adjusting for inflation.”

Furthermore, the large gains in prosperity have affected all
Americans, including low-income groups. Presently, workers earning the
minimum wage, which is a training wage, represent only 2 percent of all
employees. Also, Rector and Hederman remind us, “Today’s minimum wage
worker earns more, in real terms, in a single day than a low-skilled
worker earned in 70 or more hours a century ago.”

If we are to continue to provide more opportunities for those on the
lowest end of the economic ladder, we are going to have to do something
about shrinking the size of this country’s No. 1 growth industry, the
federal government. That includes many of those people now soaking up
large salaries as part of the poverty infrastructure.

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