[00:00.00]One factor contributing to poverty, stagnating wages. 
[00:04.20]As this graphic shows, wages adjusted for inflation have been virtually flat for 45 years, but consumer prices have been rising sharply during that same period. 
[00:15.00]For more about this and its connection to poverty we¡¯re joined now via skype from Richmond, Virgina by Roben farzad. 
[00:20.10]He¡¯s a contributor for Bloomberg Businessweek. 
[00:23.00]So let¡¯s talk about this gap between wages and purchasing power. 
[00:27.09]Why is that different?
[00:29.30]Because if you¡¯re just tempted to look at the fact ¡®Oh, I made $50 a week¡¯, 
[00:33.84]let¡¯s say for argument sake, ¡®in 1970 and I make $60 right now so it¡¯s not bad,¡¯ in reality you¡¯re fooling yourself in real terms. 
[00:41.25]Because inflation is pernicious even if it¡¯s growing in the low single digits like 2 percent or 2.5 percent, like we¡¯ve been used to for the past decade. 
[00:50.39]When you compound it over several decades it¡¯s like singeing off three quarters of your dollar every time you take it out of your pocket. 
[00:56.80]People tend to look at things in nominal terms and in the end when they can¡¯t buy as much as they¡¯re used to on what they were making, they get blindsided.
[01:05.90]But what are some of the factors contributing to it? 
[01:07.89]People will say, ¡®listen now I have access to goods and services from all over the world at even cheaper prices, so maybe I don¡¯t need to make as much.¡¯
[01:15.02]Well that has tempered the pain certainly. 
[01:17.48]But that is also a function of really aggressive offshoring and outsourcing. 
[01:22.60]And these jobs, these decent manufacturing jobs, used to be able to be a high school graduate, 
[01:27.79]or at worst you know maybe have an associates degree from a two-year program at a college and get a decent living wage, 
[01:35.41]and maybe get benefits and have hopes of raising a family of four and putting kids through high school and what not. 
[01:41.08]And that has so deteriorated in a cloud over the past several decades. 
[01:45.24]You can¡¯t count on there being good paying jobs. 
[01:48.27]People are realizing that their pension programs are no longer guaranteed, that companies are using increasingly part-time workers and contract workers.
[01:57.52]Okay, let¡¯s talk finally about the cliff effect. 
[02:00.04]This urge for people to not want to raise or not make a dollar more than what actually gets them in the poverty zone?
[02:07.64]It¡¯s one of the evergreen and very valid criticisms of the social safety net in the United States. 
[02:12.50]It¡¯s so frustrating for people who are on the brink of being able to get out of assistance, 
[02:18.39]whether you¡¯re talking about food stamps or Medicaid, 
[02:20.53]but they know that for every incremental 10 dollars that they make, they¡¯re gonna lose all their benefits, and they can¡¯t do that. 
[02:28.17]Suppose you¡¯re making 19,000 dollars a year and you have a chance to make 22,000 dollars a year, 
[02:33.27]but you¡¯re going to have to pay for out-of-pocket health insurance, 
[02:36.51]or go uninsured, and then pay out-of-pocket groceries when you were getting food stamps before. 
[02:40.21]So it gives you a disincentive to go out and find better paying work. 
[02:44.64]and until the system becomes more proportional you¡¯re going to have millions of Americans, 
[02:48.87]especially during a time of record food stamp use, sticking to that cliff.
[02:53.57]Alright, Robert Farzad, thank you so much for your time.