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"Incomes are going up, but so are prices" The Federal Poverty Threshold is set annually and is tied to the Consumer Price Index, so if prices go up, so does th

• makomk 10y ago
  Like most government measures of inflation the CPI has an interesting way of measuring of pricing changes, especially in technology. For example, suppose that a 2GB USB flash drive in the CPI basket of goods is discontinued and replaced with an 4GB model at a slightly higher price. The BLS compares this to the price of the old 4GB model and counts this as a price decrease even though most consumers end up paying more, and the same with every other aspect of technology. Now factor in the fact that tech has been stuck in a kind of red queen's race where you need higher and higher spec devices to continue, for example, viewing the same web pages and you can probably see the issue here. The CPI also makes heavy use of geometric rather than arithmetic means which de-emphasises the goods which have risen most in cost on the assumption that consumers will substitute them for one of the cheaper alternatives, even if they're not substitutes. For example, until 2016 the CPI used the geometric mean for prescription drugs, assuming that if - for example - EpiPens shot up in price consumers would substitute them for other drugs which didn't even treat the same condition. (Notice that this article uses 2015 figures.)