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A change in real dollars still affects lower income folks more because a higher percentage of income is devoted towards basics. Inflation reduces purchasing pow
by adolph 5y ago
A change in real dollars still affects lower income folks more because a higher percentage of income is devoted towards basics. Inflation reduces purchasing power for all, but some categories of spending cannot be substituted or eliminated.
U.S. households with higher incomes spend more money on food, but the amount spent represents a smaller overall portion of their budgets. In 2020, households in the lowest income quintile spent an average of $4,099 on food (representing 27 percent of income), while households in the highest income quintile spent an average of $12,245 on food (representing 7 percent of income).
https://www.ers.usda.gov/data-products/ag-and-food-statistics-charting-the-essentials/food-prices-and-spending/ https://www.ers.usda.gov/data-products/ag-and-food-statistic...
- vkou 5y agoSo, you're saying that for every dollar taken from the poor (to be redistributed to the working poor), we'd be taking three dollars from the rich (to again, be redistributed to the working poor)? That seems to support my point that raising the minimum wage disproportionately helps the working poor.
- adolph 5y agoKey word is proportionate. Inflation disproportionately affects those with low income. The affects are not linear—look at the difference in pct income to food in lowest quintile compared to others. A dollar from the lowest quintile is objectively more valuable in purchasing power than three dollars is to the highest. It’s akin to the company town giving a buck more in wages but charging 2 more in groceries. Sure you make “more,” but since you can buy less of what you need, you are effectively making less. https://www.econlib.org/library/Topics/HighSchool/RealvsNominal.html https://www.econlib.org/library/Topics/HighSchool/RealvsNomi...