New Way to Tally Poor Recasts View of Poverty
By Sabrina Tavernise and Robert Gebeloff
The Census Bureau on Monday released what it says is a more accurate measure of poverty in America. The new measure shows more poverty among the elderly, but less among children and African-Americans.
It also shows a slightly higher poverty rate for the nation last year — 16 percent compared with 15.2 percent under the official measure — but lower rates among groups who benefit from noncash government programs the official count leaves out, including food stamps and the earned-income tax credit.
As a result, there were 3.2 million fewer children found to be living in poverty in 2010, compared with the official measure, a difference of about four percentage points, and 800,000 fewer poor African-Americans, or about two percentage points less.
Two of the biggest antipoverty measures, food stamps and the earned-income tax credit, were expanded substantially under President Obama’s stimulus package, helping lift about 11 million people above the poverty line in 2010, according to the Center on Budget and Policy Priorities. As that money winds down, there is a concern that help for the poor could shrink.
“Unemployment isn’t going away anytime soon, and Congress has been talking a lot about cutting deeply,” said Arloc Sherman, a senior researcher at the center.
Census officials cautioned that the bureau’s new measure, known as the supplemental poverty measure, would not replace the official one, which is used to calculate federal assistance to states and other types of spending.
The new assessment was developed primarily to give policy makers a sense of the effect that social safety-net programs are having, said Kathleen Short, a Census Bureau official who presented the measure on Monday at a conference at the Brookings Institution. It also includes costs like child care, out-of-pocket medical expenses and taxes, which erode income for those above the poverty line, greatly expanding the ranks of the near poor, whom the safety net does not reach.
Under the new measure, a third of Americans fall into the group that earns 100 percent to 200 percent of the poverty threshold, which in 2010 was $24,343 for a family of four last year.
The middle and upper classes fared worse. Families with incomes four times the poverty threshold or more — $97,372 for a family of four — shrank to just 17 percent of the population, compared with 36 percent under the official measure, largely because taxes and work expenses were subtracted from income.
The traditional measure of assessing poverty was first applied in the 1960s, when Americans spent roughly a third of their income on food. Today, spending on food has shrunk to a seventh of income, census officials say, while spending on housing, utilities and work expenses has expanded. The new measure, which counts those costs, was designed to adjust for that shift.
Bruce Meyer, an economics professor at the University of Chicago, said the new measure overstated poverty for the elderly because it did not take into account their income from savings, the stock market and other accumulated wealth. “If you look at what they consume, you see that their living standard is much higher,” Professor Meyer said.
The new measure shows a 15.9 percent poverty rate among people 65 and older, nearly double the 9 percent rate of the official measure, largely because the new measure deducts medical expenses from income.
Other experts said the new measure was notable for how similar it was to the official one in terms of the rise in poverty: Both rose by just under one percentage point from 2009 to 2010.
“The big picture is that in this so-called recovery there are more people in distress regardless of how you measure poverty,” said Lawrence Katz, an economics professor at Harvard University.
About CCF: The Council on Contemporary Families is a non-profit, non-partisan organization of family researchers, mental health and social practitioners, and clinicians dedicated to providing the press and public with the latest research and best practice findings about American families. It was founded in 1996 and is based at the University of Miami.
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