Poverty numbers get an update

Thursday, November 3rd, 2011 

When the Census Bureau released new poverty figures in September, the stats made headlines. More Americans in poverty than ever before. A poverty rate not seen since 1993. One in five children living in poverty, one in 10 children in deep poverty.  

But the real picture of American poverty is more complicated than the recent census numbers suggest. Those figures, and all the ones before them, were based on calculations made in 1963 by Mollie Orshansky, a researcher at the Social Security Administration. She took USDA estimates of how much a family needed to spend on food for a month, multiplied that by three, and voila, the poverty line. The numbers have been a bone of contention ever since. 

Now that decades-old data is getting some competition.   

On Monday, the Census Bureau is putting out a second set of numbers, the Supplemental Poverty Measure. These numbers will take into account how much a family spends in four categories: food, shelter, clothing and utilities. That's not based on the food budget times three, but on actual consumer spending data. 

The supplemental measure also factors in other basic needs, adding 20 percent onto the total cost of those essentials — a calculation known as “plus a little more” in Census-speak. The “plus a little more” is for “things like shampoo, personal needs for yourself, maybe some transportation to the grocery store or books you need for school,” says Kathleen Short, a research economist in the social, economic and housing statistics division of the Census Bureau. 

There’s another huge change: many government benefits will be included in family resources for the first time. Right now, unemployment benefits, social security payments and other cash transfers are counted as part of income. But the current calculations leave out things like food stamps, the Earned Income Tax Credit, or other forms of non-cash, pre-tax aid. The new numbers also subtract work-related expenses like child care and commuting costs, as well as out-of-pocket medical expenses. That last one is huge, particularly for seniors. 

In other words, the supplemental poverty measure should give a much more realistic picture of what resources families do and don’t have to meet their basic needs.  

Orshanky, who died in 2006, may well have been pleased with the new companion to her famous figures. She knew that the poverty line wasn’t perfect from the start. For one thing, she based her calculations on the USDA’s “economy plan,” which was designed “for temporary or emergency use when funds are low,” not for planning every day family meals, as she wrote in a landmark 1965 article (pdf). That’s why she also calculated a second, higher line, based on the “somewhat less stringent low-income plan,” writes Gordon Fisher, a program analyst in the Department of Health and Human Services who has published numerous papers about Orshansky. But the Office of Economic Opportunity went with the lower, economy plan, Fisher writes, and that was what stuck. He speculates that the OEO preferred the lower line because it “yielded approximately the same number of persons in poverty” as the definitions already used by the President’s Council of Economic Advisers. The more generous measure would have meant more poor people.   

The poverty line was supposed to measure income levels that allowed people to eat “the minimal diet that could be expected to provide adequate nutrition” and still have enough to cover “all other living essentials,” Orshansky wrote. To that end, she proposed adding a whopping 15 cents per person per day to the poverty line, “to allow for the husband in a family to buy coffee at work or for children to buy snacks,” Fisher writes (pdf). Her supervisor vetoed the idea, according to Fisher. Living in poverty, then and now, really means the barest of bones.  

Orshansky’s definitions will still be used; the supplemental poverty figures are, essentially, for information purposes only. But while her calculations are still the federal standard, her warnings about their use, and their shortcomings, have fallen into obscurity.  

“Poverty has many facets, not all reducible to money,” she wrote 46 years ago. “The poor have been counted many times,” she continued. “It remains now to count the ways by which to help them gain a new identity.”  

 

 


 

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