Changing Poverty Demographics

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Friday, September 17, 2010 at 5:24 pm

Matt Yglesias posts a good chart of the changing poverty demographics over the past forty years:

Poverty declines sharply for seniors. For families headed by single mothers, it declines significantly before tracking back up during the 2000s. The aughts saw a slow rise in poverty for the working-age and children, as well — the first time ever that poverty has increased during a period of economic expansion. Matt explains what is behind the dynamics:

[P]overty among seniors declining thanks to Great Society expansion of retirement support programs. The other is a jump in poverty for non-seniors during the 1978-82 period that persisted throughout the Reagan-Bush years. This was in part driven by an increase in the proportion of female-headed households without husbands, but the same pattern appears within that subset. We then had a giant reduction in poverty among this group in the 1990s which was a combination of strong economic performance, “welfare reform,” and also the fact that the Clinton administration really wanted to make welfare reform work so threw lots of stuff — EITC expansion, SCHIP, etc. — at making it work. Then we saw a slow, steady erosion of that progress.

I also think that it is important to note that the governmental definition of poverty is extraordinarily outdated. For one, it is income-based, not spending-based — it derives from what a family makes, not what it earns — skewing the data for reasons I explained yesterday. Second, the poverty threshold is, at its foundation, based on the cost of food. In the mid-1960s, government researchers found that the average family spent a third of its income on food. They therefore determined how much it would cost a family to live on basic basket of products, then tripled that amount — creating the poverty threshold. Every year, the government updates that number for inflation. The problem is that food has gotten relatively less expensive — families now spend just one in seven dollars on food. And many other things have gotten relatively more expensive — housing, child care, elder care, transportation. Third, the poverty threshold does not take into account the different costs of living around the country. Because the poverty threshold is so outdated, some researchers estimate the actual poverty rate should be around a third higher.

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