Poverty Is on the Upswing, but Metric Is Out of Date
The federal poverty rate in the United States is expected to be 15 percent when 2009 census data are unveiled later this year, up from 13.2 percent in 2008. But many think that figure is low because of the way the federal government measures poverty, which doesn’t include many of the monthly expenses that families have to tackle. On the other hand, the calculation of income used when measuring poverty also doesn’t include the billions of public safety-net dollars distributed to families.
The formula for measuring poverty has been unchanged since 1963, according to a Stateline report. That metric doesn’t include medical costs, transportation or the regional differences in housing costs. It also counts only pre-tax cash income when measuring what a family has to spend each month, leaving out benefits like food stamps, housing vouchers, tax credits and child-care subsidies.
The Obama administration plans to begin using a new supplemental poverty measure in 2011, based on recommendations made by the National Academy of Sciences in 1995. That measure will use Commerce Department data for expenditures on food, clothing, shelter and other household expenses to develop a poverty threshold for a family of four. That threshold will be compared to a family or individual’s income, which will be calculated using both income and in-kind benefits, excluding taxes and other “non-discretionary” expenses like child care and medical expenses.
The use of the new data is likely to have political ramifications, as it will change formulas used for distributing federal dollars to the states.