Five Things You Need to Know About Measuring Poverty in America

Posted September 3, 2014, By the Annie E. Casey Foundation

Blog fivethingsaboutpoverty 2014

The offi­cial pover­ty mea­sure has been crit­i­cized by peo­ple of all polit­i­cal per­sua­sions who claim, that among oth­er things, the cur­rent mea­sure under­es­ti­mates what it takes to raise a fam­i­ly today and does not accu­rate­ly cap­ture all the income and ben­e­fits com­ing into a households. 

We have includ­ed this mea­sure in our annu­al KIDS COUNT Data Book since the first Data Book was released in 1990 because it is the most wide­ly accept­ed mea­sure of child pover­ty and is com­pa­ra­bly col­lect­ed across states and over time. The child pover­ty rate includ­ed in our Data Book reflects the offi­cial pover­ty mea­sure cal­cu­lat­ed by the U.S. Cen­sus Bureau and is used by researchers, pol­i­cy mak­ers and all lev­els of gov­ern­ment to deter­mine pro­gram eligibility. 

Advo­cates for chil­dren, researchers and oth­ers reg­u­lar­ly report the rate and num­ber of chil­dren liv­ing in pover­ty because grow­ing up in eco­nom­i­cal­ly deprived house­holds can have enor­mous neg­a­tive impacts on child well-being, espe­cial­ly if chil­dren expe­ri­ence pover­ty in ear­ly child­hood or remain in pover­ty for an extend­ed peri­od of time. 

As debates swirl about mea­sur­ing pover­ty in the Unit­ed States, here are five facts you should consider: 

  1. The offi­cial” pover­ty mea­sure is based on an out­dat­ed for­mu­la cre­at­ed in the 1960s
    Cur­rent­ly set at about $24,000/year for a fam­i­ly of four, the fed­er­al pover­ty thresh­old is based on a for­mu­la cre­at­ed five decades ago by researcher Mol­ly Orshan­sky that cal­cu­lat­ed the cost of what it took to feed a fam­i­ly a nutri­tion­al­ly ade­quate diet in 1963 and mul­ti­plied by three, as food account­ed for rough­ly one-third of the aver­age family’s bud­get at that time. It has been adjust­ed for infla­tion every year since then. Today food accounts for a much small­er por­tion of a typ­i­cal family’s bud­get. Researchers have found that, on aver­age, fam­i­lies need an income of rough­ly twice the pover­ty lev­el to cov­er basic expens­es for hous­ing, food, trans­porta­tion, health care and child care.
     
  2. The offi­cial mea­sure also fails to ade­quate­ly reflect the ways in which costs — such as hous­ing and child care — vary by region.
    The offi­cial pover­ty line is the same for fam­i­lies who live in North Dako­ta as in Cal­i­for­nia, but costs for rais­ing a fam­i­ly vary dra­mat­i­cal­ly based on where the fam­i­ly lives. For exam­ple, the typ­i­cal rent for a two-bed­room apart­ment in Far­go, North Dako­ta is $715 v. $1,400 in Los Ange­les
     
  3. The offi­cial pover­ty rate does not account for many resources fam­i­lies receive.
    Only the pre-tax cash income avail­able to fam­i­lies is includ­ed when deter­min­ing whether or not they are offi­cial­ly poor. This excludes many resources that a fam­i­ly might receive, such as fed­er­al tax cred­its, child care and hous­ing assis­tance and food aid through the Sup­ple­men­tal Nutri­tion Assis­tance Pro­gram (for­mer­ly food stamps).
     
  4. To bet­ter under­stand how fam­i­lies are far­ing, the U.S. Cen­sus Bureau cre­at­ed a Sup­ple­men­tal Pover­ty Mea­sure (SPM).
    This new sta­tis­tic mea­sures the impact of social pro­grams and accounts for ris­ing costs, among oth­er changes. This new mea­sure is an impor­tant advance in under­stand­ing child pover­ty and the effects of safe­ty net pro­grams and tax poli­cies on the eco­nom­ic well-being of fam­i­lies. In fact, when using the sup­ple­men­tal pover­ty mea­sure, researchers deter­mined that the rate of chil­dren in pover­ty has declined since 1990 while the offi­cial mea­sure shows no real change.
     
  5. The Unit­ed States con­tin­ues to have one of the high­est rel­a­tive child pover­ty rates among all devel­oped countries.
    In order to com­pare rates of pover­ty across coun­tries many researchers use rel­a­tive” pover­ty rates, which exam­ine a family’s income rel­a­tive to the aver­age fam­i­ly in the coun­try. A recent report by UNICEF found that the Unit­ed States had more chil­dren liv­ing in rel­a­tive pover­ty — defined as liv­ing in a house­hold in which dis­pos­able income is less than 50 per­cent of the nation­al medi­an – than all but one oth­er eco­nom­i­cal­ly advanced coun­tries, Romania.

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