Advocates Call for Updating of Federal Poverty Measure
Feature Story by Jake Liscow - 7/21/2008
Anti-poverty advocates urged lawmakers to establish a new federal poverty measure at a House Subcommittee on Income Security and Family Support hearing on July 17, citing a broad consensus that the current measure, crafted in the 1960s, was significantly outdated.
Rep. Jim McDermott, D. Wash, has drafted legislation designed to modernize the calculation of poverty thresholds and poverty rates, the Measuring American Poverty Act. The McDermott bill reflects the 1995 recommendations of the National Academy of Sciences Panel on Poverty and Family Assistance, which many experts have supported.
A poverty threshold is the minimum level of income deemed necessary to achieve an adequate standard of living. Those making less than this level are considered to be living in poverty.
The McDermott bill notes that "the official poverty measure, while helpful, is based on outdated assumptions and fails to accurately measure economic deprivation or take into account the availability of many economic resources."
Instead, it proposes a measure of poverty that would be based on current consumption patterns for food, clothing, shelter and other basic necessities. Additionally, it would account for income assistance from public programs (e.g., the Earned Income Tax Credit food stamps and housing assistance) and necessary expenses (e.g., federal taxes, work expenses and out-of-pocket medical expenses). The new measure would also take into account geographical differences in the cost of living.
The current measure sets the poverty threshold at $21,200, a figure that advocates say does not accurately reflect the contemporary costs of meeting basic needs, yielding something not "remotely close to a well thought out, accurate measure of who is genuinely poor," according to Douglas Nelson, president and CEO of the Annie E. Casey Foundation.
More specifically, the current poverty measure omits such key expenses as transportation to work, child care, and state and local taxes. Nor does it include a variety of non-cash benefits on which low-income families rely, such as food stamps, housing assistance, the Earned Income Tax Credit, and the Child Tax Credit.
"The apparent simplicity of [the current] measure masks a number of straightforward deficiencies," said Dr. Mark Levitan, the director of poverty research for the City of New York Center for Economic Opportunity.
The mayor of New York City recently proposed a new poverty measure that takes into account a number of expenses that the federal measure currently does not.
Panelists at the hearing stressed the importance of a federal poverty measure that accurately accounts for tax credits and other non-cash benefits, as well as for work expenses and medical out-of-pocket expenses. Both steps would affect the numbers in poverty.
"If we want to track the well-being of America's low-income families, and if we want to effectively measure the effects of our antipoverty policies… it is long past time to make this change," said Dr. Rebecca Blank, the Robert V. Kerr Senior Fellow at the Brookings Institution. "We need a statistic that demonstrates how policy and economic changes affect…low-income families."
