Better Poverty Measure Shows Worse U.S. Poverty Rate

We should be used to this by now. The Census Bureau has just reported a higher national poverty rate than the rate it reported in September. According to its Supplemental Poverty Measure, the rate is 16%, instead of 15%, as the official measure indicated.*

This means that somewhat over 2.7 million more people — a total of 49.7 million — were living in poverty last year. On a somewhat brighter note, the percent of people living in severe poverty, i.e., below 50% of the applicable threshold, is again lower — by 1.5% — than the official measure shows.

We again see shifts up and down for state-level rates as well.

For example, the rate for the District of Columbia rises from 19.3% to 22.7%, according to the three-year averages the Census Bureau uses for the SPM. Rates based on the three-year averages dropped in 28 states and increased more than the District’s in five.

As in the past, we also see shifts in rates for different age and race/ethnicity groups. For example, the poverty rate for blacks dips from 27.3% to 25.8%, while the poverty rate for Asians rises from 11.8% to 16.7%.

The poverty rate for non-Hispanic whites is till the lowest, but it’s higher than the official rate — 10.7%, as compared to 9.8%.

The rate changes all reflect differences between the crude, official measure and the SPM, which goes at poverty measurement in a different — and more sensible — way.

I’ll forgo another summary of how the SPM works. I took a stab at one last year and the year before. And the Census Bureau has a more extensive (and wonkish) explanation in its report.

From a policy perspective, both the overall higher poverty rate and the rate shifts are especially important because they show both the impacts and the limits of major federal benefits programs.

So far as the rate shifts are concerned, the most striking are those for the young and the old.

  • The child poverty rate drops from 22.3% to 18%, reducing the number of children in poverty by about 3.2 million.
  • For children, the severe poverty rate is less than half what it is under the official measure — 4.7%, as compared to 10.3%.
  • The poverty rate for seniors rises from 9.1% to 14.8%, increasing the number of poor people 65 and older by nearly 2.5 million.
  • The severe poverty rate for seniors also rises, from 2.7% to 4.7%.

The higher rates for seniors reflect principally the amount they spend on medical out-of-pockets, e.g., deductibles, copays.

This seems to me pretty good evidence that the chained CPI, which could still become the new cost-of-living adjustment measure for Social Security benefits, would disadvantage the 36% of seniors who rely almost entirely on them, as well as younger people who receive them because they’re severely disabled.

At this point, however, Social Security remains by far and away the single most effective anti-poverty program we’ve got. The SPM report shows that, without it, 26.6 million more people of all ages would have been poor — and the poverty rate for seniors a whopping 54.7%.

The report speaks to another issue that Congress is debating — and one that it isn’t, but should deal with swiftly.

The hot issue is SNAP (the food stamp program) — not whether to cut it because Congress has already done that, but by how much more.

So it’s useful to know that pre-cut SNAP benefits lifted 4.9 million people, including 2.2 million children, out of poverty last year. They were the single most important factor in the marked drop in severe child poverty, the Center on Budget and Policy Priorities reports.

The back-burner issue is the soon-to-expire Emergency Unemployment Compensation program, i.e., cash benefits for workers who’ve been jobless longer than their regular state programs cover.

I may have more to say about this, but will note here that unemployment insurance benefits generally reduced the SPM poverty rate by somewhat less than 1% — about 2.54million people.

UI benefits have lifted fewer and fewer people out of poverty since 2009 — mainly because fewer jobless workers are receiving them, according to a recent CBPP analysis based on other Census figures.

Retrenchments Congress made in the EUC program in early 2012 are part of this story. I suppose more recent figures would show the impact of sequestration as well.

House and Senate negotiators apparently still hope to stop the across-the-board cuts — at least for while. But this is a far cry from an agenda that would bring the very high poverty rate back down to where it was when we rang in the 21st century.

* The SPM report cites 15.1% for the official measure, noting that this is not statistically significant from the previously reported figure. Several other official measure figures in the report also differ from those the Census Bureau earlier reported.

The differences, if I understand correctly, reflect the fact that the SPM universe includes children under 15 who are living in a household with adults to whom they’re not related. For comparability, I’m using the official measure figures in the SPM report here.

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2 Responses to Better Poverty Measure Shows Worse U.S. Poverty Rate

  1. Alex says:

    Thus is an incredibly helpful piece and should be required reading.

  2. […] the other hand, we do have 16% of the population — 49.7 million people — in poverty, according to the SPM. And this […]

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