Better Poverty Measure, Worse Poverty Rate, But Not for Everybody

October 16, 2014

As in the past, the Census Bureau’s Supplemental Poverty Measure yields a higher poverty rate than the official measure that was the basis for the reports the Bureau issued last month. According to the just-released SPM report, the rate last year was 15.5%, rather than 14.5%.*

This means that about 2.9 million more people — roughly 48.7 million in all — were living in poverty. At the same time, 1.3% fewer people lived in deep poverty, i.e., at or below 50% of the income threshold that determines who’s counted as poor.

These differences as well as the many others reflect the fact that the SPM is constructed differently from the official measure. There’s a brief explanation of how it’s built in the last section below.

Other Shifts in Poverty Rates

We see shifts up and down for state-level rates. For example, the rate for the District of Columbia rises from 19.9% to 22.4%. Rates fall in 26 states and rise in 13. (These reflect three-year averages to compensate for the relatively small sample sizes.)

As in the past, rates also shift for major race/ethnicity groups. Most of the shifts are relatively small. An exception here for Asians, whose poverty rate was 5.9% higher, and for blacks, whose deep poverty rate was 4.6% lower.

The most marked shifts are again for the young and the old.

  • The child poverty rate drops from 20.4% to 16.4%, reducing the number of poor children by about 2.9 million.
  • The deep poverty rate for children is less than half the official rate — 4.4%, as compared to 9.3%.
  • By contrast, the poverty rate for people 65 and older rises from 9.5% to 14.6%.
  • And the deep poverty rate for seniors ticks up from 2.7% to 4.8%.

Poverty Rates Without Key Federal Benefits

The changes for seniors largely reflect the fact that the SPM factors in medical out-of-pocket costs. But the SPM report also tells us that the senior poverty rate would have been 52.6% without Social Security payments. In other words, Social Security protected about 23.4 million seniors from poverty last year — more than three and a half times as many as were poor.

This is only one of the policy-relevant figures the SPM report provides in a section that shows how poverty rates would change if some particular benefit weren’t counted as income. Some examples Census has helpfully translated into raw numbers:

  • The refundable Earned Income Tax Credit and Child Tax Credit lifted 8.8 million people out of poverty.
  • But for SNAP (food stamp) benefits, about 4.8 million more people would have fallen below the poverty threshold.
  • Unemployment insurance benefits lifted 2 million people over the threshold.

So we see that the much-maligned safety net programs work. But we also see that policy choices have impaired the impacts some of the biggies formerly had.

For example, SNAP benefits lifted about 5 million people out of poverty in 2012, before the across-the-board cuts became effective. We’ve yet to see the effects of the further, targeted whack at benefits that’s part of the new Farm Bill.

The anti-poverty impacts of UI benefits shrunk further — a trend dating back to 2010, according to the Center on Budget and Policy Priorities. The number of people the benefits lifted out of poverty last year was nearly half a million fewer than in 2012.

And that was before Congress let the Emergency Unemployment Compensation program die at the end of last year. The new UI figure almost surely reflects reductions it made when it last renewed the program, however.

SPM 101

As I’ve explained before, the SPM is a more complex — and generally viewed as better — poverty measure than the one that’s used for official purposes, e.g., as the basis for the federal poverty guidelines that help determine eligibility for many safety net and other means-tested programs.

The Bureau begins by setting initial thresholds based on what the roughly 33rd percentile of households with two children spend on four basic needs — food, shelter, clothing and utilities.

It then bumps the amount up a bit to account for some other needs, e.g., household supplies, transportation that’s not work-related. It also makes some housing cost adjustments based on differences between major geographic areas and whether households rent or own — and in the latter case, with or without a mortgage.

Next, it deducts for certain other necessary expenses, e.g., work-related expenses, out-of-pocket costs for health care. And, as income, it adds the value of some non-cash benefits that households can use for the four basic needs. It also, for the same reason, folds in the refundable tax credits.

The report I link to at the beginning of this post provides a fuller — and considerably more wonkish — explanation.

* This is the same rate the Census Bureau reported last month. However, most of the official rates in the SPM report differ somewhat because the Bureau has included children under 15 who are unrelated to anyone they’re living with, e.g., foster children. The official measure doesn’t include them as part of a family unit.

I’m using the adjusted rates so we can have apples-to-apples comparisons. But the rates reported last month are those that should be used for other purposes.

UPDATE: The Center on Budget and Policy Priorities reports that the refundable tax credits lifted 9.4 million people out of poverty. This figure, it says, is based on its analysis of the SPM data. I don’t know why it’s higher than the Census Bureau figure I linked to.


More Than a Third of Young DC Adults in Poverty Last Year

October 6, 2014

My recent post on the new poverty rates for the District of Columbia prompted an email from Deborah Shore. She wanted to know what I could tell her about poverty among older teens and young adults.

I’m sure many of you know why. For the rest, Deborah is the executive director of Sasha Bruce Youthwork, a nonprofit she founded 40 years ago. It now provides emergency shelter, transitional housing and a range of services to homeless and at-risk youth in the District.

Deborah also chairs the board of the National Network for Youth — a large coalition of organizations that serve and advocate for runaway, homeless and disconnected youth, i.e., those who are neither in school nor working.

I’m grateful for her question because, like many others who reported on the results of the American Community Survey, I didn’t initially pay attention to the figures for young adults.

Children, of course. Yet the very high poverty rates for them, both in the District and nationwide, can’t be neatly separated from poverty among teens and young adults because some are parents — mostly single mothers, it seems.

The Census Bureau doesn’t tell us a whole lot about youth in poverty, though I suspect one could dig up a fair amount if one had the tools to work with the detailed tables that expand what it reports from a special piece of the Current Population Survey. I don’t.

So I went searching among the thousands of tables the Bureau uses to report the results of the ACS — a better source for community-level data anyway. Here’s what I found there and in some other reports.

Folded into the District’s child poverty rate are roughly 2,925 children on the verge of adulthood, i.e., 16 and 17 year olds. They represent about a tenth of all poor D.C. children — a far lower percent than the very youngest.

But many more who’d just crossed the threshold were officially poor. The Census Bureau reports 21,000 young D.C. adults, i.e., 18-24 year olds, in poverty. This makes for an age-group poverty rate of a bit under 37%. It’s more than 11% higher than the national poverty rate for the age group.

And (here comes the bombshell ) nearly one in four young adults in the District lived in deep poverty last year, i.e., had incomes at or below half the applicable threshold. For one person living alone, deep poverty means a maximum annual income of $6,060 — and for a single parent with one child, a maximum of $8,029.

By far and away more young adults in the District were deeply poor than poor, but less so. This was not true for young adults nationwide. For them, the deep poverty rate was 13.7%, according to the ACS, or 10.2%, according to CLASP’s analysis of the Current Population Survey.

Well, what are we to make of all this? One thing is that the poverty rates reflect the unusually hard time young adults are having in the labor market.

The unemployment rate for 18-19 year olds was 19.8% last month, as compared to 5.4% for everyone older who was also jobless and actively looking for work. The rate for 20-24 years olds was 11.4%. And rates for both groups were even higher for men.

Such figures as we have suggest that far from all jobless young people were actively looking. Last year, only 64.7% of 18-24 year olds were either working or seeking work. This is nearly 8.7% lower than in 2000.

At the same time, those who were working didn’t earn much. The median for 18-24 year olds was $17,760 in 2012 — and for those with less than a high school education, a mere $13,510.

Try as I might, I haven’t found comparable figures for young adults in the District. The Economic Policy Institute provides a couple that come close, however. It tells us that 14.8% of D.C. workers under 25 were unemployed last year, not including those who were still enrolled in school or those who’d decided it was futile to look.

An additional 26.2% were underemployed, i.e., working part time, though they wanted full-time work or had looked during the year, but given up. (I don’t know why EPI doesn’t count the latter as unemployed.)

Both rates are due partly to the fact that young workers generally have a tougher time getting — and staying — employed than workers with more job experience. This is especially true when there are far more job-seekers than jobs to go around.

But the premium our local labor market puts on college degrees is probably also a factor, as the DC Fiscal Policy Institute’s analysis of 2012 unemployment rates shows.

And so far as good jobs are concerned, only one of the “high demand/high wage” jobs in the District requires only a high school diploma or the equivalent — and only two others less than a four-year college degree.

Both the poverty and the un/underemployment rates help explain the surge of homeless families in the District, since nearly half the parents who spent at least part of last winter in the DC General family shelter were 18-24 year olds.

They also help explain some first-time-ever figures for homeless youth who had no family members with them. Of which more in my next post.

 


How Does DC Stack Up Against States?

September 18, 2014

A few additional factoids from the new Census Bureau figures — all reinforcing the acute income divide I’ve already remarked on.

On the one hand, the median income for households in the District was higher than the medians in all but four states. Neighboring Maryland had the highest — $72,483. The District’s was $4,911 lower.

On the other hand, only five states had higher poverty rates than the District. And the District tied with Alabama for the sixth highest child poverty rate. Pretty remarkable when you consider that Alabama had the fourth lowest median income.


DC Poverty Rate Rises to Nearly 19%

September 18, 2014

I was all set to write that the poverty rate for the District of Columbia dipped down last year, just as the official national rate had. But no, according to the just-released results of the American Community Survey.

The District’s poverty rate increased from 18.2% in 2012 to 18.9% in 2013,  Or so it seems. The increase is small enough increase to fall within the margin of error.*

Here’s more of what we’ve got, plus a few remarks here and there.

The Big Picture

The new poverty rate means that approximately 115,630 District residents lived on less than the very low applicable poverty threshold — just $23,624 for a two-parent, two-child family or about 26% of the family’s basic living costs in the D.C. area.

The rate is 2.5% higher than in 2007, just before the recession set in. It is also 3.1% higher than the 2013 national rate.

The deep poverty rate, i.e., the percent of residents living below half the applicable income threshold, was 10.3%. In other words, somewhat over 63,000 residents were devastatingly poor, especially when we consider the high costs of living in the District.

Young and Old

As in the past, the child poverty rate was much higher than the overall rate — 27.2%. This means that about 29,740 D.C. children were officially poor — well over half of them (16.2%) deeply so.

Both the total and the deep poverty rates for children were slightly higher than in 2012 — in both cases, by less than 1%. But they were considerably higher than in 2007, when the child poverty rate was 22.7% and the deep poverty rate for children 12%.

They were also both higher than the national rates. These, according to the ACS, were 22.2% and 9.9%.

Seniors had lower poverty and deep poverty rates — 17.5% and 4.5% respectively. These too, however, were higher than the nationwide rates. And a better poverty measure than the clunker the ACS uses would probably yield higher rates for seniors here in the District.

Non-Hispanic Whites v. Everybody Else

Race/ethnicity gaps in the District remain very wide. For example:

  • The black poverty rate was more than three and a half times greater than the rate for non-Hispanic whites — 28.7%, as compared to 7.7%.
  • For blacks, the deep poverty rate was 15.2%, while for non-Hispanic whites only 5.1%.
  • For Hispanics, the poverty rate was 12.6% and the deep poverty rate 5.6%. These are markedly lower than the 2012 rates, unlike the others here.
  • Rates for Asians were 18.7% and 13.2% respectively.

We see similar disparities in median household income, i.e., the midpoint between the highest and the lowest.

  • The median income for non-Hispanic white households was a very comfortable $118,402.
  • For black households, the median income was less than a third of that — $38,124.
  • Hispanic and Asian households fell in between, with a median incomes of $50,861 and $63,281 respectively.

The non-Hispanic white household median was a whole lot higher here than nationwide, by nearly $60,720.  The medians for black and Hispanic households were higher too, but the dollar differences were much smaller, especially the former. The median for Asian households was lower — a surprise, since it was considerably higher in 2012.

Work and Education

We’re told that work is the solution to poverty. The ACS figures support this, but only up to a point.

In 2013, 46.5% of poor residents between the ages of 16 and 64 didn’t work at all. An additional 25.7% worked less than full time or intermittently.

But that still leaves nearly 8,380 working-age residents who were employed full-time, year round and still not earning enough to lift themselves out of poverty — or at least, not them and dependent family members.

It’s a fair guess that these are mostly residents who don’t have the formal education credentials that living-wage jobs here, as elsewhere, increasingly demand. This is probably also the case for many of the part-time and some-time employed.

What we do know is that roughly 44.5% of residents 25-64 years old who had less than a high school education were employed during 2013 — and only 54.2% with no more than that.

Not surprisingly then, the poverty rate for those 25 years and older who had just a high school diploma or the equivalent was 27% last year — and for those with less, 39.3%. By contrast, the poverty rate for those with at least a four-year college degree was just 5.4%.

(Yes, I know these shifting age brackets are frustrating.)

Income Inequality

There’s obviously a lot of wealth in the District — and a lot of poverty. We see this in the figures I’ve cited, but also in the fact that the average household income — $102,822 — is so much greater than the median.

While 15.3% of households had incomes under $15,000, 12% had incomes of at least $200,000 — the highest bracket the Census Bureau reports.

There’s nothing new about this divide, except for the specific numbers. Nor is it unique to the District, though the disparity here seems unusually high. Nothing new about that either.

Most experts — and advocates as well — view the growing income inequality in this country as a bad thing in and of itself. They also see negatives specifically for people at the low end of the income scale. Many of the same arguments would apply to the District.

Nearly 10,860 families in the District had annual incomes, including cash benefits of less than $10,000 last year. Surely we can do better, though doing it won’t be simple.

* All the ACS tables include the margins of error, i.e., how much the raw numbers and percents could be too high or too low. In the interests of simplicity, I’m reporting both as given.

NOTE: I’ve revised several figures in this post because I’ve learned that I should use the ACS national figures for comparisons. I had originally used the Current Population Survey for these because that’s how I understood the Census Bureau advice.


Official U.S. Poverty Rate Finally Ticks Down

September 16, 2014

The Great Recession officially ended more than five years ago. Data from various sources indicate that the recovery has actually taken hold, even in the labor market. And now the official poverty rate does so too.

The Census Bureau just reported that the overall poverty rate for the U.S. population ticked down for the first time since 2006 — from 15% in both 2011 and 2012 to 14.5% last year.

But like the other indicators, the new rate shows we’ve still got a long way to go — and that such prosperity as the recovery has generated is far from equally shared.

The new poverty rate translates into 45.3 million people poor enough to fall below the Census Bureau’s poverty thresholds. These are very low — an annual income of less than $18,770 for a single parent with two children, for example.

More than 19.8 million people — 6.3% — lived in what’s commonly referred to as deep (or extreme or severe) poverty, i.e., had incomes below half the threshold applicable to their family size and configuration.

As in the past, the child poverty rate was considerably higher than the overall rate — 19.9%, representing well over 14.6 million children or about one in three of all our country’s poor. And the senior poverty rate was considerably lower — 9.5%.

Approximately 6.5 million children — 8.8% lived in deep poverty. This was true for only 2.7% of seniors.

But we’ve reasons to expect that the Census Bureau’s report on its more complex Supplemental Poverty Measure will show markedly higher rates for seniors, as well as somewhat lower rates for children.

Other disparities generally mirror those we’ve seen before. For example:

  • The black poverty rate was nearly triple the rate for non-Hispanic whites — 27.2%, as compared to 9.6%.
  • The deep poverty rate for blacks was 12.2%, while only 4.3% of non-Hispanic whites were that poor.
  • The poverty rate for Hispanics was 23.5% and their deep poverty rate 9.4%.
  • Rates for Asians were 10.5% and 5.2% respectively.

Disparities among family types also replicate a familiar patterns. The percent of married couples who were officially poor was 5.8%, while the percent for single-woman families was 30.6%. Families headed by a single man were again in between — 15.9%. And there were, as usual, far fewer of them.

Like the overall rate, most of these breakout rates were lower than in 2012. Not, however, the poverty rate for blacks or the ever-so-much-lower deep poverty rates for non-Hispanic whites and married couples.

None of the rates was as low as in 2007 — the last year before the Census survey reflected the recession. And those rates were nothing to cheer about.


More Earnings May Not Mean Less Hardship

August 20, 2014

Everyone with even a passing interest knows that the Census Bureau’s poverty thresholds are far too low — in part because they’re based on a long-outdated spending pattern.

The Urban Institute’s Molly Scott has a more fundamental objection. “All our national poverty statistics,” she says, “reflect economic poverty.” In other words, they measure total household income — both earnings and payments from programs like unemployment insurance and SSI.

The Census Bureau’s Supplemental Poverty Measure also includes the value of some near-cash benefits, e.g., SNAP (food stamps), housing subsidies, home energy assistance.

But Scott has something quite different in mind than a better version of our poverty measure. “The problem,” she says, is that “the arbitrary poverty line is a bad measure of material poverty, the amount of hardship people experience meeting their basic needs.”

People both above and below the poverty line often struggle to get through the month. The only difference between them is “the mix of resources they use and the costs associated with work,” Scott says.

She gives us two hypothetical single mothers in the District of Columbia. Both have two school-age children. They live next door to each other, so the rent on their apartments is the same. They both have minimum wage jobs. The difference is that one works part time, the other 60 hours a week.

The part-time mom’s family gets a larger SNAP benefit because the household’s income is lower. She’s somehow managed to get a housing voucher — again because her income is extremely low.

At the same time, her transportation costs are lower, presumably because she doesn’t work every day. And she doesn’t have to pay for child care because she works only while her kids are in school.

The end result is that her gross income is much lower, but her family is actually somewhat better off. Probably still facing struggles, but not actually in the hole, like the family headed by the other mom, whose earnings put them nearly $10,000 above the federal poverty line.

The moral of this story is that policymakers — and others — who champion work requirements and other strategies “to get people to work more” are often actually looking for more ways to minimize spending on programs that help poor people make ends meet.

We may spend less, but achieve little or nothing to alleviate hardship, as Scott’s time-and-a-half working mom’s situation shows.

Scott’s conclusion is more cautionary than prescriptive. “[W]e need to make sure our policies and programs do more than swap out subsidies for low-income wages that won’t change people’s quality of life.”

She refers to “real ladders of opportunity and supports along the way.” Which is all very well and good, but we need to do something about those low-wage jobs as well — and about supports for people who, for various reasons, can’t climb a ladder into a genuine living wage job.

For our single mothers in the District, that would be a job paying $32.95 an hour, assuming full-time, year round work. This would give them an annual income nearly three and a half times higher than the poverty line for their families — and about $1,950 more than the median for all households in D.C.

We’ve got bills in Congress that would raise the floor the “ladders of opportunity” rest on. There’s the long-stalled minimum wage increase, of course, but also a pair of bills that would, among other things, ensure that workers don’t get shorted if they’re sent home early or required to work for awhile and then again later because their employers go in for “just-in-time” scheduling.

We’ve got bills that would guarantee most workers some time off with pay so they could stay home when they were sick or for other compelling reasons, e.g., childbirth, an ill family member who needs care.

We’ve even now got a bill that would help ensure that some of the 26 million or so workers employed by federal contractors get paid what they earn.

And, of course, President Obama has used his pen — or as some Republicans say, disregarded the Constitution — to both raise their wage floor and better protect them against wage theft, as well as some other prohibited labor practices.

But the mighty pen can’t boost federal funding for child care — the second largest item in the living wage budget for our D.C. single-mother families. It can’t do anything about the cost of housing, which, as you might expect, is the largest.

And it’s highly doubtful Congress will either — any more than it will raise the minimum wage or pass all the other bills that would somewhat improve the financial circumstances of low-wage workers.

What’s more frustrating, in a way, is that there is no silver bullet — or round of silver bullets — ready for policymakers to fire, if they choose. Material poverty seems to me even more complex than plain vanilla economic poverty.

Which isn’t an argument for doing nothing. There’s a lot that can be done, much of which we already know. It is an argument, however, as Scott implies, for rejecting out of hand solutions that rely solely on getting more people into the workforce.

 

 


Why Not Just Give Poor People Money?

July 14, 2014

Not long ago, a Chinese millionaire decided to invite some homeless people for a fancy free meal, with $300 checks as a post-dessert treat. The operators of the shelter he contacted agreed to supply the guests, but only if he donated the money to the shelter instead.

Some of the guests might use their cash gifts to buy alcohol and drugs, the executive director reportedly said.

The story provoked some sputtering and muttering, as you might imagine. It also gave rise to a New York Times op-ed that teed up an idea that’s been around for awhile. Why not just give the poor cash?

This, in fact, has been done, to a limited extent, in some developing countries. Professor Christopher Blattman, who wrote the op-ed, provides examples, including some trial programs he and colleagues had assessed.

For the most part, recipients used the money to improve their lives. Some extremely poor women who were given $150, plus a few days of business skills training nearly doubled their earnings, invested in some “durable assets” and, on average, tripled their savings.

Even homeless men and drug users in Liberian slums bought themselves some clothes and “ate and lived better.”

In most of the trials, people worked more after they got the grants, though the trials apparently didn’t impose work requirements, as our major cash assistance program does — and SNAP (the food stamp program) for people like at least some of the Liberian slum-dwellers.

Would handing out cash, with no strings attached, work here — and on a large scale? We don’t know. The U.S. projects Blattman mentions required families to set goals and report on progress, make efforts to “build up their human capital,” etc.

What we do know is that private donors, public officials and nonprofits like the New York City shelter are likely to take a dim view of addressing poverty in the simplest, most direct way, i.e., by giving poor people money.

Even one of the projects that linked cash to goal-setting and the like encountered “mistrust from donors and other nonprofits who held hard to the view that poor people can’t make good decisions,” Blattman says.

This is a commonly held view, I think. In some cases, it’s a form of blaming. People are poor because they made bad decisions — didn’t finish high school (or go on to college), had children before they were married, etc.

And how many stories have we read of the extravagant and/or unhealthful things people buy with their food stamps? How many proposals to keep them from using their benefits this way?

We see something of the same view in widely-reported experiments designed to show that poor people make bad decisions through no fault of their own, but because their brains are overloaded with worries about not having enough money. Note the assumption here.

Awhile ago, blogger Matt Bruenig figured that we could cut poverty in half by giving every American about $3,000 a year, which we could each use however we chose.

This was perhaps more a thought-provoker than a serious proposal — a way, as he said, of showing that the obstacle to “dramatic poverty reduction” is politics, not the inherent complexity of devising effective solutions. Nor the cost.

Yet he’s not enthusiastic about simply giving everyone who’s poor enough money to lift them over the poverty line. This, he says, “would probably cause intolerable numbers of people to drop out of the labor market.”

Reihan Salam at the National Review objects to “unconditional income support” — and for somewhat similar reasons. “[I]t might help the most motivated poor people with the strongest social networks to raise their earnings potential,” he says. But it would harm the rest because they wouldn’t engage in gainful employment.

The biggest worry for him, it seems, isn’t what this would do to our economy, but rather that the poor would miss out on the personal benefits work provides.

Brink Lindsey, a “bleeding heart” libertarian whom Salam cites, elaborates on this point at length. “Joblessness,” he says, “means not only lack of income, but also lack of status, lack of identity, and lack of direction. It is the path … to anomie and despair.”

I suppose, in our society, this is generally true, though we can all think of exceptions — just as we can all think of jobs that, if anything, impair one’s sense of personal identity.

What’s interesting to me is that both Salam and Lindsey assume that poor people will make a decision that’s bad for them. They’ll forgo personal fulfillment and chose “anomie and despair” instead.

I doubt that giving no-strings cash to poor people is the solution to poverty. Among other things, it’s unimaginable that we’d give them enough. But, as Blattman says, “why not try” and see what happens?

 


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