Census Bureau Reports 16.1% Poverty Rate

November 15, 2012

Another round of news on poverty in the U.S. — this time from the Census Bureau’s latest report on the results of analyses using its Supplemental Poverty Measure.

Once again, the national poverty rate is higher than the rate the Bureau earlier reported, using its official measure — 16.1%, as compared to 15.1%.

In other words, about 3 million more people — a total of nearly 49.7 million — were living in poverty last year.

On the other hand, the percent of people living in extreme poverty, i.e., below 50% of the applicable threshold, is 1.5% lower than the official measure shows.

We get a mixed picture for state-level poverty rates, for which the Bureau uses three-year averages. Some of the rates are higher than the official rate. Some lower.

The rate for the District of Columbia rises sharply — from 19% to 23.2%. This is higher than the rate for any state except California.

As I’ve written before, the official measure sets poverty thresholds at three times the annually adjusted costs of what used to be the U.S. Department of Agriculture’s cheapest food plan.

The SPM starts from the costs of basic living expenses, adjusted for differences among major geographic areas and also differences in living situations, e.g., renting versus owning.

To these, it adds some other “necessary expenses,” e.g., payroll taxes, health care co-pays and other out-of-pocket costs.

On the other side of the ledger, it takes account of not only cash income, but some “near-money” federal benefits like tax credits and also some in-kind benefits, e.g., food stamps, two forms of child nutrition assistance, housing subsidies.

And it uses actual household size, rather than counting only household members who are related to one another, as the official measure does.

These differences explain not only the difference between the overall SPM rate and the official rate, but shifts in rates for different age and race/ethnicity groups.

We see, for example, that:

  • The child poverty rate drops from 22.3% to 18.1%, reducing the number of children in poverty by about 3 million.
  • The poverty rate for seniors rises from 8.7% to 15.1%, increasing the number of poor people 65 and older by somewhat more than 2.6 million.
  • The poverty rate for blacks drops from 27.8% to 25.7% — still far higher than the non-Hispanic white rate of 11%, but now 2.3% lower than the rate for Hispanics.
  • The poverty rate for Asians rises from 12.3% to 16.9% — the largest percent change for any race/ethnicity group reported.
  • For children, the extreme poverty rate is less than half what it is under the official measure — 5.1%, as compared to 10.3%.
  • For seniors, however, the extreme poverty rate rises — from 2.3% to 4.3%.

This year’s report is unusually timely because it gives us a read on the anti-poverty effects of some benefits that are at immediate risk. It tells us that:

  • Food stamp benefits lifted more than 4.6 million people, including  about 2.1 million children, out of poverty last year.
  • Well over 8.6 million more people, including nearly 4.7 million children, would have fallen below the poverty threshold if their family’s disposable income hadn’t been boosted by refundable tax credits.
  • Unemployment insurance benefits kept nearly 3.4 million people out of poverty — mostly adults, but about 963,400 children too.
  • And Social Security — the single most effective anti-poverty program we’ve got — accounted for 25.6 million fewer poor people than there would have been without its benefits. Poverty rates for all age groups would have been higher. The rate for seniors would have soared to 54.1%.

So there are the benefits. Now here are the risks.

The farm bills now pending in Congress would cut food stamp benefits for at least half a million households — 1.3 million if the House version prevails. The House bill would also mean no more food stamps at all for as many as 3 million people.

As you’re well aware, the Bush-era tax cuts are expiring. We can be quite confident that most will be renewed.

But Congressional Republicans want to extend earlier versions of the refundable Earned Income Tax Credit and Child Tax Credit, not the expanded versions that have made a significant difference to low-income working families.

The federal program that funds unemployment insurance benefits for longer-term jobless workers will also soon expire. Some two million workers and their families may face the new year with no source of cash income.

Lead Republicans in Congress are about to sit at the bargaining table with their Democratic counterparts and White House officials to thrash out an alternative to the so-called fiscal cliff.

They say they’ll be amenable to increased revenues (not to be confused with higher tax rates for the wealthiest 2%).

But the deal must also include “real changes to the financial structure of entitlement programs” — apparently something along the lines of the recommendations in the plan produced by the co-chairs of the President’s fiscal commission, a.k.a. Bowles-Simpson.

These recommendations would cut Social Security retirement benefits in several different ways. With the average benefit now only $1,230 a month, we could see more seniors in poverty if the Democrats don’t hold firm to the position they’re taking now.

NOTE: A couple of the benefits impact figures reported by the Center on Budget and Policy Priorities are a bit higher than mine. This is also true for figures reported by the Center for American Progress. I’m at a loss to explain the discrepancies.


New Census Report Shows Higher Poverty Rate, Especially For Seniors

November 7, 2011

So how many poor people are there in the U.S.? We have a new answer from the Census Bureau, which has just released a report based on its supplemental poverty measure.

According to the SPM, 49.1 million people in America were poor in 2010 — 16% of the population. That’s about 2.9 million — 0.9% — more than the Bureau reported based on the official poverty measure.

However, the Bureau’s earlier report doesn’t include unrelated individuals, i.e., people not living with relatives, who are under 15. Folding them in, as the SPM report does, nearly 2.5 million — 0.8% — more people were poor.

Poverty Rate Shifts

Some of the breakout figures are also markedly different from those based on the official measure.* For example:

  • The child poverty rate drops from 22.5% to 18.2%, reducing the number of children in poverty by about 3.2 million.
  • The poverty rate for seniors rises from 9% to 15.9%, increasing the number of poor people 65 and older by somewhat more than 2.7 million.
  • The poverty rate for blacks drops from 27.5% to 25.4% — still far higher than the non-Hispanic white rate of 11.1%, but now 2.8% lower than the rate for Hispanics.
  • The poverty rate for Asians rises from 12.1% to 16.7% — by far and away the largest percent change for any race/ethnicity group reported.
  • The percent of people in extreme poverty, i.e., with incomes below 50% of the threshold, drops from 6.8% to 5.4%.
  • For children, the extreme poverty rate is barely more than half what it is under the official measure — 5.3%, as compared to 10.4%.
  • For seniors, however, the extreme poverty rate rises from 2.5% to 4.6%.

Both the gap in overall poverty rates and the shifts for specific groups reflect profound differences in the way the official measure and the SPM set the poverty threshold and also in the way they determine who’s above and who’s below it.

Brief overview here of something that’s really quite complicated.

Poverty Thresholds

The official poverty measure is three times the cost of what used to be the U.S. Department of Agriculture’s cheapest meal plan for a two-adult-two-child family, with adjustments for inflation since the measure was developed in the early 1960s.

The SPM instead sets the threshold at the 33rd percentile of what households with two children and any number of adults spend on food, clothing, shelter and utilities — far more realistic, since food no longer accounts for anything close to a third of basic living expenses.

The total for these is multiplied by 1.2 to accommodate other basic needs, e.g., household supplies, transportation for purposes other than work.

The SPM then makes adjustments for shelter costs based on whether households rent or own — and if own, with or without a mortgage.

These costs are also adjusted to account for differences among geographic areas — obviously needed, since housing costs far more in New York City than in, say, Mobile, Alabama.

Definition of Household

The SPM adopts a more flexible view of who should be counted as part of a household.

For the official measure, a household consists of all related individuals living at the same address. The SPM also includes unrelated individuals living there — foster children, for example. Also what the Bureau refers to as “cohabitors,” i.e., domestic partners, and their relatives.

Income Calculation

The third big difference is the way income is calculated. For the official measure, only before-tax cash income counts — wages, of course, but also cash benefits from programs like unemployment insurance and Social Security.

For the SPM, “near-money federal benefits” for the four big expenditure categories also count. Tax credits are included here.

Also five in-kind benefits — food stamps, school lunches, supplementary nutrition assistance provided by WIC, housing subsidies and assistance funded under the Low Income Home Energy Assistance Program.

On the other hand, the SPM recognizes what the Bureau calls “nondiscretionary expenses” — payroll and income taxes, child care and certain other work-related expenses, child support payments and medical out-of-pocket expenditures.

These are all deducted from the expanded income calculated to arrive at the bottom line used to determine whether a household is above or below the poverty threshold.

Why the Nuts and Bolts Matter

Once we understand the SPM, the poverty rate shifts make sense. Or rather, we can make them make sense by applying what we know about discrete populations and the federal policies the measure takes account of.

This is what the SPM is supposed to help us — and policymakers — do. And though it’s still a work in progress — and subject to criticisms from both left and right — I think it does the job pretty well.

Surely a whole lot better than the official measure we’re still stuck with.

* All the comparisons below come from the SPM report. The official measure rates are, therefore, in some cases, different from those in the CPS report.


New Census Bureau Numbers for Poor People In the U.S.

November 22, 2009

Awhile back, I led off a posting by asking how many poor people there are in the U.S. The answer was nobody knows because the official poverty measure is so flawed.

Back in 1995, the National Academy of Sciences produced recommendations for an alternative measure that would take account of actual living costs, geographic differences and the impacts of public benefits. Experts generally agree that such a measure would be a big improvement over what we’ve got.

The Census Bureau has issued alternative poverty estimates based on the NAS recommendations. So do we now know how many poor people there are in the U.S.? No. But we’ve got at least six sets of figures that generally point in the same direction.

All four detailed sets base living costs on the Consumer Expenditure Survey–a two-part program that collects information on what Americans buy and how much they pay.

Two of these sets adjust poverty thresholds for geographic differences. One also subtracts Medicaid out-of-pocket expenses from income. The other includes Medicaid out-of-pockets in the poverty thresholds.

Looking at the first set, what we find is that, in 2008:

  • There were 47.4 million poor people in the U.S., as compared to 39.8 million under the official poverty measure.
  • The poverty rate was 15.8%, rather than the official 13.2%.
  • The child poverty rate was 17.9%, rather than the official 19%. The drop here probably reflects the impacts of food stamps and other non-cash benefits.
  • The poverty rate among seniors wasn’t lower than for any other age group, as the official measure indicates, but higher–18.7%. Rising health care costs are probably the culprit here.
  • While the poverty rate for blacks was unchanged at 24.7%, poverty rates for all other race/ethnicity groups were higher than the official rates, topped by Hispanics at 29%.

The second set puts most of these figures higher.

  • Instead of 47.4 million poor people, we get 50.8 million–16.9% of the population.
  • The child poverty rate goes up to 19.8%, rather than down.
  • Poverty rates for all race/ethnicity groups go up, with the Hispanic rate reaching 31.8%.
  • However, the poverty rate for seniors goes down a bit, to 18.1%.

I wish I knew enough to know which set of figures gives us the more accurate picture.

What’s clear enough is that there were many more poor people in the country than the original Census report indicated–unless you accept the view that the Bureau’s NAS formula is seriously flawed. Here again, I wish I knew more, but the aggressively anti-government source makes me suspicious.

If the formula’s not so bad, then the Bureau’s poverty thresholds are too low. Using the NAS recommendations, the 2008 threshold for a family of two adults and two children would increase from $21,834 to $29,654.

Here’s where the need to know comes up against fiscal politics.

As I’ve written before, bills have again been introduced in the Congress to establish a new poverty measure based generally on the NAS recommendations. They would not replace the current measure as the standard for calculating federal benefits. But the alternative measure would almost certainly show that many poor people are denied benefits because they don’t fall below the official poverty line–or whatever multiplier is used for the program.

Are members of Congress ready to deal with that? What about the Obama administration, which could adopt the alternative measure on its own?

The Census Bureau said it expedited release of the NAS-based poverty estimates because both wanted to see a broader range of numbers. Now they’ve got them. Let’s see what they do.


Bills That Count

September 19, 2009

I’ve been having a running discussion with some fellow advocates about how to impact public policy. One says there’s no point in presenting hard data. Legislators “aren’t interested in the truth.” They’re interested in getting re-elected. So what we need to do is create a groundswell of constituent pressure.

No doubt about the value of grassroots activism. But I think data have a role to play too, especially when issues are complex and call for complex, evolving solutions. As the business management gurus say, “you can’t manage what you don’t measure.”

So it’s good to see that bills have been introduced in the Congress that would give us a better fix on one of the most complex issues we’ve got–poverty itself.

As I’ve written before, the current federal poverty measure gives us a very incomplete picture of the problem–how many people are poor, who they are and where. Experts, advocates, even policymakers have known this for a long time. But nothing’s happened to change it.

Last year, a bill was introduced to belatedly implement recommendations for an improved poverty measure that was developed by the National Academy of Sciences. This bill–the Measuring American Poverty–has been reintroduced in the House as H.R. 2909 and in the Senate as S. 1625.

Under the MAP Act:

  • The Census Bureau and the Bureau of Labor Standards would develop a “modern poverty measure” generally based on the National Academy of Sciences’ recommendations.
  • The Census Bureau would publish poverty rates based on this measure, as well as on the “traditional poverty measure,” i.e., the one in use now.
  • The National Academy of Sciences would be commissioned to develop recommendations for two additional measures–a measure of the income a family would need to afford the costs of a “safe and decent, but modest standard of living” and a measure of the extent to which individuals are at risk of being unable to afford needed medical care.

The new measures would be only a first step. Under the MAP Act, the “traditional poverty measure” would still be used to determine eligibility for federal benefits and the amounts and kinds of benefits provided. So there’d be no direct impact on poor people, unless state and local governments decided to adopt the “modern” measure for their own programs.

Congress could, of course, switch federal programs to the “modern” measure. But, as the Center for American Progress points out, the new measure is likely to change poverty rates–not only overall, but among populations and among states. So adopting it for federal benefits would be politically challenging–as changes always are when some stand to lose what others gain.

Still, the MAP Act would give us a better understanding of the extent of deprivation in this country and a better benchmark for the effectiveness of anti-poverty programs. It would also give us a radically different measure that could, over time, become the basis for efforts to ensure that everyone in this very wealthy country of ours has a decent standard of living.

But first Congress has to pass the MAP Act, and the prospects don’t look great. The bill has only 13 cosponsors in the House and one in the Senate. And, as columnist Alec MacGillis observes, poverty isn’t high on the Democrats’ agenda–let alone the seemingly wonkish issue of how we define and measure it.

Meanwhile, health care reform is absorbing virtually all the political energy. Congress will nevertheless have to complete work on Fiscal Year 2010 appropriations before members can go home to work on their real top priority–getting re-elected.

So revamping the federal poverty measure may, once again, get put off to another day. Or maybe not. It could get tucked into some other piece of legislation. You never can tell about these things.


Census Numbers Bad and Going To Be Worse

September 12, 2009

The Census Bureau’s 2008 report on income, poverty and health insurance coverage confirms what we already knew. The recession has pushed an enormous number of people into poverty. Between 2007 and 2008:

  • The number of people living below the federal poverty threshold increased by nearly 2.6 million–from 12.5% to 13.2% of the population.
  • The number of poor children increased to more than 14 million–19% of all children.
  • Nearly 34% of black children and 30.6% of Hispanic children were poor.
  • The number of children in deep poverty (below 50% of the poverty threshold) rose to nearly 6.3 million–8.5% of all children.

But this is only part of the story. The Coalition on Human Needs gives us a table that compares the most recent figures to the figures for 2000, just before the last recession set in. It shows that in 2008:

  • There were 8.2 million more poor people and nearly 2.5 million more poor children than in 2000.
  • The percentage of people in poverty was 1.9% higher and the percentage of poor children 3.2% higher.
  • The number of children in deep poverty was more than 1.6 million (2.1%) higher.

And that’s still only part of the story because the recession has deepened since 2008. Last year’s unemployment rate averaged 5.8%. It’s now at 9.7%. And economists foresee no turnaround until some time next year, if then.

The Economic Policy Institute projects that by 2010:

  • The poverty rate will have climbed to 15.1%–and to 31.6% for blacks.
  • More than one in four children will be living in poverty.
  • More than 46% of single-mother families will be below the poverty threshold–up from 37% in 2008.

Economists at the Brookings Institution have come to similar conclusions, though their numbers are slightly different. And they doubt the poverty rate will get back to its 2007 level during the next 10 years.

So, they say, the extra funds the economic stimulus package provides for disadvantaged families “will fade away long before the poverty rate is expected to peak.” We need to shore up the safety net for the long term, as well as to ensure that more people have the education and training they need to benefit from the opportunities the economy will ultimately provide.

Deborah Weinstein at CHN also calls both for continuing aid in the economic stimulus package and for investments that will create jobs and renew the economy. Failure to act, she says, will delay our further recovery. But it’s also “a moral wrong, since it causes preventable harm to vulnerable people.”

The harm she’s talking about speaks for itself in the poverty thresholds all these dire figures are based on. Nearly 40 million people below these thresholds–more than 17 million people at half or less than these.

Surely we can’t just tell these people to tighten their belts, keep on striving and wait for better days.


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