Better Poverty Measure Shows Worse U.S. Poverty Rate

November 6, 2013

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 still 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 well over 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.

Offical U.S. Poverty Stays Flat at 15%

September 17, 2013

I was all set to write about how the official U.S. poverty rate dipped down, as experts had predicted. But no. The Census Bureau reported this morning that the 2012 rate was statistically the same as in 2011 — 15%.

The economy has supposedly been in a recovery mode since June 2009, but the poverty rate hasn’t budged for three years now. It’s still 2.5% higher than in 2007, just before the recession set in — and in fact, a bit higher than the year the recession officially ended.

As I and many others have often cautioned, the official rate is based on an over-simple, outdated measure that understates the number of people who barely — if at all — have enough to live on.

It also, as some examples below indicate, fails to capture the anti-poverty impacts of many of our major safety net programs.

At this point, however, the results it produces are what we’ve got. And the measure is consistent from year to year. So trends are reasonably reliable.

Here then is some of what we learn from the poverty portion of the new report.

The Big Numbers

All told, nearly 46.5 million people were poor enough to fall below the Census Bureau’s very low poverty thresholds — about $18,500 for a parent and two children, for example.

Though the poverty rate is the same, it represents about 249,000 more people than in 2011.

Of these, 6.6% — 20.4 million — were so poor as to fall below 50% of the applicable threshold, i.e., to have lived in what’s commonly referred to as extreme poverty.

Both the rate and the raw number are the same as in 2011 — and not surprisingly, higher than in 2007, when somewhat under 15.6 million people were in extreme poverty.

Race-Ethnicity Gaps

Poverty rates for all major race-ethnicity groups also flat-lined. So the disparities remained very large. For example:

  • The black poverty rate was nearly three times the rate for white, non-Hispanics — 27.2%, as compared to 9.7%.
  • The poverty rate for Hispanics was 25.6%.
  • For Asians, the poverty rate was 11.7%.

The extreme poverty rates mirror these gaps — only 4.3% for white, non-Hispanics and a somewhat higher 5.7% for Asians, but 10.1% for Hispanics and 12.7% for blacks.

Married and Single

The disparity between poverty rates for married couples and families headed by a single person also remained extraordinarily large.

For families headed by a single woman, the rate was nearly five times times the rate for married couples — 30.9%, as compared to 6.3%.

The gap was smaller for families headed by a single man, but 14.6% of them were still officially poor.

Young and Old

As in the past, the child poverty rate, i.e., for people under 18, was considerably higher than the rate for the 65 and older crowd.

  • The child poverty rate was 21.8% — statistically the same as in 2011. Nearly 16.1 million children were officially poor — more than a third of all people in poverty.
  • More than 7.1 million children — 9.7% — lived in extreme poverty.
  • By contrast, the poverty rate for seniors was 9.1% and their extreme poverty rate just 2.7%.

We can chalk the age disparities up largely to the oft-maligned Social Security programs. Without them, the senior poverty rate would have been nearly four times greater.

However, the disparities are larger than they would be if the Census Bureau used a less crude measure, as we see in the results of last year’s Supplemental Poverty Measure.

The Bureau didn’t preview its SPM figures this year, but it did the equivalent with a few examples of what researchers can learn by using its table creator tool.

So we learn that counting the the Earned Income Tax Credit would reduce the number of poor children by 3.1 million. And if SNAP (the food stamp program) benefits were counted, 4 million fewer people would have qualified as poor.

I don’t suppose I need to say that these benefits are squarely in the House Republicans’ bull’s eye.

Policies to ensure that the economic benefits of the recovery reach the very large number of poor and near-poor working families in this country seem a distant dream.

But the new poverty figures ought to be a wake-up call.

We Shouldn’t Have to Choose Between Kids and Seniors

March 6, 2013

A striking full-page ad in last Sunday’s Washington Post. A toddler and an elderly woman, both posed as boxers, below the headline “Who Is More Important?”.

Here we go again, I thought. Another message about how spending on Social Security retirement benefits and Medicare is impoverishing the next generation.

But no. The actual message is “We Shouldn’t Have to Choose.” Helping to lift seniors out of poverty is good. We should make the same choice for kids.

The evidence the ad gives is a contrast between child and senior poverty rates. The former is a year out of date, but this doesn’t make much difference because the most current official rate — 21.9% — isn’t significantly lower than the rate for 2010.

Where the ad creators got their senior poverty rate (9.3%) is a mystery to me. The latest official poverty rate for seniors is 8.7% — surely better for the case the nonprofit advertiser is making.

If the figures aren’t right, the overall message surely is. Our child poverty rate is shamefully high. And Social Security is undoubtedly one of our most successful anti-poverty programs — arguably the most successful.

Though we don’t have poverty rates dating back to 1939, when it was created, we do have figures showing a dramatic drop from 1960 forward. The latest reported rate is about four times lower than the rate that year.

And Social Security benefits were the most important factor. The senior poverty rate without them would have been a mind-boggling 54.1%.

These are the official poverty rates, of course. The Census Bureau’s Supplemental Poverty Measure produces a higher senior poverty rate, mainly because it factors in out-of-pocket medical expenses.

The latest SPM boosts the senior poverty rate to 15.1%. This is nevertheless far lower than it would be without Social Security benefits.

So how would we achieve anything like the same result for kids?

The organizations named in the ad — the Next Generation and its campaign spin-off Too Small to Fail — clearly don’t want a replica of Social Security and have thus far said little about affordable health care insurance for kids.

Their aim at this point is to start a national conversation — and apparently to build a sense of responsibility among businesses, policymakers, parents and other caregivers.

The fact sheets on the Too Small website tee up a host of issues gathered under four main headings — education, health, work-life conflict and 24/7 media, i.e., the benefits and perils of access to computers and other digital technologies.

Most, but not all of the issues disproportionately affect low-income children and youth. And addressing them would, as the campaign says, increase social mobility — specifically, the likelihood that children born at the bottom fifth of the income scale will move up in adulthood.

But it’s hard for me to see how the agenda one might derive from the fact sheets would significantly reduce poverty among this generation of kids while they’re still kids — or for that matter, significantly mitigate the hardships that affect them, e.g., hunger, homelessness, acute parental stress.

These, as we’ve been told many times, help explain why so many low-income children perform so poorly on the achievement tests that are now the make-or-break for schools, teachers and ultimately students.

Perhaps the diverse topics for our national conversation will eventually shake out into an actionable policy agenda.

My own sense, however, is that they wouldn’t “create the protections and level of support that are afforded our seniors” — as limited as those are.

For that, we’d need to revisit the principles underpinning major elements of our safety net. First and foremost, however, we’d need a reset of the priorities reflected in the across-the-board cuts that began this week.

Education alone will take a $2.1 billion hit this fiscal year and possibly additional cuts thereafter as Congress parcels out spending so that the totals will come in below the mandatory spending caps — unless, of course, it can agree on an alternative.

A remote possibility now, but down the road apiece a big threat to Social Security benefits.

We need to “fight together for America’s next generation,” as the Post ad says. But we may well need to fight together for the elder generation too.

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.

DC Poverty Rate Hits 19.2 Percent

September 22, 2011

A couple of weeks ago, the Census Bureau released the results of its 2010 Current Population Survey.

Much attention here in the District of Columbia to the increase in our local poverty rate. Up to 19.9%, we were told. Trailing only Mississippi and Louisiana.

That poverty rate was based on a small sample, which means it could be off by quite a bit. The two-year average Census recommends yields a rate of 18.9%. The even more reliable three-year average is 18.1%.

But these rates, of course, don’t tell us whether poverty has been trending up or down. Nor anything about specific impacts.

So I waited for the results of the American Community Survey — partly because its one-year figures are reasonably reliable, but also because there are lots more state-level figures.

Now we’ve got them. Here’s some of what we learn, combined with my analyses based on figures from prior years.

Poverty Rate

In 2010, the District’s poverty rate did indeed go up, though not by quite as much as the one-year CPS figure indicates.

According to the ACS, the rate was 19.2% — 0.8% higher than in 2009 and 3.9% higher than for the nation as a whole.

The new rate means that about 109,620 District residents lived below the Census Bureau’s very low poverty thresholds. These vary by household size and composition. But, to give you a sense of how low they are, the average threshold of a family of four was $22,314.

Child Poverty Rate*

The already very high child poverty rate increased to 30.4%. This is 8.8% higher than the national rate and 7.7% higher than in 2007, just before the recession set in.

Translated into more human terms, the new rate means that about 30,500 D.C. children lived in poverty last year.

One tiny bright spot. The percent of children in deep poverty, i.e., in households with incomes below 50% of the poverty threshold, dropped by 2.6%.

It is still, however, a very high 16.2% — 6.6% higher than the national rate.

Race/Ethnicity Gaps

We see once again that poverty is not an equal opportunity condition here in the District or in the nation as a whole.

In 2010, 8.5% of non-Hispanic white District residents lived in poverty. The poverty rate for black residents was more than three times greater — 27.1%. The rate for Hispanic residents was nearly double the non-white Hispanic rate — 14.7%.

Deep poverty rates also varied — from 5.9% for non-Hispanic whites to 14% for blacks, with Hispanics in the middle at 8%. All three of these rates are greater than the 2009 rates. The increase for Hispanics — 4% — was markedly greater than for the other two groups.

Not surprisingly, we see similar gaps in median average household income. For non-Hispanic white households, the median was $99,220 — an eye-popping $45,052 more than the national median for these households.

The District’s black household median income was more than two and a half times lower than the median for all District households — $37,430, as compared to $60,903.

Hispanic households fared better, though not nearly so well as non-Hispanic white households. Their 2010 median income was $60,798.

In short, these are mostly grim figures — and a far cry from the “one city” Mayor Gray envisions.

To my mind, the child poverty rate rings the loudest alarm bells because we’ve got volumes of research showing that children who live in poverty have much higher risks of poor health, developmental delays, academic difficulties and other problems;

These, the research shows, pave the way for lifelong poverty — and thus another generation of children who are born with two strikes against them.

* All the child poverty figures are for individuals up to the age of 18.

UPDATE: Shortly after I posted this, the Coalition on Human Needs published a state-by-state list of poverty rates reflecting the new ACS report and its reports for the four years preceding.

According to the list, the District’s 2010 poverty rate is higher than any state’s. Alabama and Kentucky tie for second place, with rates of 19% all but two states’, Mississippi’s and New Mexico’s.

A separate CHN list provides state-by-state child poverty rates. The District’s rate is the second highest, topped by Mississippi’s 32.5%.

Census Bureau Reports Record Number Of Poor Americans

September 13, 2011

The Census Bureau opened its press briefing on the just-released 2010 income, poverty and health insurance data with a brief statement from the director. The yearly figures, he said, show “how day-to-day people are faring under changing economic conditions.”

By almost every measure, the answer is not well at all. Between 2009 and 2010:

  • The poverty rate rose from 14.3% to 15.1%. The new rate is the highest since 1993.
  • The number of people in poverty increased by 2.6 million. The total number now — 46.2 million — is the largest in the 52 years Census has been publishing such figures.
  • The percent of people in deep poverty, i.e., with incomes at or below 50% of the applicable poverty threshold,* increased to a record-high 6.7%.

As in the past, poverty rates were considerably higher in some population groups than others. For example:

  • The child poverty rate increased to 22% — up from 18% in 2007.
  • The number of children in poverty increased by 950,000 to a 16.4 million.
  • Nearly 7.4 million of these children (9.9%) were in deep poverty.
  • The poverty rate for blacks was well over two-and-a-half times the rate for non-Hispanic whites — 27.4% as compared to 9.9%.
  • The deep poverty rate for blacks was more than three times higher — 13.5% as compared to 4.3%.
  • The poverty rate for Hispanics was 26.6% and the deep poverty rate 10.9%.

A reporter asked the Census Bureau experts whether they could explain why the poverty rate rose. Was told that the Bureau produced statistics, not explanations. One factor suggested, however, was the growing number of people who’d had no — or virtually no — work during the entire year.

In 2010, 86.7 million people over the age of 16 worked less than one week — an increase of more than 3.4 million over 2009 and of more than 11.3 million over 2007. Not surprisingly, 23.9% of these potential workers lived below the poverty threshold.

Seems to me another arrow in the quiver of those of us who want Congress to pass the President’s jobs bill.

Yet the bill, as he himself says, “can’t solve all our nation’s woes.” He’s referring, as White House communications indicate, to the dwindling economic security of the middle class.

The economic woes of low-income Americans pre-date the recession too. As the Center on Budget and Policy Priorities reports, the poverty rate has been rising for most of this decade — in boom years as well as downturns.

We’ll need a comprehensive strategy — and a smart one — to do something about this. We’ll need a broad-based commitment. Things as they are, I’m not holding my breath.

* The Census Bureau’s poverty thresholds are more complex than the poverty guidelines used in determining eligibility for federal benefits programs. Using one of the Bureau’s weighted averages, we see that a family of four in deep poverty would have had an income of no more than $11,157 for the year.

New Census Figures Show DC Poverty Rate Rose Again Last Year

September 28, 2010

As you may have read, the figures the Census Bureau released two weeks ago showed that the poverty rate in the District had gone down — from 18% in 2008 to 17% in 2009.

Jenny Reed at the DC Fiscal Policy Institute cautioned us that the new figure was actually a two-year average that might mask the impacts of the recession. We should wait, she said, for the single-year 2009 results of the American Community Survey.

Now we have them. And indeed, they show the poverty rate increased last year — up by 1.2% from 2008. The 2009 poverty rate in the District was 18.4% — 4.1% higher than for the nation as a whole.

Here are some other things we learn:

  • The child poverty rate rose again. In 2009, a shocking 29.4% of all D.C. children lived below the poverty level — up by 4% from 2008. This is 6.7% more poor children since 2007 and 9.4% more than for the nation as a whole.
  • The percent of blacks living below the poverty level was more than three and a half times higher than the percent for non-Hispanic whites — 26.8%, as compared to 7%. The gap here is 2.8% greater than in 2008 and 4.4% greater than in 2007.
  • We see a similar, though much smaller gap between the poverty rates for Hispanics and non-Hispanic whites — a 3.7% difference. It was considerable greater last year — 10.9%.
  • The percent of individuals living in deep poverty, i.e., below 50% of the poverty level, rose again — from 9.8% in 2008 to 10.7% in 2009.
  • A large gap here too, but only for blacks versus non-Hispanic whites. The percent of blacks in deep poverty was 16%, as compared to only 4.3% for non-Hispanic whites. The percent of Hispanics in deep poverty was smaller than either — 3.1%.
  • There are still huge race/ethnicity income gaps. The 2009 median income for non-Hispanic white households was $104,201 — $67,253 more than for black households and $47,380 more than for Hispanic households.

There are probably many reasons for the District’s persistent high poverty rate and the yawning race-linked gap between the haves and the have-nots.

One jumps out from the new ACS figures — the mismatch between the demands of the local labor market and the formal education credentials of many of our fellow residents.

For individuals with only a high school diploma or a GED, the poverty rate was 25.5%. For those with less, it was 28.3%. The latter is six times greater than the percent for individuals with a bachelors degree or higher.

These figures should be a call to action, were any needed, for reforms in the public education system that don’t emphasize high test scores at the expense of struggling learners. Do any of our educators hold the exit door open when low-scorers want to give up? Will they when the pressure to produce year-over-year improvements increases?

They’re also a powerful argument for job training programs that encourage drop-outs to work for their GED and high school graduates to get some further education under their belts. These programs are not where the District should be looking as it seeks to rebalance its budget.

UPDATE: The poverty figures I used come from the annual tables entitled Selected Characteristics of People at Specified Levels of Poverty in the Past 12 Months. After posting this, I found that the Census Bureau also released a brief comparing 2008 and 2009 poverty rates. The 2008 rate for the District is different from the one in the detailed table. According to the brief, the poverty rate in the District increased by 0.8% and the poverty rate for children by 2.7%. I’ll leave it to the experts to explain the discrepancy.


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