Census Bureau Reports 16.1% Poverty Rate

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 DC Poverty Figures … Surprising and Not

Figures the Census Bureau released two weeks ago indicated that the poverty rate in the District of Columbia had gone up — and by a lot.

Looking at the two-year average to compensate for the small sample size, the poverty rate hit 19.7% in 2010-11. This is 4.6% higher than the comparable rate for the U.S. as a whole — and higher than the rates for all but two states.

Now we’ve got results from the much more comprehensive American Community Survey. It uses samples large enough to make one-year figures for states — and even smaller jurisdictions — reasonably accurate. Also figures for specific age and race/ethnicity groups.

And, lo and behold, the overall poverty rate in the District didn’t rise after all. Here’s more detail on that, plus some other notable numbers.

Poverty and Severe Poverty Rates Halt Upward Climbs

The new D.C. poverty rate looks like a decline — down from from 19.2% in 2010 to 18.7% last year.

The Census Bureau, however, says that the change is not statistically significant.* Even a level rate is, of course, better news than what we read earlier.

As with the two-year averages, the rate in the District was higher than the nationwide ACS rate — by 2.8%. Rates in nine states were higher.

Similar news for the severe poverty rate, i.e., the percent of residents who lived below 50% of the applicable poverty threshold (just $23,021 for a family of four).

It dropped a bit — from 10.7% to 10.3%. Doubtful that this change is statistically significant.

Whether or no, it means that more than half of all D.C. residents counted as officially poor — 109,317 — were so very poor as to meet the severe poverty standard.

Unequivocally bad news for the District’s children. The poverty rate for the under-18 population — 30.3% — was virtually the same as in 2010. The new rate is 7.8% higher than the also disturbingly high national rate.

As with the District’s poor population generally, more than half of all poor D.C. children lived in severe poverty last year — 16.5%. That’s nearly 17,285 children in truly desperate circumstances.

Race/Ethnicity Gaps Still Very Large

We’ve got new figures, but no new story for the challenges to Mayor Gray’s One City vision. For example, in 2011:

• The poverty rate for blacks was more than four times the rate for non-Hispanic whites — 27.8%, as compared to 6.8%.
• The severe poverty rate for blacks was also much higher than the rate for non-Hispanic whites — 14.6%, as compared to 4.8%.
• The poverty rate for Hispanics was 18.1% and the severe poverty rate 8%.

We see the same disparities in household income.

• The median income for non-Hispanic white households was a very comfortable $107,679.
• For black households, the median income was barely more than a third of that — $39,302.
• Hispanic households did better, on average, with a median income of $59,607, but their median income was somewhat higher in 2010.

More Jobs Would Help, But …

Commenting on the earlier Census figures, the DC Fiscal Policy Institute noted that the jump in the poverty rate reflects mainly “stubbornly high unemployment” for “some groups of residents.”

Well, we had no jump. But the analysis still applies, with some qualifications.

Nearly half — 47.3% — of the District’s poor residents between the ages of 16 and 65 didn’t work at all last year. Another 25.5% worked less than full time and/or year round.

That leaves 27.2% of working-age residents who were employed full time, year round and nevertheless in poverty.

So it’s pretty obvious that more jobs would be helpful. But it’s also obvious that more jobs alone won’t cut it.

Education is commonly touted as the answer to persistently high poverty rates. I, among others, am  inclined to think that’s over-simple, though no doubt part of the answer — certainly here in the District.

According to the ACS, the poverty rate for adults 25 years and older who had just a high school diploma or the equivalent was 22.8% last year — and for those with less, a whopping 35.6%.

The poverty rate for those with at least a bachelor’s degree was just 4.2%. This is lower than the rate in 2010, while the rate for those with less than a high school diploma or GED is markedly higher.

We could surely narrow the income gaps in the District with better — and more equal — educational opportunities for residents without the advantages of their well-off peers.

Those opportunities unfortunately may diminish, due to the across-the-board federal spending cuts that Congress isn’t even close to averting.

We know that the District’s public education programs would take a significant hit — estimated, for only three major sources, at more than $9.1 million next year.

The cuts would also throw a lot of people out of work — estimated at upwards of two million nationwide. The District would lose its share — perhaps more than its share.

Lost jobs mean lost tax revenues that could be used to shore up our fraying safety net and for programs that reduce needs for the aid it should provide.

All sad — and wholly avoidable — prospects for our egregiously large poor population.

* As the text indicates, the severe poverty rate change I report here may not be statistically significant either. The Census Bureau’s brief doesn’t cover levels above and below the poverty thresholds, though the ACS tables do. They show error margins, but they’re not multi-year.

Census Poverty Rates Defy Predictions

Well, the crystal ball gazers blew it. The Census Bureau just reported that the poverty rate didn’t rise last year. The official 15% rate isn’t statistically different from the 2010 rate, it says.

This is surely good news. It nevertheless means that more than 46.2 million people were so poor as to fall below the Bureau’s very low poverty thresholds.

And well over 20.3 million — 6.6% — were so extremely poor as to fall below 50% of the applicable threshold. This is what’s commonly referred to as severe poverty.

What also hasn’t changed is the distribution of poverty across different age and race/ethnicity groups. For example, in 2011:

• The child poverty rate was 21.9% — not statistically different from the rate in 2010.
• The poverty rate for seniors was 8.7% — again, virtually the same as the 2010 rate.
• The black poverty rate was nearly triple the poverty rate for whites — 27.6%, as compared to 9.8%.
• The poverty rate for Hispanics was 25.3%.

Poverty rates among family types also replicate a familiar pattern. The percent of married couples who were officially poor was 6.2%, while the rate for single-woman households was five times higher — 31.2%.

Severe poverty rates were, of course, lower. But they mirror the same disparities. For example:

• Nearly 1 in 10 of America’s children — 9.8% — lived in severe poverty last year.
• The severe poverty rate for blacks was 12.8% and for Hispanics, 10.5%.
• By contrast, severe poverty afflicted 4.4% of whites and only 2.3% of seniors of all racial/ethnic groups combined.

What we’re to make of all this I’m really not sure. We’ll undoubtedly have many analyses in days to come.

In the interim, we can ferret out of the Census report a couple of policy-relevant messages, based on examples it provides of what the statistically adept can find out by using its online tool.

One we might guess from the relatively low senior poverty rate. Without Social Security benefits, about five times as many elderly people would have been counted as poor.

This is surely a testimony to one of our oldest anti-poverty programs — and a warning of what could happen if some of the “reforms” that are being widely promoted became law.

An additional 2.3 million people were lifted above the poverty threshold by unemployment insurance benefits.

A more imminent danger here because more than 2 million jobless workers will lose these benefits in January if Congress doesn’t extend the only still operative federally-funded UI program.

Millions more will have, at most, 26 weeks of benefits — this at a time when 40% of those actively looking for work have been unemployed for longer.

So here’s a case where our federal policymakers could keep what are still really depressing poverty numbers from getting worse.

Whether they will or not depends on what voters decide in November.

New Reasons New Census Figures Won’t Give Us a True Read on Poverty in America

Next week, the Census Bureau will issue the first of its annual reports. Economists surveyed by the Associated Press predict that the poverty rate will rise again.

Two recent blog posts tell us that whatever the Bureau reports next week — or later, when it issues the results of its more detailed American Community Survey and its supplemental poverty measure — will understate the number of poor people in America.

Another Problem With the Poverty Thresholds

The poverty rate we generally read about is based on a set of thresholds the Census Bureau uses.

The thresholds matter not only because they’re our main source of poverty data, but because they’re the basis for the federal poverty guidelines. They thus ultimately determine eligibility for a wide range of safety net programs.

It’s common knowledge that the thresholds are a crude, out-dated poverty measure — three times what the cheapest U.S. Department of Agriculture food plan cost a family of four in the mid-1960s, adjusted annually for inflation.

Blogger Evan Soltas — a super-wonkish undergraduate, even by Princeton standards — adds a new wrinkle. The inflation adjustments themselves, he says, cause the Census Bureau to under-count the poor.

The Bureau uses the CPI-U (Consumer Price Index for All Urban Consumers) to adjust its thresholds. The CPI-U reflects the cost of a market basket of goods and services commonly purchased by people who live in metropolitan areas.

But, says Soltas, the market basket of goods and services purchased by people in the bottom fifth of the income scale is different. And its costs have risen significantly more than the CPI-U.

The cumulative difference since 1967 is a 12% understatement of living costs for the poor. Hence an under-count built on top of the under-count resulting from a drop in food costs as a percent of total household budgets.

Any safety net program that indexes to the CPI-U has thus effectively cut benefits by the same 12%, Soltas says. I assume this includes all the programs that use the poverty guidelines.

More than 30 federal programs do. Some state programs also. Seems we’ve got a big problem then — different from the big problems we already knew.

A Problem With the Supplemental Measure Too?

The Census Bureau’s supplemental poverty measure takes an altogether different approach to the thresholds, basing them on the 33rd percentile of what households with two children spend on four basic needs — food, clothing, shelter and utilities — plus a multiplier to accommodate the rest.

It also factors in some other “nondiscretionary expenses,” on the one hand, and major federal benefits that don’t come to recipients as cold cash, e.g., tax credits, food stamps.

The results are commonly viewed as a big improvement over the official Census figures. Shawn Fremstad at the Center for Economic and Policy Research says not necessarily.

In 2010, the child poverty rate was 4.3% lower under the SPM than the official measure.

Conversely, the senior poverty rate was 6.9% higher — mainly because the SPM takes account of out-of-pocket health care expenses.

But look, says Fremstad, at USDA’s food insecurity rate — the “most established measure” we have of “direct deprivation.”

According to Fremstad, the 2010 food insecurity rate for children was 20.2% — closer to the official poverty rate than the SPM rate. An even smaller difference between the food insecurity and official poverty rates for seniors.

Fremstad thinks the SPM rate for seniors is about right. The child poverty rate isn’t because it fails to capture the unique costs of meeting children’s “basic needs for care and healthy development.”

No one, I think, could argue with that. Whether the food insecurity rate Fremstad cites reflects “direct deprivation” experienced by children is another matter.

We know a family can be food insecure even if it always has the resources to buy enough food to keep children from going hungry. Adults will skip or scrimp on meals first, as the USDA data clearly show.

Fremstad is comparing the child poverty rates with the food insecurity rate for households with children. The food insecurity rate specifically for children is just under half that.

So it’s not food that most officially poor children are missing, though we’ve disturbing reports of children showing up at school hungry.

It’s those other investments in their healthy development — the parental attention, high-quality child care and other resource-based influences that account for wide income disparities in school readiness among kindergarteners and subsequent academic performance.

Hard to imagine the Census Bureau could measure these. But Fremstad seems to think it should try. Because it will otherwise “continue to define deprivation down for America’s children.”