How Many Poor People Are There in the U.S.?

Since I wrote this posting, the Census Bureau has issued two new official estimates of the number of poor people in the U.S. You can find my summary of the latest here. It has also issued two sets of alternative estimates. You can find my summary of the first set here and a discussion of the second set here.

According to the latest U.S. Census Bureau figures, the answer is about 37.3 million. But if we want to know how many people lack the resources needed for a decent standard of living, then the answer is nobody knows.

Economists, service providers, advocates and many policymakers have known for years that the current poverty measure is outdated–in fact, was flawed from the get-go.

It was developed in 1963, based on a 1955 survey. The survey found that the average family of three or more spent a third of its after-tax income on food. So the basic poverty threshold became three times the cost of the U.S. Department of Agriculture’s Economy Food Plan–a bare subsistence food budget.

This threshold was then spun off into specific thresholds for different family sizes. And certain adjustments were made based on factors related to food purchases. That’s basically what the thresholds are today.

If your income is at or below the relevant threshold, you’re counted as poor. If it’s over, you’re not.  Whether you’re supporting children not living with you doesn’t matter. Nor does it matter whether you have resources other than cash income. Whether you live in New York City or Biloxi, Mississippi doesn’t matter either.

The poverty thresholds are annually updated to reflect rising costs of living as indicated by the Consumer Price Index. But no adjustment has been made for major changes in consumer spending patterns that have significantly reduced the percent of household budgets spent on food.

And the thresholds still takes no account of geographic differences in cost of living. Studies by Wider Opportunities for Women indicate how big those differences can be. For example, in 2005, self-sufficiency for a D.C. adult with two young children required an annual income of $53,634 per year. The same family in Wheeling, West Virginia could have been self-sufficient with $24,321.

In 2005, the poverty threshold for that family of three was $15,735–less than 30% of the D.C. family’s minimal costs of self-sufficiency. And it’s the threshold that determines eligibility for assistance under more than 30 federal programs and some state programs as well.

Last December, the Brookings Institution issued a report recommending a poverty measure based on recommendations in a 1955 report issued by the National Academy of Sciences. It’s quite complex, but then so is the issue.

Basically, the measure would use current data on actual expenditures for a set of basic necessities and resources available to obtain them, after deductions for additional necessary expenditures. Adjustments would then be made for family composition, as well as size, and for geographic differences.

In 2008, legislation was introduced to establish a poverty measure based on the NAS/Brookings approach. It may–and should–be reintroduced in the new Congress.

As the Brookings authors say, it will be politically challenging to put a new measure in place. But we can’t provide needed assistance to poor people unless we can accurately identify them. And we can’t assess current policies and programs unless we know, over time, how many poor people there are.

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