Total DC Poverty Rate Ticks Down Again (Barely). Rates for Blacks Rise.

September 15, 2016

CORRECTION: The overall poverty rate change for DC falls within the margin of error. A preview table I saw indicated it didn’t. But I should have verified.

The Census Bureau has taken to blasting out all its major poverty reports in rapid-fire succession. So we now have the results of the American Community Survey — not a report in the usual sense, but a huge number of online tables.

They cover a wide range of topics. And the ACS sample is much larger than what the Bureau uses for its two other annual reports. So we can get reasonably reliable figures for states and smaller jurisdictions.

I’ve again dug into a few tables for the District of Columbia — mainly those most directly related to poverty. We could, I suppose, take heart from another year of progress. But it’s modest and mixed. Both the extent of poverty in the city — and related inequalities — remind us how much remains to be done.

Poverty and Deep Poverty Rates for DC Residents Still High

About 110,380 District residents — 17.3% — lived in poverty last year. The new rate is just 0.4%* lower than the rate reported for 2014. It’s 2.6% higher than the new ACS national rate — and rates for all but eight states.

It’s also nearly 1% higher than the local rate for 2007, just before the recession set in. The population has grown since then. So the seemingly small rate difference means that the District is now home to about 18,600 more poor people. And they’re very poor indeed, for reasons I’ll touch on below.

Roughly 58,700 District residents — 9.2% of the total — lived in deep poverty, i.e., had incomes less than half the maximum set by the poverty threshold the Census Bureau uses for a household like theirs.

The new rate is perhaps 0.1% lower than the rate for 2014 — in other words, basically the same. It too is higher than the rate for the nation as a whole.

Child Poverty Rate Still Far Higher Than Overall Rate

The child poverty rate has consistently exceeded the rate for the population as a whole, both in the District and nationwide. The local rate last year was 25.6%. Like the overall rate, it’s 0.4% lower than the 2014 rate.

But it still represents about 29,710 children — about 300 more than in 2014 because, again, the rate reflects a somewhat larger population. It too is higher than the disproportionately high national rate.

More than half the District’s poor children — 15,088 — were deeply poor. The new rate is higher than the 2014 rate — 13%, as compared to 12.4%.

Race/Ethnicity Gaps Still Large

Poverty is not an equal opportunity condition here in the District or anywhere else. As in the past, we see this writ in black and white in the ACS figures. Brown and tan also, though to a lesser extent.

Last year 26.6% of black District residents were officially poor, as compared to 6.9% of non-Hispanic whites. The deep poverty rate for the former was 13.3%, while only 4.5% for the latter.

Both rates for blacks were higher than in 2014. The plain vanilla rate for non-Hispanic whites was the same then, but their deep poverty rate somewhat higher.

For Hispanics, the poverty rate was 11.6% and the deep poverty rate 5.5%. The rates for Asians were 12.3% and 9.4%.

We see the same large disparities in the ACS figures for household incomes — a related, but broader indicator than the poverty rates.

The median household income for non-Hispanic whites was nearly three times the median for black households — $120,400, as compared to $41,520. Median incomes for Hispanic and Asian households fell in between.

The median for non-Hispanic white households was an eye-popping $63,400 more than the national median — an even larger difference than reported for 2014.

More Residents Suffering Hardships Than Poverty Rates Show

I always remark, at least in passing on the fact that the poverty thresholds the Census Bureau uses for analyses like these are very low.

They’re almost surely too low to accurately reflect the number of households without enough money for basic needs in communities nationwide. But they’re egregiously too low in high-cost communities like the District.

Consider, for example, a single mother with two children. They’re officially not poor if her income, before taxes was roughly $19,100 last year.

An affordable apartment for them would have had to cost no more than about $477.50 a month. But a modest two bedroom apartment, plus basic utilities cost roughly $980 more. It would have left the mom with about $1,580 for all her family’s other basic needs over the course of the year.

Even with SNAP (food stamp) benefits, she’d have been hard pressed to put enough food on the table in part because groceries here cost far more than the nationwide average, according to a cost-of-living database.

And the benefits assume she’ll spend 30% of her own adjusted income. So there goes a quite a bit of the money she’d have left after paying the rent. Probably more than her expected share, in fact. If not, then some hungry days for her.

She’d still have to pay for a host of other things, of course, e.g., clothes, soap, toothpaste and cleaning supplies, transportation. These aren’t necessarily costlier in the District than elsewhere. But we know daycare is.

She’d have to pay some part, even with a subsidy. The subsidy’s not a sure thing for a working woman like her, however. Without it, the average of cost even just after-school care for her kids would exceed her total income.

I don’t think I need to flog this point further. But we do need to put the new District poverty figures in perspective. [Your policy message here.]

* All the ACS tables include margins of error, i.e., how much the raw numbers and percents could be too high or too low. For readability, I’m reporting both as given. The overall poverty rate beats the statistical text, but others Small year-over-year changes may mean no real differences.


U.S. Poverty Rate Slides Down

September 13, 2016

The Census Bureau has just reported that 13.5% of people in the U.S. — about 43.1 million — were officially poor last year. One wouldn’t pop a champagne cork over numbers like these. But they’re lower than reported for 2014, when the rate was 14.8%, representing roughly 46.7 million very poor people.

Rates declined for every major population group the report breaks out, except working-age adults with disabilities, whose rate remained 28.5%. All reported groups, except Asians also had lower deep poverty rates, i.e., household incomes less than half the thresholds the Bureau uses to separate the poor from the non-poor.

On the flip side, we still see large disparities. And the somewhat improved rates don’t necessarily reflect meaningful income gains.

Children Still the Poorest, Seniors Still the Least

The child poverty rate has exceeded the overall poverty rate since at least 2006, when I started tracking. Last year it dipped to 19.7%, just 1.4% lower than in 2014. The new rate represents about 14.5 million children — more than a third of all the poor people in our country.

About 6.5 million children — 8.9% — lived in deep poverty. This too is somewhat fewer than in 2014, but still alarming, especially given what we know about the lifelong damages that even just plain poverty can wreak on young children.

As in the past, people 65 years and older had the lowest poverty and deep poverty rates among the major age groups — 8.8% and 2.8% respectively. We can chalk this up largely to Social Security retirement benefits, as the Census Bureau’s new report on its Supplemental Poverty Measure shows.

Race/Ethnicity Gaps Still Yawning

Nothing much new here, except the rates. For example, the poverty rate for blacks was still more than two and a half times the rate for non-Hispanic whites — 24.1%, as compared to 9.1%.

The deep poverty rates nearly mirror these gaps — 10.9% for blacks and 4.3% for non-Hispanic whites.

Hispanics fared better than blacks, but hardly well. Their poverty rate was 21.4% and their deep poverty rate 8.5%.

Rates for Asians were lower — 11.4% and 6.2% respectively. But several analyses suggest we’d see some larger gaps — and in other cases, virtually none or even reversed — if the Bureau differentiated among the subpopulations this group comprises.

Low Inflation a Factor in Poverty Rate Drops

We should take always take poverty rates like these with a large grain of salt because the thresholds are so very low. One dollar over the threshold and everyone living in the household (except for some children) is officially not-poor.*

The thresholds aren’t altogether fixed, however. The Bureau adjusts them annually, based on the CPI-U — what consumers in metro areas spend on a market basket of goods and services.

The CPI-U remained virtually flat in 2015. So even a miniscule increase in household income could boost all its members over the applicable threshold.

In other words, the new, lower poverty rates don’t necessarily signal substantial, widespread income gains. They do, however, mean that more workers got paid somewhat more — and more who wanted to work got jobs that paid more than a pittance.

* Children under 15 who aren’t related by birth, marriage or adoption to any of the adults in the household are not part of the “poverty universe,” so far as the official measure is concerned.


More at Stake With the Chained CPI Than Social Security Benefits

January 25, 2013

As perhaps you know, the President’s last comprehensive “fiscal cliff” proposal included the adoption of a new inflation measure — the Chained Consumer Price Index.

We’ve heard about it before, but almost exclusively as a way to curb spending on Social Security retirement benefits. And that’s what we’re hearing most about now.

But what the President proposed was apparently a global switch to the chained CPI, with some unspecified protections for “the most vulnerable.”

Just because Congress decided to punt on the “fiscal cliff” doesn’t mean something of this sort won’t resurface.

In fact, it already has in a bill co-sponsored by Tennessee’s Republican Senators Bob Corker and Lamar Alexander.

Like the President’s offer, the Corker-Alexander bill would make the chained CPI the inflation measure used for all federal cost-of-living adjustments.

So it would raise more tax revenues, with the highest percent increases coming from fairly low-income households.

It would also make relatively fewer people eligible for a host of safety net programs and, in some cases, reduce the benefits those still eligible would get, relative to what they could expect if there were no CPI switch.

The same result, of course, for Social Security retirement benefits.

I’ll deal here with the eligibility issue and return to benefit cuts in a separate post. But first, a super-simple primer to set the context.

Chained CPI 101

At this point, the federal government uses the Consumer Price Index for All Urban Consumers (CPI-U) to make what are basically cost-of-living adjustments in both the tax code and the Census Bureau’s poverty thresholds.

A somewhat different index — the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) — is used to adjust all major federal retirement benefits, including Social Security, and Social Security disability benefits as well.

Both these indexes reflect the prices consumers pay for a set market basket of goods and services. When the average costs of the total go up, so do  the CPIs.

But, say economists, consumers change their purchasing practices when the costs of certain items rise. For example, if the price of beef goes up, they buy less of it and more chicken.

The chained CPI is designed to capture these changes. So the cost-of-living increases it produces are lower than those based on a a market basket that isn’t continuously re-weighted to reflect substitutions.

Eligibility for Safety Net Benefits

More than 30 federal anti-poverty programs based their income cut-offs or targeting on the federal poverty guidelines,* as do some state and local programs.

The federal programs include many we think of as key parts of the safety net, e.g., the food stamp program, other nutrition assistance programs, the Children’s Health Insurance Program, LIHEAP (the Low Income Home Energy Assistance Program).

The poverty guidelines are simplified versions of the Census Bureau’s official poverty thresholds. These, as I’ve said, are annually adjusted using the CPI-U.

The chained CPI would thus mean smaller upward adjustments in the income cut-offs — not much smaller in any given year, but cumulative over time.

Bad Policymaking

I see at least three problems with the result I’ve just described.

First, the thresholds already significantly understate the number of poor people in this country, as even the Census Bureau’s still-evolving Supplemental Poverty Measure shows.

This is partly because the thresholds are based on an outdated minimum cost-of-living measure — three times the cost of what used to be the U.S. Department of Agriculture’s cheapest food plan.

The annual adjustments compound the problem because the CPI-U understates living-cost increases for households in the bottom fifth of the income scale — or so the research we have suggests.

Use of the chained CPI would thus, as Shawn Fremstad at the Center for Economic and Policy Research says, define deprivation downward, even more than use of the current thresholds do.

At the same time, the living-cost research tells us that the chained CPI probably isn’t more accurate for low-income households — quite the opposite, in fact.

So using it would unjustly exclude even more people from the safety net — assuming the proper measure is insufficient income to pay for basic living needs. And if not that, what?

Finally, the proposed switch to the chained CPI is an underhanded way to make consequential policy changes. And that, as Wonkblogger Dylan Matthews says, is what makes it so attractive.

If our policymakers want to shrink the safety net, then they should say so forthrightly, name the programs and give us the figures — not trot out a supposedly technical change that only the most wonkish among us can understand.

* The official list of programs that use the federal poverty guidelines says that the Temporary Assistance for Needy Families Program doesn’t. This is because states can set income eligibility standards for TANF however they choose. Fourteen expressly use the federal poverty level, which I assume means the guidelines.


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

September 6, 2012

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.”