The War on Poverty: 50 Years Later, Do We Have the "Glands"?

There is a scene in the movie “American Idealist,” an excellent biopic about Sargent Shriver, in which President Lyndon Johnson is trying to get Shriver to agree to lead the still-conceptual War on Poverty that the President had announced to the nation in his first State of the Union message on January 8, 1964 (50 years ago).  Shriver at the time was directing the Peace Corps, a globe-trotting, full-time job.  He had been called home by the president for this conversation.  Shriver was deeply committed to the Peace Corps and reluctant to abruptly take on the large new task. At a key moment, the movie uses telephone recordings to track the conversation between the earthy Texan and his urbane but tough colleague:

Sargent Shriver and President Lyndon B. JohnsonJohnson: “You’ve got the responsibility, you’ve got the authority, you’ve got the power, you’ve got the money. Now, you may not have the glands.”

Shriver:  “The GLANDS?”

Long pause….

Shriver: “I’ve got plenty of glands.” 

And so Shriver took the job (and kept the Peace Corps job, too). 

More importantly, the nation took the job. The nation, following bold leaders, had the “glands”—the guts—to undertake a war on poverty with public will and tax dollars. Shriver gathered a remarkable group of experts and devised enduringly effective programs. Poverty was reduced significantly. It is not my subject here to go into the policy details or argue about the policy choices made back then. My point is to highlight the role of public leadership and public support for fighting poverty. Back then, the leaders and the country took it on as a collective effort—a “war”—and an appropriate role for government.   

Does America have the guts to take on poverty nowadays? Does it have the leaders to describe the task and give it importance, the public will to engage in a collective effort to fight poverty? 

In 1964, Americans had a powerful can-do spirit about what could be accomplished through a national collective effort. They had seen the country conduct major public works projects to provide employment during the Depression, bring electricity to the countryside, win a World War, rebuild Europe, confront the Soviet threat, and commit to an effort to reach the moon. There was a partisan divide on many issues but also a spirit of bipartisanship in solving problems. Revelations about Appalachian and inner-city poverty had shocked a self-satisfied country lulled by the 1950s-era image of suburban prosperity. John Kennedy and, more recently, Bobby Kennedy had begun to take on poverty as a national cause.  After the assassination of President Kennedy, the country and Congress were ready to follow through on Kennedy-inspired initiatives, and President Johnson wanted to seize this moment and put his own stamp on the effort as well. The stars were aligned for a national, tax-supported War on Poverty.  (See Scott Stossel’s fine biography, Sarge, for details on all of this). 

America is a different place now. We have gone through Vietnam, Watergate, and most recently the Great Recession and many other episodes draining confidence in government. President Reagan led an ascendant conservatism devoted in large part to undermining public confidence in government. A newer wave of conservative ideology blames the poor and resists public efforts to address poverty as affronts to the personal “freedom” of wealthy individuals whose tax dollars might support those efforts. Bipartisanship in solving big problems is disparaged by many and rare. For a significant portion of the body politic there is a big shrugging off of any collective responsibility for poverty, a categorical opposition to undertaking a tax-supported public campaign to address poverty. There is no stomach for the effort.

These recent decades have eroded the American sense of confidence, mutual effort, and mission.  Nevertheless, at this 50th anniversary of the declaration of the War on Poverty, there are some signs that, if the leadership has the will and makes the commitment to take on poverty as a collective challenge, the public will respond. President Obama has not announced a “war” on poverty, but he has consistently delivered a message of mutual responsibility and collective effort to raise the circumstances and opportunities of all Americans. Starting with his famous convention speech in 2004 (“it matters to me if your kid can’t read, even if my kid can”) this message has resonated widely with the American public. For my money, the positive public response to this message accounts for Obama’s two election victories—people want to engage in a good collective effort in a cause fueled by values they like to believe they own. They want to be led to it and in it. 

There is also growing concern about the eye-popping and growing income inequality in the country, and people are attentive to the stubborn persistence of the poverty rate, especially among children, and the anomaly of it in a prosperous country. Since the recession, people who had gotten used to thinking that poverty was someone else’s problem have seen it lurking at their own door. That Rep. Paul Ryan is fashioning a Republican program to take on poverty provides some corroboration that I am not alone in my reading of the public’s receptivity.  

The Affordable Care Act, in my opinion, is the single biggest anti-poverty measure in the last 50 years (since the War on Poverty era). It was not framed as an anti-poverty measure. The messaging about the Affordable Care Act suggested that it would benefit the “middle class” (which is, of course, also quite accurate). Proponents followed the advice or their media and messaging experts, fueled by polling and focus groups. They chose to use framing that works in today’s America. It’s hard to quibble with success. The episode, however, does indicate a growing public will, notwithstanding decades of government-bashing and partisanship, to undertake collective efforts supported by tax dollars to solve large problems, provided the leadership is there. 

At this 50th anniversary of the declaration of the War on Poverty, there are signs that if America’s leaders take on poverty by name, the country itself may be ready to take large-scale action against poverty. There are plenty of good ideas that need public will and investment and a spirit of bold endeavor. We should make this a time that will have its own anniversary 50 years from now as a watershed in the successful fight against poverty.

Another Way to Give Thanks This Season

To offset Black Friday and Cyber Monday, we now have #GivingTuesday—an opportunity to support the wide range of nonprofit work in our various communities, including the Sargent Shriver Center National Center on Poverty Law. But there’s another way to give or give back. Speak up on behalf of families facing poverty and speak out against the disingenuous rhetoric and detrimental policies and agendas aimed against low-income communities.

It’s hard to pull yourself up by your bootstraps when the straps are tethered or broken. In low-income communities, more often than not schools are under-resourced, jobs are scarce, and housing options are limited. Some may access better options by commuting or moving to better-resourced communities, but most families are left with lesser opportunities.

The rhetoric of the bootstrap theory takes many guises—the country can’t afford entitlement programs, poor people need a hand up not a hand out, I worked my way through school, why can’t they, etc. The next time you hear a politician, a teacher, a friend, or a family member espouse the bootstrap theory or one its many derivations, speak up. Challenge the misperceptions underlying these platitudes by broadening the conversation to include the complexity of past and present systemic failures that result in less access for some communities but not others.

Silence is a form of support for hostile views targeted at low-income communities. This season give your voice in support of programs and policies that provide a safety net and seek to improve the state of education, employment, and housing in low-income communities.

Census Bureau's Annual Poverty and Income Report Paints a Dark Future

Census reportEvery year the Census Bureau releases its annual report on the state of Poverty, Income, and Health Insurance in the United States. This report looks back on the data for the previous year. Last week the Census Bureau released its report for 2012. But more than looking back on the past, the report is interesting, and disturbing, for what it suggests about our future.

The continuing struggle of young adults. The youngest working age group, ages 15-24, is the only age group whose income has not increased over the past 30 years. In 1982, the median salary of a householder aged 15-24 was $31,563. In 2012, the median salary of a householder aged 15-24 was $30,604 (the difference is not statistically significant). In addition, in 2012, young adults aged 25-34 living with their parents had a 43 percent poverty rate if their poverty status is determined using only their own income and not their parents’ income.

These data speak to the problems faced by young adults. It is during these initial years of career building, when young adults generally do not yet have families, that they have both the resources and the capacity to lay a solid foundation for their entire adult life. It is also the time to build credit and begin saving for retirement and emergencies. A consequence of this stagnant median income is that young adults in 2012 are increasingly having to push these activities into their thirties. Ultimately, lowered income means lowered opportunities for young adults to invest in themselves and their future families.

The lack of a post-recession recovery. Median income and the poverty level were not statistically different in 2012 than they were in 2011. Fifteen percent of the American people lived in poverty, 20 percent more than before the recession. Real median household income lingered at $51,000, 8.3 percent lower than the pre-recession level. Thus, even now, three years after the recession has ended, the recovery has yet to reach the 46.5 million Americans living in poverty.

The poverty rate understates the true level of destitution. Fifteen percent of the overall population lived in poverty, with the poverty rate for children at 22 percent. But forty percent of those who lived in poverty—20 million people, including seven million children—lived in extreme poverty, meaning their income was less than half of the federal poverty level. A family of three in extreme poverty has an annual income below $9,765.

Income inequality has grown enormously over time. Over the past 45 years, the average household’s income has increased by $8,000, while the income of households at 90% of the median income has increased by $56,000, and the income of households at 95% of the median income has increased by $77,000. As a result of this unequal income growth, the disparity between the living standards of middle class and wealthy Americans is far different today than it was in 1967. A household at 90% of median income now has roughly three times as much income as the average household, and a household at 95% of median income has roughly four times as much.

The release of the Census Bureau reports comes against the backdrop of the U.S. House of Representatives’ vote to shred the safety net for low-income Americans by cutting $40 billion from the Supplemental Nutrition Assistance Program (SNAP) over the next ten years. As bad as poverty is in America, it would be far worse without safety net programs like SNAP, which lifts nearly four million Americans out of poverty.

Kali Grant contributed to this blog post.

 

On Gideon v. Wainwright's 50th Anniversary, What About the Civil Side?

GavelToday marks fifty years since the U.S. Supreme Court held, in Gideon v. Wainwright, that anyone charged with a felony and too poor to hire a lawyer has a constitutional right to counsel at no cost. The Court subsequently expanded the right to a broader range of defendants, including anyone charged with a misdemeanor that could lead to jail time. Indigent defense systems expanded dramatically. Henry Fonda starred in the movie.

The anniversary of Gideon has been receiving a good deal of attention from mainstream media, the blogosphere, and the advocacy community, and much of the coverage suggests that since the decision things have gone downhill. “The Right to Counsel:  Badly Battered at 50” reads the headline of The New York Times headlines editorial, while The Atlantic weighs in with “How Americans Lost the Right to Counsel , 50 Years After ‘Gideon.’”

Is this pessimism warranted? To be sure, much of Gideon’s promise remains unfulfilled. Not surprisingly, the great majority of criminal defendants are too poor to hire their own lawyers, and the quality of the assigned defenders who represent these defendants varies widely, with impossible caseloads the primary cause of inadequate representation. A 2012 report by the Brennan Center for Justice found that public defenders spend an average of six minutes per case at arraignments, where charges are often disposed of with guilty pleas. Some defendants are never assigned counsel at all. As budgets contract at all levels of government, indigent defense caseloads have grown far beyond what ethical standards allow. Some defender programs have seen no alternative to refusing to take new cases.

But the principle enshrined in the Gideon decision—that the Constitution guarantees at least the semblance of legal counsel before the state may incarcerate, even for a short period, someone charged with a criminal offense—remains intact and largely unquestioned. The principle may be battered in practice. The indigent defense system may cry out for drastic overhaul. But the system need not be created from scratch.

What of the civil side of the courthouse? What of parents threatened with permanent loss of custody of their children, too poor to hire counsel and forced to represent themselves against an opposing party who can pay a lawyer? What of those who face loss of a home due to botched procedures or outright fraud by faceless financial institutions that have entire law firms on retainer? What about denial of health care when one learns of a life-threatening condition? These threats are arguably much more devastating than a night or two in county jail, and yet, to the surprise of many, people who face them have no constitutional right to counsel. The U.S. Supreme Court squelched that hope in 1981 when it decided, in Lassiter v. Department of Social Services, that North Carolina did not violate the constitutional rights of a mother who had no lawyer when the state terminated her parental rights.

But the civil side of the right to counsel question is getting more attention. Not only did The New York Times profile the issue on its March 16 front page; a determined group of advocates across the country is directing attention to the harm lack of counsel in civil cases causes to both individual litigants and the court system. Now marking its 10th year, the National Coalition for a Civil Right to Counsel has worked to increase the availability of counsel as a right for low-income people in cases affecting basic human needs. Clearinghouse Review, published by the Sargent Shriver National Center on Poverty Law, has covered the work of the coalition since its inception. In 2006, for example, coinciding with the American Bar Association’s passage of a resolution in support of a civil right to counsel for low-income people in cases affecting basic human needs, Clearinghouse Review devoted its entire July-August issue to the movement for a civil right to counsel and a range of approaches to achieving the right.

In its May-June issue the Review will publish three related pieces on the topic. An article by John Pollock, Coordinator of the National Coalition, and Mary Schneider, Executive Director of Legal Services of Northwest Minnesota, will take a look back at the coalition’s work and progress. Martin Guggenheim and Susan Jacobs of the Center for Family Representation in New York will discuss advancements in ensuring representation of parents involved in the child welfare system. And retired California Court of Appeal Justice Earl Johnson, Jr., now a key player in the coalition, long-time proponent of a civil right to counsel, and pioneer of the legal aid movement as we know it today, will reflect on the meaning of Gideon for anti-poverty advocates and the evolution of his conviction about the importance of civil counsel.

Most of those seeking to improve the indigent defense system and advocating a civil right to counsel understand full well that the two rights are sides of the same coin, affecting the same communities. Lack of adequate defense to criminal charges can lead to lasting collateral consequences such as a criminal record that makes obtaining housing and employment difficult, while lack of counsel in an eviction or foreclosure proceeding can lead to homelessness and greater vulnerability to criminal charges. As we celebrate the anniversary of the Gideon decision and resolve to push for its full realization, these inextricable links should remind us how important it is, in fulfilling Gideon’s promise, not to forget people on the civil side of the courthouse.

New Poverty Data, Still Not Looking Good for Millions

The Census Bureau recently released new data capturing the state of poverty in the U.S. using the Supplemental Poverty Measure (SPM). The U.S. government uses two measures for quantifying poverty: (1) the official poverty measure and (2) the SPM

The official measure, also known as the Federal Poverty Level (FPL), is used to determine the eligibility of individuals applying for means-tested public benefit programs, such as the Supplemental Nutrition Assistance Program (SNAP), Medicaid, and Temporary Assistance for Needy Families (TANF).  

In March 2010, the U.S. Census Bureau announced that it would develop an alternative way to measure poverty and created the SPM. The SPM is an attempt to update the official poverty measure or FPL; it is generally agreed that the FPL is outdated and therefore underestimates the level of poverty in the U.S. The SPM is not intended to replace the FPL, but rather to supplement it. Thus, the FPL will continue to be the measure for determining eligibility for public benefits.

The SPM is a more robust tool for examining the overall picture of poverty in the U.S. For years, statisticians, policy analysts, and advocates argued that the official poverty measure was overly simplistic, as it is simply calculated by looking at gross pre-tax income. The SPM, on the other hand, takes into consideration geographic location, necessary expenses, taxes, and alternative forms of income such as public benefits. The final calculation of the SPM is the “sum of cash income; plus in-kind benefits that families can use to meet their food, clothing, shelter and utilities needs; minus taxes (or plus tax credits); minus work expenses; minus out-of-pocket medical expenses and child support paid to another household.”   

According to the first SPM data, which was released last November, 49.1 million, or 16%, Americans lived in poverty in 2010, significantly more than the official poverty measure for the same time period, under which 46.6 million people, or 15% of Americans, were living in poverty.

The new SPM data released earlier this month found that approximately 49.7 million or 16.1% of Americans were living in poverty in 2011 versus 46.6 million, or 15%, under the official poverty measure.  Although the report shows that there was no statistical change in the overall SPM poverty rate between 2010 and 2011, the data is still grim. According to the new SPM data, African American and Hispanic populations have significantly higher poverty rates than whites and Asians; 25.7% of all African Americans and 28% of all Hispanics were living poverty in 2011, compared to 14.3% of whites and 16.9% of Asians. Women were also more likely to be living in poverty compared to men;  53.5% of people living in poverty in 2011 were women versus 47% of men. As for poverty levels by age, according to the official poverty measure, 22.3% of children (under 18), 13.7% of adults (ages 18-64), and 8.7% of seniors (65 and above) were living in poverty in 2011. While under the SPM, 18.1% of children (under 18), 15.5% of adults (18-64) and 15.1% of seniors (65 and above) were living in poverty in 2011

Most importantly, the SPM examines the impact of various government programs on poverty. The new SPM data reveal that without Social Security the overall poverty rate would increase from 16.1% to 24.4%. Similarly, without refundable tax credits the overall rate would grow from 16.1% to 18.9%. Alternatively, if people didn’t have expenses such as child support, income and payroll taxes, work-related expenses, and medical out-of-pocket expenses, the overall poverty rate would decrease from 16.1% to 12.7%

The 2011 SPM data allow us to understand the current poverty levels in our society more clearly. There are somewhere between 45 and 50 million Americans living in poverty according to the SPM and the official measure. Yet, these measures still understate the number of people in poverty, since they focus solely on income poverty and do not even consider asset poverty. Asset poverty means having insufficient funds to meet one’s needs for three months if income were to disappear for those three months. According to the Urban Institute, 1 in 5 people, or 60 million Americans, were asset poor in 2010. Unfortunately in the 2012 election, tackling domestic poverty issues was not on either the candidates’ agenda or the media’s agenda. In a country with so much wealth and an overall increasing wealth gap as well as a worsening racial wealth gap, it is totally unacceptable that so many people are living in or on the edge of poverty, and we as a country need to bring this issue to the forefront.

This blog post was coauthored by Alex Hoffman.

 

Election Bodes Well for People in Poverty

The Shriver Center’s mission involves improving the quality of life and opportunities of people living in poverty. From that perspective, here are some initial thoughts on the presidential election.

Yes, as some have argued, it would be good to have a more forthright conversation about poverty in the presidential campaign, to name it as a priority to be addressed, and to hear the competing strategies. The principal framing of both sides on economic issues focused instead on the middle class. Much of that is unavoidable—the taking of advice from pollsters and experts about what messages will work during a particular passage of time to improve the chances of victory. That is a lesson all of us in the advocacy world have been struggling to learn for many years—the point is to win, to actually move the ball, not to deploy more personally satisfying rhetoric. 

A quick reminder about the time we are in helps to explain this middle-class framing. The Great Recession has dramatically blurred the lines between the middle class and people in poverty. Lost jobs, lost homes, lost health insurance, lost savings, lost credit, broken neighborhoods, and the very real threat of all those things for people who have managed to avoid them so far are all signs of the perilous nature of middle-class status. And yet the data tells us that everyone, rich or poor or in the middle, prefers to think of themselves as middle class. For most people in poverty, policies framed as advancing the middle class are policies aimed to help them.

So I’m OK with the framing. Particularly from the Obama side of things, it is hard to argue with success. Far more important than framing is the practical impact that the administration’s policies and economic plans will actually have on the prospects for people in poverty. What can we glean from the campaign and from last night? 

The acceptance speech was a resounding affirmation of the core attitude essential for a positive policy direction for people in poverty: “We are all in this together.” The election was yet another chapter in the major struggle of our times between competing narratives about national political life: “we are all in this together” versus “the primacy of the individual.”  People in poverty, and people in the middle class at risk of falling into poverty, will fare better when the general tide of the times favors the common good, mutual duty and responsibility, and the community as well as the individual.

The first level of translating this public narrative into practical outcomes that help people in poverty is the general attitude about the role of government. The campaign juxtaposed the Tea Party attitude that government is bad—because it is government—against the pragmatic notion that government is crucial to and capable of solving problems. As timely exhibited by the ongoing response to Hurricane Sandy, government can competently address emergencies without partisan rancor. The answer to government failure (Katrina) is not to jettison government but to do the job better (Sandy). What bigger emergency, what more compelling need for a smart pragmatic government role, than the thorny and massive-scale issues of poverty?

As a specific illustration of how winning these high-level arguments can produce pragmatic progress, we will now see the full implementation of health care reform. The Affordable Care Act is the single biggest blow against poverty since the 1960s—half a century, or the whole career of an anti-poverty advocate my age. It hasn’t been framed that way, but that’s what it is. It completes Medicaid, making health coverage available to everybody who is poor, which instantly makes them more employable and productive and opens the path to the middle class. It makes affordable commercial coverage available to the whole economic spectrum well up into the middle class, boosting upward mobility, and instantly eliminating the nightmare of lost coverage, bankruptcy, slow death from untreated conditions, blocked aspirations, and loss of middle-class status. The Affordable Care Act stands as a major rebuttal to those who say President Obama got nothing done, or did nothing to address poverty, in his first term.

The Affordable Care Act is a prime manifestation of “we’re in this together,” and of a pragmatic role for government in solving a major economic issue for people in poverty and the middle class. The leading critique against it took the opposite sides of these arguments—the mandate was “the biggest attack on freedom ever” (primacy of the individual) and the law was “too much government” —and failed.

From public narrative, to the role of government, to specific initiatives, the election can be understood as a promising direction for the prospects for people in poverty. It is not self-executing, however, and there are many obstacles, starting with a Congress probably not convinced that these core arguments are conclusively decided. Looming immediately ahead are the immense issues of the “fiscal cliff” that have profound implications for people in poverty. There is a compelling role for those of us committed to the improvement of the prospects of people living in poverty to help see to it that the promising direction of the election produces that improvement.        

What's Up with Vermont? Exploring the American Community Survey Poverty Data

VermontOn September 12, the Census Bureau released official poverty data that showed that the national U.S. poverty rate did not significantly change since 2010. While the poverty rate did not increase, but it also did not decrease, which is bad. There are still 46 million people in America who live in poverty, including one in every five children. That’s 25% more people than at the start of the recession in 2007 and is still the highest number in the 52 years that this data has been collected.

This past week, the Census Bureau released The American Community Survey (ACS), which provides more detailed poverty data on the state and local level.  According to the ACS data, the number of people with incomes below the poverty line grew by 0.6 percentage points between 2010 and 2011. This was the fourth consecutive increase in the poverty rate, however, this year’s increase was smaller than the increases between 2008 and 2009 (1.1%), and between 2009 and 2010 (1.0%).

According to the ACS, among large metropolitan areas, poverty rates ranged from 8.3% to 37.7% in 2011. Additionally, 27 states and the District of Columbia saw no statistically significant change in their poverty rate since 2010, while 22 states saw increases in their poverty rates. Only Vermont had a decrease in its poverty rate, from 12.7% in 2010 to only 11.5% in 2011.

Nationally, real median income dropped 1.3 percentage points since 2010, from $51,144 to $50,502. According to the ACS, 27 states had median household incomes lower than the national median, while 19 states and the District of Columbia had higher median incomes. Median incomes ranged from a high of $70,004 in Maryland to a low of $36,919 in Mississippi. Vermont, where median income rose from $50,707 in 2010 to $52,776 last year, was the only state to have an increase in median income.

The data also show that, nationally, the percentage of people without health insurance coverage decreased (16.3% in 2010 to 15.7% in 2011). In particular, the Patient Protection and Affordable Care Act provision enabling adult children under age 26 to obtain coverage under their parents’ policies, which went into effect in 2010, decreased the number of uninsured young adults aged 19 to 25. Coverage of this group increased from 68.3% to 71.8%.  Overall, 37 states and the District of Columbia saw increases in health coverage, while 13 states had no significant change. And, once again, Vermont was the state that had the highest increase in coverage in the young adult (aged 19 to 25) group, going from 75.2% in 2009 to 89.1% in 2011. Vermont was also one of only nine states whose increase was greater than the national average.

Maybe one question to ask is “What’s up with Vermont?” since, in all of the reported poverty measures, Vermont is on the top. What specifically is the state doing to reduce poverty, and how can these efforts be translated to other states?

While it is impossible to draw a direct causal link between poverty reduction efforts in Vermont and decreases in the state’s poverty rates, there are some possible drivers of this correlation. For example, Vermont has the third highest minimum wage in the U.S. ($8.46).  Wages are one of the basic determinants of income so, logically, a higher minimum wage should reduce poverty.

Vermont has also enacted policies and programs that promote saving and asset building and protect consumers. For instance, with respect to education, Vermont allows savings in its 529 college savings program without a fee, and the state provides incentives for savings in the state’s 529 college savings program for residents. It has also developed content standards for personal finance courses that schools must implement when teaching financial education.  For business development, Vermont provides state funding through the use of federal block grant funding to support microenterprise development.  To protect homeowners from foreclosure, Vermont provides access to judicial review, regulates mortgage servicers, and limits deficiency judgments. In terms of health care policies, in Vermont, both parents and childless adults earning below 300% of the Federal Poverty Level (FPL) are eligible for Medicaid. Additionally, the state's Medicaid program covers basic dental care for adults and provides an extension of COBRA coverage for small firm employees.  Finally, Vermont has strong asset building policies. It has eliminated asset limits in its Supplemental Nutrition Assistance Program (SNAP) program and excludes at least four categories of assets in its Temporary Assistance for Needy Families (TANF) program. Vermont also has a strong state funded Individual Development Account (IDA) program. It provides tax incentives for working families such as a refundable state Earned Income Tax Credit (EITC) which is 32% of the federal EITC, as well as a Child and Dependent Care Tax Credit.  Finally, Vermont has strong consumer protections against predatory lending.  It caps payday lending and short-term installment loan rates (18% and 24% respectively) and prohibits car-title lending entirely.

Overall the 2011 poverty data show that there is a lot of work to be done when it comes to fighting poverty on both the local and federal level. However, poverty reduction is possible if states begin changing their public policies to promote asset building and savings opportunities and strong consumer protections to protect such savings and assets.  

This blog post was coauthored by Alex Hoffman.

 

Census Bureau Releases 2011 Poverty Data--Downward Trends Continue

Yesterday the U.S. Census Bureau released data on poverty and health insurance coverage for 2011. The headline is that poverty stayed the same in 2011 as it was in 2010. Not too interesting, unless one looks beneath the surface. 

Poverty: There are still 46 million people in America who live in poverty, including one in every five children. That’s 25 percent more people than at the start of the recession in 2007. The poverty level for a family of three is $19,090

Economic Recovery and Poverty: There is no assurance that poverty will decrease as the economy recovers. During the last economic recovery, economic growth was so weak and the monetary benefits of recovery were so unevenly shared that the official poverty rate grew from 11.7 percent at the start of the recovery in 2001 to 12.5 percent when the recovery ended in 2007.   

The Middle Class: Middle class living standards took another serious blow as median income fell by 1.5 percent in 2011. The median income has fallen by eight percent since the recession started in 2007. For a family with $50,000 in annual income, that’s a loss of $350 per month.

Government Programs Lifted Millions Out of Poverty: Unemployment insurance kept two million people out of poverty in 2011 and social security kept twenty-one million people out of poverty. In addition, Food Stamps (now called SNAP benefits) and the earned income tax credit are not considered when the official poverty rate is calculated because they are “non-cash benefits.” If counted, they would have lifted ten million people, including five million children, out of poverty.

Income Inequality:  Income fell for the bottom four-fifths of American households, and rose by two percent for the top-fifth, including five percent for the top five percent of households—a $15,000 increase in annual income. Apart from being unfair, this continuing growth in income inequality is a drag on economic growth and job creation, shifting resources away from persons who will spend them and stimulate economic activity.     

Overall, the Census numbers paint a picture of continuing high rates of poverty, government programs that provide an essential safety net, a major decline in middle class living standards, and an ever-widening gap between rich and poor that is undermining our economic recovery.  

This article is largely based on analysis by the Center on Budget and Policy Priorities

What Did Congress Do to Combat Poverty in 2011?

Poverty ScorecardThe number of people in poverty has risen to unparalleled levels. According the most recent Census Bureau data, there were 46.2 million Americans living in poverty in 2010, up from 43.6 million in 2009 (an increase of 2.6 million). In other words, more than one in six Americans were poor in 2010. This is the highest number since the Census Bureau began gathering data 52 years ago, superseding last year’s all-time high.

What has been the legislative response of the United States Congress to the increase in poverty? Virtually nothing. Only one bill that will reduce poverty—legislation that will expand job opportunities and training for veterans—passed the Senate and House and was signed into law by the President in 2011.

The Shriver Center’s 2011 Poverty Scorecard, released today, rates every member of Congress on how they voted on anti-poverty legislation. In consultation with national anti-poverty experts in 20 different fields, we identified the 18 House votes and 11 Senate votes that were the most significant votes to people in poverty in 2011. The 2011 Congressional Poverty Scorecard includes a thorough summary of each vote we scored that describes the measure that was voted on and why it was important in fighting poverty. 

In past years, almost every vote important to people in poverty concerned a legislative initiative that would fight poverty. In contrast, most of the votes in 2011 that were of the greatest significance to people in poverty were votes against legislation that would have made poverty even worse.

Several votes would have eliminated programs that people in poverty rely on, including national health reform, legal services, school-based health centers, the McGovern-Dole international food program, and three important foreclosure relief and neighborhood stabilization programs.

Other votes were on sweeping proposals that affected a wide array of anti-poverty programs. These included proposals to dismantle the Medicare program, undermine the structure of Medicaid and the Supplemental Nutrition Assistance Programs (formerly Food Stamps), enshrine a balanced budget requirement and other ruinous fiscal principles in the U.S. Constitution, and substantially cut funding for Pell Grants for higher education, employment and training programs, the WIC nutrition program for pregnant women and young children, and mental health and substance abuse program.

In addition to making poverty worse, some of the proposals would have exacerbated the 30-year trend of growing income inequality in the United States. In particular, the Ryan budget proposal approved in the House but rejected in the Senate would have made massive cuts in federal programs, most of which would have fallen on the poor, with all of the resulting savings used to provide additional tax breaks for the wealthy.

The Poverty Scorecard is a powerful tool that advocates, media, and citizens can use to evaluate the performance of their elected representatives. Each Senator and House member is assigned a letter grade, A+ through F-, based on their overall voting performance. Members who did not vote on enough bills were not graded. In total, we graded 431 of 435 Representatives and all 100 Senators. Readers are encouraged to examine their representatives’ voting records, as well as other data available in the Poverty Scorecard, to learn more about what Congress did, and did not do, to combat poverty in 2011.

 

 

Poverty Scorecard Grades Congressmembers' Records on Anti-Poverty Legislation

Poverty ScorecardThe Great Recession has undermined the economic security of people and communities across America, including the poor. There were 43.6 million Americans living in poverty in 2009, an astounding 17 percent increase in the two years since the Great Recession began in 2007. With poverty at such a rising tide, never has it been more important for our elected representatives to take effective action to fight poverty.

Each year the Shriver Center publishes its
Poverty Scorecard, which grades the performance of every Member of Congress on the fifteen or so most important poverty-related votes of the year. Experts in approximately twenty different subject areas help us identify which votes to use. The Scorecard’s purpose is to hold our Senators and Representatives accountable – every single one of them – for their efforts to fight poverty, or their failure to do so.

The major legislation Congress has considered over the past two years reflects an evolving federal response to the Great Recession. In 2009, there were several bills in the housing field, especially relating to foreclosure. In 2010, much of the focus was on extending unemployment insurance benefits and spurring job creation. Examples include:
Hiring Incentives to Restore Employment, votes to extend the TANF jobs program, multiple unemployment insurance extensions, the Disaster Relief and Summer Jobs Act. Major consumer protection legislation and national health care reform were also produced in 2009 and 2010 in response to the troubled economy. Summaries of important legislation, including the Health Care and Education Reconciliation Act, appear in the Poverty Scorecard.

As in 2009, several major pieces of legislation that will have a significant impact in fighting poverty were enacted into law in 2010. These include the
Affordable Care Act (national health care reform), reauthorization of the federal child nutrition programs, a series of extensions in the weeks of eligibility for unemployment insurance benefits, bills that sought to stimulate job creation, and a package of major fiscal relief to the states.

The final version of each of these bills was the product of significant compromise. Health care reform did not include a public option. Child nutrition reauthorization was at a lower funding level than recommended by the President and the cost was offset by a cut in future SNAP (supplemental nutrition assistance program, formerly known as food stamps) benefits, as was the cost of major fiscal relief to the states. Unemployment insurance benefit extensions were generally for short periods and did not include extensions of many other anti-poverty programs such as the TANF emergency contingency fund. Job creation initiatives were greatly scaled down from the bills that were introduced. And then there was the greatest compromise of all, a 13-month extension of federal extended unemployment insurance benefits and low-income tax credits in return for extending tax cuts for the wealthy and lowering the tax on large estates.

As a result of the significant compromises that occurred, half of the 16 bills included in the Poverty Scorecard passed both the Senate and House and were signed into law, a higher percentage than in previous years. Of the 8 other bills, 2 failed to obtain the 3/5 vote required to invoke cloture and move to a final vote in the Senate and 6 were considered in the House only. At least some of these bills were not considered in the Senate because of the Senate rule which prevents legislation from moving to a final vote unless there is a super-majority of 60 per cent voting in favor of “cloture”, commonly called the filibuster rule. The Senate should eliminate the profoundly undemocratic filibuster rule and allow legislation to be voted on and approved by a simple majority.

The Scorecard includes a
summary of each vote we scored that describes the measure that was voted on and why it was important in fighting poverty.

With the help of national anti-poverty experts in 20 different fields, the Shriver Center has identified the 16 House votes and 14 Senate votes over the past year that were the most significant in fighting poverty.
Each member is assigned a letter grade, A though F, based on their overall voting performance. Members with a perfect voting record earned an A+ and members who voted against reducing poverty every single time got an F-. Members who did not vote on enough bills were not graded. In total, we graded 428 of 435 Representatives and 99 of 100 Senators.

Distribution of Grades for Senators and Representatives


A+ A B C D F F-
Senators 15 37 5 2 7 29 4
Representatives 165 74 16 7 84 73 9

 

Congressional Delegations with Poor Voting Records

We compared each state’s poverty ranking with the average voting rank of its congressional delegation. As in past years, we often found a negative correlation between a state’s poverty rate and the voting record of its members, i.e.,
the states with the highest poverty rates often had delegations with the lowest average score in voting to fight poverty.


Poverty Rate Poverty Rate Rank Delegation’s rank in voting to fight poverty
Mississippi 21.4% 1st 43th
Alabama 16.8% 7th 44th
Oklahoma 16.4% 9nd 46th
Kentucky 17.4% 6th 42nd
Louisiana 18.4% 2nd 38th
Texas 16.8% 8th 41st
South Carolina 15.8% 11th 43rd
Georgia 15.0% 13th 40th
Tennessee 16.1% 10th 36th
Arizona 14.7% 14th 37th

 

Congressional Delegations with Good Voting Records

In contrast, Congressional delegations in several states around the country with higher than average poverty rates had good records in voting to fight poverty.


Poverty Rate Poverty Rate Rank Delegation’s rank in voting to fight poverty
New Mexico 18.1% 3rd 3rd
Arkansas 17.7% 4th 14th
West Virginia 17.6% 5th 12th
New York 13.8% 17th 7th
Oregon 13.6% 20th 11th

 

Even states with comparatively low poverty rates have a lot of poor residents. The Congressional delegations in five states with relatively low poverty rates had especially good records in voting to fight poverty.


Poverty Rate Poverty Rate Rank Delegation’s rank in voting to fight poverty
Connecticut 8.7% 48th 4th
Hawaii 9.4% 46th 2nd
Maryland 8.2% 49th 9th
Massachusetts 10.1% 41st 8th
Rhode Island 11.6% 34th 1st

 

The Poverty Scorecard is a powerful tool that advocates, media, and citizens can use to evaluate the performance of their elected representatives. The goal of the Poverty Scorecard is to enable citizens to read about how well their legislator stood up and fought for the interest of low income communities. Readers can even use the action page to contact their legislator. Our representatives must be held accountable.

Recommitting to the Safety Net--Improve and Expand Benefits to Lift More Families Out of Poverty

Child EatingThe 2010 legislative session will pass without Congress reauthorizing cash assistance for poor families with children (called Temporary Assistance for Needy Families or TANF); instead, its funding was simply continued at current levels for the next year. Reauthorization will likely occur next year, and Congress has already begun hearings on how to improve TANF. When Congress gets around to reauthorizing TANF, it must mend our frayed safety net. Ultimately, the key to improving TANF will be to measure success not by caseload reductions but by the elimination and alleviation of poverty. 

The federal poverty line in the U.S. for a family of four is just $22,050. In Illinois, 15% of families with children under 18 were poor in 2009. Those who live in extreme poverty have income totaling less than half of the poverty line. It is unconscionable that the safety net in an industrial democracy such as our own still leaves nearly nineteen million people living in extreme poverty in 2009. In Illinois 8.5% of children are growing up in extreme poverty, and many are not being helped by TANF at all. The same picture is playing out around the country.

Since federal welfare reform was enacted in the 1996, the Government Accountability Office (GAO) reports that caseloads have plummeted across the country—declining 87% in just 10 years. Meanwhile, extreme poverty is 18% higher than it was in 2000. The decline in TANF caseloads is due almost entirely to a huge rise in the number of eligible families who are not receiving benefits. Even before the recession, the GAO concluded that increasing the enrollment of eligible families to 1995 levels would lift 800,000 children nationally out of extreme poverty. Welfare has declined, but the real human need for it has not.

A few months ago, the Senate Committee on Finance concluded a “Hearing on Welfare Reform: A New Conversation on Women and Poverty.” The Sargent Shriver National Center on Poverty Law submitted testimony to that hearing. Among other suggested reforms, we highlighted the need to fundamentally rededicate TANF to its purpose—to be a robust and flexible safety net to lift people out of poverty. 

Here in Illinois, we have made significant strides to improve TANF through Public Act 96-0866, (described more fully here), which went into effect on July 1, 2010. By making benefits available sooner, and to more poor individuals, our TANF program has become a more robust safety net during the recession. In fact, Illinois has experienced a relatively significant increase in TANF receipt during the recession, rising approximately 40% in two years and 15% in just the months since Public Act 96-0866 went into effect on July 1, 2010. But we are still not talking about many families; only one in nine Illinois families in poverty receives TANF.

TANF reauthorization presents the opportunity to rededicate the program to its most critical goal, the alleviation of poverty, while at the same time furthering the aims of reducing dependency on aid and strengthening families. It is time to reauthorize TANF.

 

Decreasing Poverty, Even If We Can't Agree How to Measure It

[This is the last in a series of six articles summarizing the half century history of the US poverty threshold and the dire need for an updated poverty measure.]

MoneyAs the earlier posts have discussed, the main problem with the currently poverty measure is that its ridiculously out of date. Updating the measure will offer a more realistic view of what constitutes poverty in 2010. The measure will actually have some real relationship to costs rather than rely on antiquated 1955 costs. It’s currently based on the lowest cost food plan available in 1955; a time when food constituted 1/3 of the average family’s budget. Now, however, food is only 1/7 of a family’s budget while the costs of housing, childcare, and health care, none of which are taken into consideration, have all risen disproportionately. The 2008 average poverty threshold of $22,025 for a family of four represents the same purchasing power as the corresponding 1963 threshold of $3,128.

The current poverty measure is also confusing. As discussed previously, the poverty thresholds are published by the Census Bureau and are the original measure and are mostly used for statistical purposes. The poverty guidelines are published by the Department of Health and Human Services (HHS) and are used for determining eligibility for certain federal benefit programs. The Census Bureau and HHS also follow different labeling practices. The Census Bureau labels its poverty thresholds by the year to which they are applied, whereas HHS labels its poverty guidelines by the year in which it issues them. Because of these disparate labeling practices, the Census Bureau poverty thresholds for 2008 and the 2009 HHS are actually for the same year. Trying to compare these two versions leads to confusion.

Perhaps most importantly, however, is the fact that such outdated poverty measures are used for benefits determinations at all. Although some means-tested programs do not use the poverty guidelines in determining eligibility (e.g. TANF, SSI, EITC), many others do.  Currently at least 82 federal or federally assisted programs use information about numbers of people in poverty in some way in formulas for allocating funds to states or localities, or use some percentage of poverty in calculating benefits eligibility. Federal programs that use the guidelines in determining eligibility include Head Start, Low Income Home Energy Assistance, Children’s Health Insurance Program, Food Stamps, and Women Infants and Children (WIC). Some federal programs use a percentage multiple of the guidelines, such as 125%, 150% or 185%. This is not the result of a single coherent plan, instead, it stems from decisions made at different times by different congressional committees or federal agencies. Additionally, some state and local governments have chosen to use the federal poverty guidelines in some of their own programs and activities such as state health insurance programs.

Use of the poverty guidelines might not have been important if cash and in-kind government benefits for poor families had risen at the same rate. The rate of growth has, however, been very unequal. In the early 1960s more than $8 out of $10 in public means-tested benefits was transferred to poor people as cash, less than $2 as in-kind benefits. By the early 1990s, more than $7 out of $10 was transferred as in-kind benefits. Official poverty statistics, therefore, mask the full extent to which poverty has been reduced by programs to ameliorate it, because they exclude the consumption gains that result from in-kind transfers.

The new poverty supplement addresses many of these deficiencies. Yet, there will likely be little to celebrate from the new data. Given the depth and length of this recession, the supplemental measure will likely confirm what we’ve known for a while – that more and more working families are living on the brink. On the other hand, the new measure could prove transformative if it becomes the central basis by which we establish whether we are making progress on reducing poverty.

The current poverty measure’s failure to evaluate the effectiveness of anti-poverty programs creates the false impression that poverty is intractable and that we’ll never make a dent in this problem no matter what government does. In reality, research shows that just four policy recommendations, to improve the Earned Income Tax Credit, Child Tax Credit, child care assistance, and minimum wage, would cut the U.S. poverty rate by 26% over 10 years.

This new data can help us understand how well the federal government is responding to the recession and what types of policies are most effective at helping those families striving to join the middle class. In particular, these supplemental figures could take on added significance at a time when many in the government point to an overhaul of public benefit programs as the best hope for reducing the ballooning federal debt. The fact that the new measure will not immediately be used as an “official measure” is also beneficial.

Using the new measure as a supplement allows studies of the potential effects such a switch could have. Once this impact is assessed, advocates can then lobby for a change if appropriate.

In the meantime, after such a long discussion about the poverty measurement, it is important to remember exactly what the purpose of the U.S. poverty measure is. As its creator explained:

"Unlike some other calculations, those relating to poverty have no intrinsic value of their own. They exist only in order to help us make them disappear from the scene . . . .With imagination, faith and hope, we might succeed in wiping out the scourge of poverty even if we don't agree on how to measure it."
 

Out with the Old (Sort of) and In with the New: A New Federal Poverty Measure

[This is the fifth in a series of six articles summarizing the half-century history of the U.S. poverty threshold and the dire need for an updated poverty measure.]

MoneyAs fears about the economy became reality, the call for modernizing how the nation measures poverty took on new urgency. The President’s FY 2011 budget, for example, included a proposal for creating a new poverty measure

Based on this new sense of urgency as well as the many previous proposals and discussions, in March the U.S. Census Bureau announced that it will be developing an alternative way to measure poverty. The Supplemental Poverty Measure will be released in the fall of 2011, at the same time that the official income and poverty measures for 2010 are released. This new measure will be broadly based on NAS’s1995 recommendations, but updated by the research done on this issue for the past 15 years. The precise formula has yet to be determined, but in general it is expected that the measure will:

  • Define “family unit” to include all related individuals who live at the same address in order to reflect today’s family structure;
  • Use the most recent five years of available data to increase the stability of the poverty thresholds;
  • Include in-kind benefits to meet help meet food, clothing, shelter, and utility needs as income, and deduct basic expenses such as work expenses, taxes, child care, out-of-pocket expenses, child support and commuting costs;
  • Be updated annually and the measure itself continuously improved based on the latest research; and
  • Include some form of geographic adjustments that present a more realistic relationship between cost of living and what it takes to meet basic needs.

Based on alternative poverty measure figures previously used by the Census Bureau experimentally, it is clear that the new measure will put poverty rates much higher than the official rate. Although it’s impossible to predict precisely what the new supplemental rate will reveal, other alternative measures’ figures would predict the following:

  • Overall poverty is expected to increase from 13.2 percent, or 39.8 million people, to 15.8 percent, or 47.4 million, mostly due to rising expenses from medical care and other factors.
  • About 18.7 percent of Americans 65 and older, or nearly 7.1 million, will be considered poor compared to 9.7 percent, or 3.7 million, under the traditional measure, due to out-of-pocket expenses from rising Medicare premiums, deductibles, and a coverage gap in the prescription drug benefit.
  • About 14.3 percent of people 18 to 64, or 27 million, will be in poverty, compared to 11.7 percent under the traditional measure, many of which will be low-income, working people with transportation and child-care costs.
  • Child poverty should be lower, at about 17.9 percent, or roughly 13.3 million, compared to 19 percent under the traditional measure, since single mothers and their children’s non-cash aid, such as food stamps, will be counted as income.
  • And the Northeast and West will have bigger jumps in poverty, due largely to cities with higher costs of living such as New York, Boston, Los Angeles, and San Francisco.

Importantly, this new poverty measure will not replace the official poverty rate, but will instead be published alongside the traditional figure as a "supplement" for federal agencies and state governments. The point of the new measure is to provide a more realistic view of poverty including both the necessary expenses of modern day living as well as the anti-poverty programs currently being used. Issuing a supplemental measure, however, will not change eligibility for any governmental benefits or, in and of itself, cost the government one penny in additional poverty program expenditures. While some may argue that this new measure should immediately become the official measure, such a change shouldn’t be rushed into because the impact of the new measure must first be assessed.

The next and final blog in this series explores what effects, if any, this new supplemental measure will have on current benefit programs and current programs attempting to ameliorate poverty.
 

Acting on the Data: The Measuring American Poverty Act

[This is the fourth in a series of six articles summarizing the half century history of the US poverty threshold and the dire need for an updated poverty measure.]

MoneyIn September 2008 and again in 2009, the Measuring American Poverty Act (MAP Act) was introduced in Congress. The bill had a number of provisions intended to build on the NAS approach while seeking to address many of its criticisms. In general, it would have incorporated NAS’s suggestions that the poverty measure be based on current consumption patterns for food, clothing, shelter and other basic necessities, include income assistance from public programs (e.g., Earned Income Tax Credit, Food Stamps, Housing Assistance) and deduct necessary expenses (e.g., federal income taxes, work expenses, and out-of-pocket medical expenses). Finally, it would have also taken into account NAS’s suggestions to include geographical differences in the cost of living. Among the bill’s key provisions were:

  • Thresholds: The Census Bureau would have been required to adopt thresholds along the lines recommended by NAS to better reflect the needs of children.
  • Resources: The bill would have adopted the NAS approach of counting tax credits, non-cash benefits such as food stamps, and housing subsidies as household income, and, at the same time, subtract expenditures for health care, necessary work-related expenses, and child support.
  • Historical Measure: The bill would have treated the current official poverty measure as the “historical” measure, and require that calculation and reporting of poverty rates be done for both the modern and historical measure.
  • Use of New Measure: The bill would have specified that adoption of the modern measure would have had no automatic effects on program funding formulas or eligibility rules that currently use the official poverty measure. Instead, Congress would, over time, have been required to make whatever adjustments it considered appropriate on a program-by-program basis.
  • Decent Living Standards and Medical Care Risk Measure:  The bill would have directed that NAS make recommendations for Decent Living Standards and Medical Care Risk measures. The Decent Living Standard would be defined as “the amount of annual income that would allow an individual to live at a safe and decent, but modest, standard of living,” that is, an amount intended to be above that of the poverty thresholds. The Medical Care Risk measure would calculate the extent to which individuals are at risk of being unable to afford needed medical treatment, services, goods, and care, taking into account both uninsured and underinsured statuses.
  • Calculation of Relative Measure: While the bill would not have mandated reporting of relative poverty measures using percentages of median income, it would have required that public online tools be made available to allow members of the public to calculate poverty using alternative approaches, including calculations based on 50 and 60 percent of median income.

In sum, the proposed bill would have addressed a range of concerns leveled against the NAS approach. First, in addition to establishing a “modern” poverty measure the bill would have laid the groundwork for developing a Decent Living Standard measure. This measure would recognize that a family needs resources far exceeding the current poverty line in order to have a “reasonably” decent life, while acknowledging that it would not be feasible to immediately implement a new poverty line that is twice as high (or higher) than the current one. Finally, over time, a Decent Living Standard recognized in federal law could have become an important vehicle for analyzing and talking about the need to increase the number of families that have the resources not just to get by but to thrive.

The bill also would have ensured that there would be no immediate effects on existing funding or eligibility rules by specifying that there would be no automatic effects on program funding formulas and benefits eligibility.  Instead, it recognized that there may be good reason to adjust funding formulas and eligibility rules overtime.

One drawback to the MAP Act was that implementation of the new measure would have required Congressional action. In contrast, the administration could have, and still can, change the current measure without Congressional action since the directive to use the original poverty measure came from the Office of Management and Budget. Administrative action would be preferable to legislation because the measure could be developed and continually refined without locking in the detailed rules contained in parts of the Act. Still, the introduction of the MAP Act was an important step forward in showing how the administration or Congress could build on NAS’s recommendations and the subsequent learning and experience to develop a significantly better poverty measure.

The next blog in this series discusses the recently announced supplemental poverty measure.

For Good Measure: NAS's 1995 Report on Updating the Poverty Measure

[This is the third in a series of six articles summarizing the half century history of the US poverty threshold and the dire need for an updated poverty measure.]

MoneyFor the last fifty years, there has been no improvement to the Federal Poverty Measure. The National Academy of Sciences (NAS) 1995 approach for updating the poverty measure was probably the closest the U.S. has come to such reform in recent history. Among the report’s recommendations were that:

  • The poverty threshold should be comprised of a budget for three basic categories (e.g., food, clothing, shelter including utilities) and a small additional amount to allow for other needs (e.g., household supplies).
  • Actual data on household spending should be used to develop a threshold for a reference family.
  • Each year, the threshold should be updated to reflect changes in spending on food, clothing, and shelter over the previous three years and then adjusted for different family types and geographic areas of the country.
  • The resources of a family to be compared with the thresholds to determine poverty status should be defined to include money and near-money disposable income (e.g., resources should include most in-kind benefits and should exclude taxes and certain other nondiscretionary expenses (e.g., work expenses).
  • A regular updating procedure to maintain the time series of poverty statistics should be used.

The primary advantage of NAS’s proposal was that it would have directly addressed many criticisms of the current poverty measure by:

  • applying thresholds that actually reflect the costs families incur to meet a set of basic needs;
  • ensuring a logical relationship between the thresholds and resource-counting rules;
  • using resource rules that both better reflect family resources and expenses such as health care, work-related costs, and child support paid, and that do a far better job of showing the effects of key policies; and
  • providing for geographic variation in the thresholds to reflect variations in actual costs.

These changes are important, in that they would have created a measure that better reflects the effects of government and anti-poverty policies. For example, the American Reinvestment and Recovery Act, or ARRA, contained a number of provisions intended to help poor and vulnerable groups. The current poverty measure does not reflect these efforts since ARRA’s expansion of tax credits, such as the Earned Income Tax Credit, Making Work Pay, and Child Tax Credits, as well as SNAP benefits and child care assistance, are not considered in the measure.Thus, there is no way to measure their effectiveness. Similarly, removing these credits and benefits would financially hurt many, but will not affect the poverty level at all. Adopting an NAS-type approach would have fixed this problem.

However, NAS’s approach also had a number of drawbacks. Among them:

  • Measuring economic deprivation by assessing whether households can afford to meet a set of basic needs is not productive when international comparisons and many other developed countries use a “relative” measure of poverty based on the share of families below 50 or 60 percent of median income (on the premise that, in a developed society, measuring the number of families far from the median provides a better measure of whether families are outside of the social mainstream).
  • Using self-sufficiency standards, basic living budgets, and family budgets aims too low because often such measures conclude that the amount of income a family needs for a reasonably decent life or similar formulation may be twice the current poverty line or higher.
  • Using thresholds that reflect only food, clothing, shelter, and “a little more” do not adequately reflect the developmental needs of children.
  • Excluding health care and work-related costs in the thresholds can make the measure misunderstood by suggesting that these costs are not important. And, by only subtracting actual expenses, the measure provides no recognition that some families have low or no expenses because they are going without needed health or child care.

Despite these drawbacks, NAS’s approach became the one most widely debated. There was great consensus as to many of its principles, but, as always, disagreement among others. Eventually, NAS’s suggestions were used, at least in part, as the basis for several legislative proposals for updating the poverty measure that were eventually introduced.

These legislative proposals are discussed in the next blog in this series.

No Real Progress: 1969-2004

[This is the second in a series of six articles summarizing the half-century history of the U.S. poverty threshold and the dire need for an updated poverty measure.]

MoneyToday's policy experts are not the first to raise concerns over the poverty measure's accuracy. As early as November 1965, policymakers expressed concerns about the poverty thresholds and how to adjust them for increases in the general standard of living. In 1968, ideas began to be discussed about raising the thresholds to reflect such increases. A committee was established to reevaluate the thresholds. Ultimately, the committee decided to adjust the poverty thresholds only for price changes, and not for changes in the general standard of living. Thus, in 1969, it was decided that the thresholds would be indexed by the Consumer Price Index (CPI) instead of by the per capita cost of the economy food plan.

In 1973, a thorough review of federal income and poverty statistics occurred. Specifically, the Subcommittee on Updating the Poverty Threshold recommended that the poverty thresholds be updated every ten years using a revised food plan and a multiplier derived from the latest available food consumption survey. It also recommended that the definition of income used to measure overall income should also be the income definition used to calculate the multiplier for the poverty thresholds. This would generally have resulted in higher poverty thresholds at each decennial revision. Unfortunately, none of these changes were implemented.

Interestingly, beginning in 1979 the Census Bureau began testing a variety of experimental poverty measures using various expanded definitions of income and alternative methods to account for inflation. None of these, however, replaced the official poverty measure.

In 1981, several minor changes were made to the poverty thresholds in accordance with recommendations of an interagency committee. During most of the 1980s, although there were extensive debates about poverty measurements, particularly about proposals to count government noncash benefits as income for measuring poverty without making corresponding changes in the poverty thresholds, no changes were actually made.

Perhaps the closest the U.S. came to succeeding in revising this measure came in 1990. A Congressional committee tasked the National Academy of Sciences/National Research Council (NAS) with studying the official U.S. poverty measure and providing suggestions for how to revise it. In May 1995, NAS’s report was published. According to the report:

The major conclusion is that the current measure needs to be revised: it no longer provides an accurate picture of the differences in the extent of economic poverty among population groups or geographic areas of the country, nor an accurate picture of trends over time. The current measure has remained virtually unchanged over the past 30 years. Yet during that time, there have been marked changes in the nation’s economy and society and in public policies that have affected families’ economic well-being, which are not reflected in the measure.

Ultimately, none of NAS’s recommendations were implemented.

In 2004, the Office of Management and Budget held a workshop to review progress made in moving towards a new measure of income poverty as recommended by NAS’s 1995 report.  Over the succeeding three years, these discussions continued but did not result in any consensus. That is, not until recently.

Stay tuned for the next installment in the series where we discuss the findings and implications of the National Academy of Sciences’ Report.

Hard Numbers: A Measure Meant for Research, Not Eligibility

[This is the first in a series of six articles summarizing the half century history of the U.S. poverty threshold and the dire need for an updated poverty measure.]

CashThe Federal Poverty Measure is badly in need of revision. The current measure is not an accurate reflection of the resources a family needs to stay healthy and thrive. This six-part series will examine the history of the measure and past and current efforts to reform it.

The Federal Poverty Measure is a decades-old relic that became widely utilized by historical accident. The current measure was created during the mid-1960s by an economist at the Social Security Administration (SSA) who began publishing articles with poverty statistics for the United States using a poverty measure that she had developed.

Since 1965, there have been two slightly different versions of the Federal Poverty Measure: (1) the poverty thresholds, and (2) the poverty guidelines. The poverty thresholds are the original version of the Federal Poverty Measure. They are published by the Census Bureau and are used mainly for statistical purposes. The poverty guidelines are a simplification of the poverty thresholds. They are published by the Department of Health and Human Services and are used for administrative purposes (e.g., determining financial eligibility for certain federal programs).

The original poverty threshold measure has two components--a set of poverty lines or income thresholds, and a definition of family income to be compared with those thresholds. Both components of the measure are flawed and need to be revised.

In devising the measure, the economist used the price of food as the basis of the measure. At the time the measure was developed, families of three or more persons spent about 1/3 of their after-tax money income on food. In particular, the "economy food plan"--the cheapest of four food plans developed by the Department of Agriculture, which was designated for "temporary or emergency use when funds [were] low," was used as the basis. The poverty thresholds were determined by taking the dollar costs of this food plan for families of various sizes and multiplying the costs by a factor of three to allow for other expenses. However, currently food is only 1/7 of a family's budget, while the costs of housing, child care, and health care, none of which are taken into consideration, have all risen disproportionately to the cost of food.

A family's income was calculated using pre-tax income levels, since that was the only income information available at that time. Although income was based on pre-tax dollars, the poverty thresholds were created using estimated income available after taxes. In other words, using this measure, a family would seem to have more money relative to the poverty line than they had in reality. The inconsistency of this method was acknowledged, but since there was no other alternative, it was understood that the result would yield "a conservative underestimate" of poverty.

In effect, the measure was for a hypothetical average family that had to cut back on its expenditures. The measure assumed that expenditures for food and non-food items would be cut back at the same rate and that the amount that a family would be spending on non-food items would be minimal, but sufficient. Thus, the original poverty measure was presented as a measure of income inadequacy, not of income adequacy. As its developer noted, "if it is not possible to state unequivocally 'how much is enough,' it should be possible to assert with confidence how much, on an average, is too little."

In May 1965--just over a year after the Johnson Administration initiated the War on Poverty--the Office of Economic Opportunity adopted the poverty thresholds as a quasi-official definition of poverty for statistical purposes and for program planning. In 1969, the thresholds became the federal government's official statistical definition of poverty, though it was clearly stated that "[the official poverty thresholds] were not developed for administrative use in any specific program and nothing in this Directive should be construed as requiring that they should be applied for such a purpose." Thus, these thresholds were intended to be used for research, not to determine eligibility for antipoverty programs.

The next blog in this series will examine previous efforts to revise the Federal Poverty Measure.