Change in the outdated federal poverty measure is long overdue. Nevertheless, the Department of Commerce's announcement of a new Supplemental Poverty Measure (SPM) should be greeted with caution. It will not change things nearly as much as its proponents hope, and may have some unexpected effects.
What the SPM will do, is rise as living standards rise, rather than fall further and further behind -- as is the case with the current poverty measure. Indeed, the latter is "frozen" at the level of a basket of goods and services adequate for families in the 1950s, updated only for inflation. It does not allow for rapidly increasing costs, such as health care and taxes or "new" costs such as child care.
What the SPM won't do is raise the thresholds very much. Because it only includes some costs -- housing, utilities, food and clothing -- it starts at not much above the current, much too low level. In fact, since it will also introduce geographic adjustments reflecting differences in housing costs, the SPM is likely to result in lowering thresholds in less expensive areas such as rural counties or the South below the current federal poverty measure. In short, the SPM is a measure of deprivation, not a full measure of what people and families need to meet their basic needs.
What the SPM will do is take into account the impact of cash and some in-kind benefits, as well as taxes and tax credits. Thus it can measure the impact of aid that improves the well-being of the poor, a good thing. But there is a catch: it only does this for aid that mirrors costs that are in the threshold, such as housing and food. For work-related costs and health care, it only subtracts actual spending from income. As a result, those with enough for the bare basics of food and housing, but are too poor to afford sufficient health or child care, ironically do not get counted as poor.
When the SPM changes are combined, they counter each other, so that the count of the poor will likely increase somewhat, but not by much. At the same time, it does change who is counted as poor. Somewhat surprisingly, When New York City implemented a version of the SPM elderly poverty increased substantially, while the count of poor families with children decreased slightly.
The SPM only partly cures what ails the federal poverty measure. The most common critique of the federal poverty measure is that it is too low, resulting in an undercount of the poor and restricting of the Safety Net, as documented in Battered by the Storm http://www.ips-dc.org/reports/battered-by-the-storm . Indeed, most federal aid programs set eligibility at a multiple of the federal poverty line, from 130% (for Food Stamps) to as high as 400% (for S-CHIP, the State Child Health Insurance Program).
As a deprivation measure, the SPM still leaves the need for a measure that takes into account all the needs of a family, including not only food and housing (including utilities) but also health care, child care, transportation, as well as taxes and tax credits. That would require a measure like the Self-Sufficiency Standard or the Economic Policy Institute's Basic Family Budgets which do assess the cost of all needs, and are varied by place and family type. Those who would like to see a more accurate and realistic count of poverty should push for the Census Bureau to open the SPM development process to public comment, to the end of creating a measure that truly reflects the 21st century realities facing the working poor. Only then can we hope to find who, where and why we still have poverty in the richest nation on earth.
I keep hoping that someone will seek to understand the underlying cause of poverty, and pursue its eradication, rather than nibbling at the leaves.
The most logical model I've seen comes from the ideas commonly associated with Henry George.
Like Linda, I appreciate that you are fighting the good fight, in terms of seeking to measure both the real cost of living -- the just-getting-by figure. And I applaud the additional related "Overlooked and Undercounted" studies which seek to quantify the number of people who live below the SSS level. I wish, however, that you would add a single other statistic to the latter studies: the percentage of children of various ages who live in families with incomes below the SSS. I've calculated it at roughly 35% to 40% in the states for which the data has been provided; see http://lvtfan.typepad.com/lvtfans_blog/self-sufficiency-standard-studies/.
What we don't measure, we can't manage.
But the only way to reduce poverty is to end it: to get rid of the structures which produce it. For this, I encourage you to look to the ideas of Henry George; see http://www.wealthandwant.com/
Aid to the needy can be improved, and clearly we can find a better definition of "economic wellness", but we will always have poverty because there will always be 10% of the people in the lowest 10%. Poverty in the US may be something people in other countries would aspire to, but we should continue to provide people with the means to better themselves.
Here it is by quantile -- again, 2006:
* Top income decile: 47.19% of the before-tax income
* Second income decile: 13.77%
* Top income quintile: 60.96%
* Second highest income quintile: 18.18%
* Middle income quintile: 11.23%
* Fourth highest income quintile: 6.72%
* Bottom income quintile: 2.92% of before-tax income
So yes, 10% will always be in the bottom 10%. But keep in mind that the bottom 40% have less than 10% of the income. And if you tell me that the lowest income group includes elderly folks living off savings, consider that the bottom 20%, by income, had 3.77% of the net worth, and the bottom 60%, by income, had 16.15%.
The reason we still have poverty is that we've permitted structures which create poverty and which funnel our nation's income and wealth into the pockets of a very small minority of us.
Start studying those structures. That's the first step.
Henry George wrote, "It is as though an immense wedge were being forced, not underneath society, but through society. Those who are above the point of separation are elevated, but those who are below are crushed down."
This redefinition that yields "those with enough for the bare basics of food and housing, but are too poor to afford sufficient health or child care, ironically do not get counted as poor." reminds me of the Bush Administration's elimination of the M3 money supply figures.
It seems that if you cannot do the job right, you have the option of redefining "right".
But overall the method of determining where an American family lies on the poverty tables is incredibly bogus; to not include the cost of transportation to a job - in terms of gasoline prices and mandatory insurance premiums - is criminal.
And, quite obviously, any eventual mandatory health insurance premiums should also be included.
The fundamental flaw seems to be that we got the service economy that was laid before us and haven't fully recognized the implications. Wages have become such an inordinate element of costs, fiercely constrained to match perceived inflation, that people cannot generate the discretionary funds to feed economic growth when their largest unavoidable expenditures are outpacing inflation.
Even the current plunge in home values still seems inadequate to correct the situation, while the plunge itself inflicts its own damage. Containing the outsized inflation of health care costs is the only other arena where there seems any chance of having an impact on the negative trend of more poverty -- no matter how it is measured -- and forfeiture of health care, plus a stagnant or shrinking economy.
the book NIckel and Dimed said it all.
SPM seems like a good first step but things like the self sufficiency standard are far better measuring tools.
For about 10%-15% of our current home's value, and nearly negligible property taxes, we could live in an identical house where there are no jobs, distant access to health care, and encroaching meth labs. Health care would remain the same unless we took the gamble of dropping insurance.
CPI as it has been calculated for decades is not a fair starting point when it neglects the overwhelming and extraordinarily inflationary role of health care and of property taxes in living where there is opportunity and access. If the definition of poverty requires that you leave behind much chance of progressing, just to live, then you guarantee its perpetuation.
You can't win. The money to keep a modest roof over one's head is, I believe, perfectly and inversely proportional to local job opportunities. Outside of that, health care is the defining factor -- if it is not subsidized by an employer or tamed by reform, then you have to decide whether health care is a luxury or a necessity.
Were we to treat that economic rent [e.g., the rental value of urban land] as our common treasure, instead of trying to tax wages and sales, we'd create healthier and more just local economies. I'll go so far as to suggest that many of our largest fortunes are based on the (totally legal) privatization of urban land value. Remember Leona Helmsley's observation? "WE don't pay taxes. The little people pay taxes." (Everyone thought she was talking about tax evasion, but she was accurately describing tax structure.)