Columbus Dispatch, May 13, 2008: On the level
Nearly 37 million Americans live below the federally defined poverty level, the Census Bureau says.
But officials at the National Center for Children in Poverty say the government’s method for calculating the poverty level is flawed. And they make a good case.
In 1955, the Department of Agriculture found that families typically spent about a third of their income on food. In 1963, a government economist took the amount a family would need to spend on food — a figure the USDA determined is what a family could get by on “for temporary or emergency use when funds are low” — and multiplied it by three. That was dubbed the federal poverty level.
But America was a far different place when the formula was created more than four decades ago. Today, even though people are eating more, a typical family’s food bill represents about a seventh of its income. And other spending categories have changed, too.
Health-care spending, for example, has gone from 5.2 percent of the nation’s gross domestic product in 1960 to 16 percent in 2005. And child-care expenses were not a concern to most families in the 1960s because fewer women worked outside the home.
Needs also vary by location. The poverty formula ignores regional cost-of-living differences.
A family of four at the poverty level in Memphis, Tenn., or Columbus is going to be a lot better off than a family of four making the same money in New York City or San Francisco.
Another flaw in the formula is that income is counted before taxes, making it look like families have more to spend than they do.
In 1995, the National Academy of Sciences — at the invitation of Congress — examined the poverty-level formula and recommended revising it to reflect current expenses, to vary the threshold by region and to use after-tax income in computing a family’s income level.
The National Center for Children in Poverty says that even if the academy’s recommendations were implemented, the new level would represent “a minimal level of subsistence, not a decent, modest standard of living.” The center says its research has shown that families need income of about twice the federal poverty level to get by.
While there is room for debate on what the poverty level should be, it’s apparent that the current level hasn’t kept pace with changing circumstances.
Just look to the State Children’s Health Insurance Program. SCHIP is a joint federal- and state-funded program to provide health insurance for low-income children. It is telling that 44 states and the District of Columbia have set their SCHIP income eligibility at least 200 percent of the federal poverty level. This is official recognition that the current formula is unrealistic.
Increasing the federal poverty level obviously would increase the number of people eligible for government assistance. Finding additional money for them would present a huge political problem. The economy is in turmoil, the federal government already is running large annual deficits and existing entitlement programs are fiscally unsustainable.
But the ill effects of economic hardship on education, health, job prospects and emotional well-being are well known and only add to the nation’s economic woes.
All of these problems are largely being ignored by elected officials. Obviously, before any move is made to change the definition of poverty, federal officeholders will need to learn the definition of fiscal responsibility.