New York Times, July 22, 2008: Editorial: Poverty۪s Real Measure
For some 40 years, the nation has used the same formula for calculating poverty, using the cost of food as a gauge and applying a single poverty threshold across the nation from Boise to the Bronx. After a year of work, Mayor Michael Bloomberg of New York has presented a new formula for measuring poverty that creates a far more realistic view of life in the city. It should stand as an example to other cities and, ultimately, the federal government.
Recasting the federal formula that has been in place since the 1960s, the Bloomberg administration found another 400,000 poor people in New York City and came up with a poverty rate of 23 percent, compared with about 19 percent. That result was tempered by fewer extremely poor people (those whose incomes are half of the poverty threshold), which may be explained by the reach of programs like temporary assistance to needy families.
But the city found that 32 percent of the elderly are poor far higher than the 18 percent under the former measure. Out-of-pocket medical costs were a consistent big drain on the wallets of residents 65 or older.
No formula would be perfect, but Mr. Bloomberg۪s employs common sense. It is absurd, for example, that the poverty threshold in New York City, one of the most expensive, has been the same as the least expensive: $20,444 for a family of four. The mayor raised New York۪s poverty ceiling to a more believable $26,138.
Washington۪s obsolete measure looks only at the cost of food relative to income. Mass production and other efficiencies have generally made food less costly, while housing, transportation and energy costs have risen. The mayor۪s formula, taken from recommendations by the National Academy of Sciences, factors in those big-ticket items, as well as government assistance.
Mr. Bloomberg۪s approach is rightly getting attention from other cities and Capitol Hill. The campaign of Senator Barack Obama has endorsed it. The next step, which should be taken quickly, is for the mayor to use what he has learned and what we already knew to get more help to New York۪s many poor.