San Antonio Express-News, September 29, 2007: Federal poverty level stuck in a time warp

Posted on

Numbers have a way of obscuringreality.

Such is the case with the federal poverty guidelines, which ostensiblymeasure who is and isn’t “poor.” But the calculations have not keptup with changes in society and should be revisited.

The concept was created in 1963 by Mollie Orshansky, an economist with theSocial Security Administration. It dovetailed nicely with the need for metricsto fight President Lyndon B. Johnson’s so-called War on Poverty.

Orshansky considered two main factors: what a family in 1955 America wouldneed to spend on “nutritionally adequate” meals, and the assumptionthat a family of three or more spent about a third of its after-tax money onfood. The figure for a family of four was $3,165 a year.

Today, that figure is $20,650 for a family of four. The figure, by the way,is the same whether one lives in New York City; Ottumwa, Iowa; or San Antonio. Only Hawaii and Alaskahave higher guidelines.

Orshansky presented her findings in a 1965 article as a measure of”income inadequacy,” not “income adequacy.”

There is nothing wrong with Orshansky’s findings, but her work served as aresearch tool, not a statistic for creating federal poverty policy, accordingto historians.

Yet today, the federal poverty guidelines are used to determine everythingfrom food stamps, parts of the Medicaid program to the free and reduced lunchprogram.

The current battle over the State Children’s Health Insurance Program, forexample, largely centers on whether to extend coverage to families who makethree or even four times the federal poverty guideline.

Keeping the poverty threshold low means that many working poor make too muchmoney to get the help they need.

Over time, the guidelines have risen to reflect inflation, but they do notreflect changes in the American standard of living. For example, fewer mothersworked outside the home in the 1950s. These days, anyone with a child in daycare knows how expensive such services can be.

Changes in society often lead to greater pressures on the poor to acquire”necessities.” For example, rising car ownership levels andsuburbanization lead to deteriorating public transportation, essentiallyforcing the poor “to buy cars or hire taxis in order to get places wherepublic transport used to take them,” according to an analysis by theHealth and Human Services Department.

While it’s necessary to have federal measures by which to gauge relativewealth or poverty, such measures should incorporate changes in the Americanstandard of living to better reflect what people can afford in today’s world.

One suggested method to more adequately express that change is to tie thepoverty line to some percentage of median income, say 50 percent. As the medianincome goes up, so does the poverty level. Another idea is to adjust theguideline to account for regional cost-of-living differences.

Orshansky died this year at the age of 91. Her contributions to the field ofeconomics provided a necessary framework with which to analyze poverty in thiscountry.

It’s time to build on that work and update our notion of what it means to bepoor in America.


« Back to News