Spotlight Exclusives

Criticisms of an Improved Poverty Measure Miss the Mark

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This piece originally appeared in the Huffington Post.

My colleague Jodie Levin-Epstein, deputy director at the Center for Law and Social Policy, penned the following piece. — Mike

You don’t need to be a “West Wing” fan to recognize the political verite in an episode that included a discussion about the nation’s poverty measure. On the show, White House staffers acknowledge that a modernized poverty measure would improve policy decisions but decide to scrap the idea anyway because they consider it too politically risky. The show echoed the real world, where politics has repeatedly trumped good policy and the status quo has remained firmly in place. After all, what president would want to risk an increase in the poverty rate that could result from a new measure?

Fortunately, reality is occasionally more surprising than fiction. As it turns out, the Obama Administration supports the creation of a modern poverty measure, at least as a supplement to the official calculation.

Why has this administration decided to take a step so many others have found politically unpalatable? In large measure it’s due to a key actor from the world of statistics — Dr. Rebecca Blank. Blank now oversees the Census Bureau. Before that she ran the Gerald R. Ford School of Public Policy at the University of Michigan. And, back in the 1990s she served on a National Academy of Sciences (NAS) panel that offered recommendations on how to modernize our poverty measure, which still relies on its original framework from the 1950s. In her current post Blank has proposed to supplement the old measure with a new method for counting how many of us are poor. This Supplemental Poverty Measure (SPM) is based on the NAS recommendations calling for changes in the statistical calculus – in both the income and expense columns. This is an important first step toward painting a more accurate picture of poverty in our nation.

The poverty measure used today basically says you are poor if your cash income before taxes is below a certain level pegged to the cost of a 1950s basic food diet (adjusted for inflation). The NAS concluded that a more comprehensive approach is needed. It recommended counting more sources of income including those that were not part of the national fabric when the current measure was constructed, such as the Earned Income Tax Credit and food stamps. It also suggested incorporating necessary expenses that are more common today, including child care. By incorporating these suggestions, the Supplemental Poverty Measure should help answer essential policy questions, particularly the effect key government programs have on reducing poverty. And by including a more realistic set of expenses, it offers an improved picture of how the cost of basic needs contributes to poverty.

The SPM will be introduced in the fall of 2011 alongside the current poverty measure. Some states and cities, however, have already taken things into their own hands. Mayor Bloomberg of New York City insisted that a new NAS-like measure be implemented so the city could gauge how well its investments in anti-poverty programs were working. Both Connecticut and Minnesota have contracted with the Urban Institute to calculate NAS-like poverty rates and to project the poverty impact of proposed programs.

Conservative commentators also are not waiting in the wings. Robert Rector of the Heritage Foundation and Glenn Beck now have the Supplemental Poverty Measure in their sights. And Robert Samuelson of the Washington Post and Newsweek, while agreeing that some re-tooling would be worthwhile, has taken up a number of Heritage’s arguments. In a recent column, Samuelson focuses on how the poverty rate has not improved much in the last couple of decades. He suggests this is a ‘misleading scenario’ that masks the role of immigrants and improved living standards.

It is true that immigrants who are poor contribute to the poverty rate in this country. It is also true that immigrants, both poor and not poor, contribute to our economic engine, and that naturalized immigrants have lower poverty rates than even natural born citizens. In reality, poor immigrants’ impact on the poverty rate is only “marginal.” Although recent immigrants are “poorer than their predecessors, their fraction of the population is simply too small to effect the overall poverty rate by much” according to a recent analysis from the National Bureau of Economic Research.

There is no question that poor people today have more than those who lived in poverty in previous generations. Our standard of living has improved. But the question is whether central air conditioning in a housing project should render a family as no longer poor. Can you only be poor if you were poor by the standards of an earlier century? We should both celebrate the nation’s achievement in improving our standard of living and continue to collect data that helps us understand how many benefit from the increased standards.

Conservatives have also been spinning the notion that the SPM is a “relative” rather than an “absolute” measure of poverty. If only.

The common use of the term “relative poverty” means a measure that reveals where you stand in relation to the typical income of others in your nation. Most other developed nations utilize relative poverty, establishing, for example, that the poor are those who live on incomes that are less than 60 percent of the median. The relative measure is premised on the idea that inequality deserves attention.

The SPM, however, would not be a “relative” poverty measure under the common understanding of the term. Unlike a relative poverty measure, the SPM would not compare a family’s income to the typical income level of other families nationwide. Instead, it would compare the family’s income to expenditures. And not to everyone’s expenditures — just those at a relatively modest level or those at the so-called 33rd percentile. That is the level at which two-thirds of Americans spend more and one-third spend less on the most basic needs — food, clothing, and shelter including utilities. These are items that won’t go up even if everyone starts spending more on luxuries like vacations and jewelry. In other words, this is a thrifty standard tied to the basic needs of relatively low-spending Americans — not to lavish lifestyles of the multi-millionaire Glenn Becks of the world.

Samuelson’s spin drips with an ironic twist. He assails the administration for failing to achieve “political neutrality” with the proposed SPM, but in the very same column pushes a purely political idea himself. Samuelson argues that the administration wants poverty to increase on its watch so it can lay claim to more resources and redistribute the nation’s wealth.

One has to wonder where Samuelson’s script is coming from. It sounds more like political soap opera than “West Wing” material. In truth, the Supplemental Poverty measure contains very little drama. It’s just good governance.

Posted by Mike


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