Ok, so what we already know: the poverty rate barely moved between 2010 and 2011 according to the U.S. Census Bureau. Simply, 46 million Americans (15%) of the population lives in poverty. The Deseret News from Salt Lake featured an article on the potential new way to figure poverty.
The U.S. measures poverty in terms of income. The poverty line is the threshold below which families or individuals are considered to be lacking the resources to meet the basic needs for healthy living: the income required to purchase basic needs. In 2012, the poverty line was $23,050 for a family of four.
According to Timothy Taylor, the editor of the Journal of Economic Perspectives, the “largest government programs to help the poor have zero impact on officially measured poverty rates.” For example, SNAP benefits (or food stamps) are not counted as part of income for calculating the poverty rate because there are a non-cash benefit. Other such examples include the Earned Income Tax Credit and Child Care Credits.
The U.S. Census Report says:
“The poverty estimates in this report compare the official poverty thresholds to money income before taxes, not including the value of non-cash benefits. The money income measure does not completely capture the economic well-being of individuals and families, and there are many questions about the adequacy of the official poverty thresholds. Families and individuals also derive economic well-being from non-cash benefits, such as food and housing subsides, and their disposable income is determined by both taxes paid and tax credits received.”Some economists think it is time to adopt a new measure for poverty…most people familiar with poverty. A rate rooted in consumption instead of income has been suggested by Bruce Meyer of the University of Chicago and James Sullivan of the University of Notre Dame in a research paper released this year. They compared those who qualify as “poor” bases on income and those who qualify based on consumption across 25 indicators. The indicators include assets, health insurance, number of bathrooms in the home, and ownership of a dishwasher and other appliances, computer access, and education level of head of household.
As you can imagine, this reduces the number of people in poverty. Taylor explains:
“Some of those who fall below the poverty line when these are not considered, in the official income-before-taxes poverty measure, rise above the poverty line when these are included. In addition, consumption poverty better captures those who don’t have other resources to fall back on, so those whose income is temporarily low enough to fall below the poverty line, but have other ways to keep their consumption from falling as much, don’t show up as falling below a consumption-based poverty line.”Everyone understand? Fewer people are poor because we change the way we measure. We don’t address the poverty threshold as unlivable. We just want to say fewer people are living in poverty. Thanks gentlemen. This sounds like the compromise the DOL came up with during the 1996 Welfare Reform, “You don’t have to pay a living wage, just count section 8, food stamps, cash assistance, and anything else to can so that the “wage” comes to the minimum wage.”
