New NAS Formula: Poverty Rate Among Older Americans is 19%, Not 10%
Posted by Mark on Sep 10, 2009
From a recent article in the Associated Press:
The poverty rate among older Americans could be nearly twice as high as the traditional 10 percent level, according to a revision of a half-century-old formula for calculating medical costs and geographic variations in the cost of living.
The new poverty calculations, if adopted, would impact measurements of poverty among other groups as well:
— The rate for children under 18 in poverty would decline slightly, to 17.9 percent.
— Single mothers and their children, who disproportionately receive food stamps, would see declines in the rates of poverty because noncash aid would be taken into account. Low-income people who are working could see increases in poverty rates, a reflection of transportation and child-care costs.
— Cities with higher costs of living, such as New York, Chicago and San Francisco, would see higher poverty rates, while more rural areas in the Midwest and South might see declines.
— The rate for extreme poverty, defined as income falling below 50 percent of the poverty line, would decrease due to housing and other noncash benefits.
— Immigrant poverty rates would go up, due to transportation costs and lower participation in government aid programs.The changes have been discussed quietly for years in academic circles, and both Democrats and Republicans agree that the decades-old White House formula, which is based on a 1955 cost of an emergency food diet, is outdated.
A great analysis about measuring poverty, from Maggie Tishman at the Next American City, can be found here. Here is an excerpt:
The idea of a “poverty line” is a peculiar one, as if all the complexities of human and economic wellbeing could be summed up by a simple binary: have or have not. Born of unimaginative policymaking and perpetuated by the convenience of the status quo, such a black-and-white designation oversimplifies the complicated, dynamic and deeply personal experience of being poor. But more than 40 years since the line’s inception, it is still the barometer for all official poverty statistics collected by the government, and still serves as the baseline for nearly all anti-poverty policies.
Despite its stronghold on American politics, the official poverty measure has modest beginnings, developed in 1964 by Mollie Orshanky of the Social Security Administration. Working on a series of research papers for that office, Orshanky wrote, “To be poor is to be deprived of those goods and services and pleasures which others around us take for granted.” Based on 1950s data from the Department of Agriculture, she determined that any family spending more than one-third of its annual income on necessities (for her purposes this meant only food) should be labeled “poor.”
Here are a few related online resources:
Why So Much Poverty?, Stanford Center for the Study of Poverty and Inequality:
This alternative measure captures the circumstances of families more accurately because it adds in the value of noncash benefits (e.g., food stamps) while subtracting out medical costs and work-related expenses (e.g., child care). It also corrects for regional differences in the cost of living. Although both the official and NAS rates have tended to trend upward over the last 6 years, the NAS measure does so more consistently and at a higher base level.
Census Bureau Site for Poverty Measurement Studies and Alternative Measures
“Poverty in the US,” National Poverty Center, UMich:
Children represent a disproportionate share of the poor in the United States; they are 25 percent of the total population, but 35 percent of the poor population. In 2007, 13.3 million children, or 17.4 percent, were poor. The poverty rate for children also varies substantially by race and Hispanic origin.
Please contact us if you’re interested in helping DataHaven apply these new definitions to a study of the New Haven region.
Author: Mark Abraham, Executive Director, DataHaven, 9/10/09
