Monday, March 29, 2010

Defining Poverty: Developing a Supplemental Poverty Measure

The way that poverty is defined and measured has a significant impact on families living at or near the “poverty line.” According to the current population survey, in 2008, 13.2 % of Americans were living in poverty. Unfortunately, in the current economic climate this number has likely only increased.

The poverty thresholds estimate the rate of poverty in the United States by determining the number of households whose annual income is below the set threshold for the household’s size. The original U.S. poverty measure was developed by Molly Orshansky at the Social Security Administration in 1964. The Orshansky Measure, which has changed only to adjust for inflation, is inadequate in measuring both family income and need. When developed, the poverty thresholds were presented as a measure of income inadequacy, Orshansky stated that "if it is not possible to state unequivocally 'how much is enough,' it should be possible to assert with confidence how much, on an average, is too little." Unfortunately, these underestimates are used as the official poverty measure – and while program benefit eligibility is not tied directly to the poverty thresholds – the measure determines the Department of Health and Human Services’ poverty guidelines, which have serious consequences for low-income families.

To address this matter, the U.S. Census Bureau is planning to develop a supplemental poverty measure. The new supplemental measure is going to be released with the Census Bureau’s annual poverty report in 2011. The supplemental measure will address several factors that the current measure does not take into consideration. The new measure will consider not only income but also cash assistance and the cash value of benefits from government programs (including food stamps, the Earned Income Tax Credit, the child tax credit and housing asistance). The new measure will also take into account the basic cost of housing, food, transportation, child care and health care. State policymakers should follow this process closely because it will have an impact on the funding available to provide families with the assistance they need.

For a summary on the new measure read: Census to Redefine Poverty from the Brookings Institution.

For the history of the definition and measure of poverty in the U.S.

For a primer on poverty thresholds and the poverty measure.

For policies to support Family Economic Success.