Poverty Is Even More Shocking than Previously Estimated

Chuck Sheketoff

The headline in a front-page story in Saturday’s The Oregonian read: "'Shocking' increase in poverty rests on flawed statistics." It was a reprint of a New York Times article claiming that recent data showing large increase in the number of poor Americans was due to the flaws in the official poverty measure. The article gave the impression that poverty would not seem as high when the Census Bureau released its new, alternative measure of poverty on Monday (yesterday).

But contrary to The New York Times article, the new Supplemental Poverty Measure released yesterday paints an even bleaker portrait of poverty than the official measure. The Supplemental Poverty Measure puts the 2010 national poverty rate at 16 percent, compared to 15.1 percent under the official measure. Under the Supplemental Poverty Measure, 49.1 million Americans lived below the poverty threshold in 2010 — 2.5 million more than the 46.6 million under the official measure, which itself was the largest number of Americans in poverty in the 50-plus years that poverty estimates have been published.

The New York Times article did point out, correctly, that the official definition of poverty is flawed. Under that definition, developed in the early 1960s, families are poor when their income is less than three times the cost of a modest basket of inexpensive, nutritionally adequate food. While the poverty definition has stayed current in terms of the value of today’s dollar compared to the value in the 1960s, the definition ignores that families today must spend more on items such as housing, child care, transportation and health care than they did in the past.

The new, Supplemental Poverty Measure attempts to address some of the shortcomings of the official definition of poverty. It acknowledges some of the costs that families today must meet to survive. But it also looks at the income side of the ledger, and thus counts as income tax credits and non-cash benefits that help families afford basic needs.

If positive news can be found in the Supplemental Poverty Measure data, it is that it confirms the importance and effectiveness of certain key public structures in holding the line on poverty — for example, the Earned Income Tax Credit (EITC), Supplemental Nutrition Assistance Program (SNAP, formerly known as “food stamps”), the National School Lunch Program, the Supplementary Nutrition Program for Women, Infants, and Children (WIC), and housing subsidies.

Take for instance the impact of the EITC just by itself. Without the EITC, the share of children in poverty under the supplemental measure would have been have been 22.4 percent. Because of the EITC, the percentage of children considered poor under the supplemental measure was 18.2 percent.

Poverty, it turns out, is even bleaker than the official figures indicate. And yet this new measure of poverty also indicates the importance of public structures. We know that we can combat poverty through effective government programs — if we have the political will to do so.

As a final note, it was disappointing to say the least to check the pages of The Oregonian today and see that the newspaper did not bother to correct the misinformation it published over the weekend. No article, much less a front-page article, bothered to mention that the new, supplemental measure shows a higher poverty count than the official measure.

Chuck Sheketoff is the executive director of the Oregon Center for Public Policy. You can sign up to receive email notification of OCPP materials at www.ocpp.org.

By Chuck Sheketoff Nov. 08, 2011 Posted in open discussion.