New Measure Shows Higher Poverty Rate In U.S.

Nov 7, 2011
Originally published on November 7, 2011 8:04 pm

The government released a new experimental poverty measure Monday that found that the poverty rate was 16 percent last year — slightly higher than previously thought.

The new measure won't replace the official one, but it is an effort to get a more accurate picture of who is and isn't poor.

The official poverty measure has long been seen as inadequate. It doesn't include government benefits that many poor people receive, such as food stamps. It doesn't look at expenses such as health care or taxes. And it doesn't account for regional differences in the cost of living, which is why people like Sandra Killett of New York City might feel poor — even though the government says she isn't.

"I make $29,000 [a year], but how much do I bring home?" she says.

Killett is a divorced mother of two, in a very expensive city. NPR first spoke to her two years ago about the way the government measures poverty. At the time, she was struggling to make ends meet on her salary at a nonprofit. She says things haven't changed much since and she's happy that some of her concerns are now being addressed.

"Things that actually matter to people — things that are actually happening for people — should be included, such as the amount of rent that they pay," Killett says.

And that's one of the costs the new measure takes into account. It looks at spending on things such as food, clothing, utilities and housing. It considers noncash government benefits that people receive. And it adjusts for geographic differences.

The result is that more than 2 million additional people in the U.S. are described as poor, with higher rates in the West and Northeast, and among Hispanics. And the poverty rate is lower for blacks.

"I think it is a good thing to have a new poverty measure," says Ron Haskins, a poverty and welfare expert at the Brookings Institution. He calls the official one hopelessly flawed — even though it will still be used to determine eligibility for government aid.

Haskins notes, for example, that during the recession Congress approved about $200 billion in new benefits for low-income Americans.

"And it's not going to have an impact on poverty rates, because the way we measure poverty, that's just — that's crazy," he says.

Haskins is concerned, though, by what the experimental measure found. Poverty among the elderly rose, from 9 percent under the official rate to almost 16 percent — primarily because out-of-pocket medical expenses were so high.

But poverty among children dropped from about 22 percent to 18 percent, in part because children tend to benefit more from programs such as food stamps. Haskins worries that this could be used as an excuse to spend more on the elderly and less on kids.

Shawn Fremstad of the liberal Center on Economic and Policy Research says the new poverty measure has many flaws.

"It doesn't take into account the fact that you're a mother and you can't afford child care and you've got your child in a kind of inadequate situation, where she's staying with a relative or something else while you work," he says. "If you're uninsured, again, it doesn't get at the fact that you're uninsured and you can't afford to make out-of-pocket expenditures."

He also worries that it sets too low a standard — with a poverty line of about $24,000 for a family of four.

That's the complete opposite of what Robert Rector of the conservative Heritage Foundation says he believes.

"This is a measure of inequality and it's generally intended to completely deceive the American public," he says.

Rector says what the government calls poverty isn't what most people have in mind — things such as hunger and inadequate housing.

"Over 80 percent of poor families have air conditioning, two-thirds of them have cable TV, half of them have computers, a third of them have widescreen HDTVs," Rector says.

And he thinks the new measure is worse than the old. Defining poverty is in many ways political. And government officials admit that the new measure is very much a work in progress.

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Transcript

ROBERT SIEGEL, HOST:

From NPR News, this is ALL THINGS CONSIDERED. I'm Robert Siegel.

GUY RAZ, HOST:

And I'm Guy Raz.

The government released a new experimental poverty measure today. It found that the poverty rate was 16 percent last year, slightly higher than previously thought.

NPR's Pam Fessler reports that the new measure won't replace the official one, but it's an effort to get a more accurate picture of who is and isn't poor.

PAM FESSLER, BYLINE: The official poverty measure has long been seen as inadequate. It doesn't include government benefits that many poor people receive, such as food stamps. It doesn't look at expenses such as health care or taxes. It doesn't account for regional differences in the cost of living, which is why people like Sandra Killett of New York City might feel poor, even though the government says she isn't.

SANDRA KILLETT: I make $29,000, but how much do I bring home?

FESSLER: Killett is a divorced mother of two in a very expensive city. NPR first spoke to her two years ago about how the government measures poverty. At the time, she was struggling to make ends meet on her salary at a nonprofit. She says things haven't changed much since and she's happy that some of her concerns are now being addressed.

KILLETT: Things that actually matter to people, things that are actually happening for people should be included, such as the amount of rent that they pay.

FESSLER: And that's one of the costs the new measure takes into account. It looks at spending on things such as food, clothing, utilities and housing. It considers non-cash government benefits that people receive. And it adjusts for geographic differences. The result is that more than two million additional people in the U.S. are described as poor; with higher rates in the West and Northeast, and among Hispanics and a lower poverty rate for blacks.

RON HASKINS: I think it is good thing to have a new poverty measure.

FESSLER: Ron Haskins, a poverty and welfare expert at the Brookings Institution, calls the official one hopelessly flawed even though it will still be used to determine eligibility for government aid. Haskins notes, for example, that during the recession, Congress approved about $200 billion in new benefits for low-income Americans.

HASKINS: And it's not going to have an impact on poverty rates, because the way we measure poverty. That's just - that's crazy.

FESSLER: Haskins is concerned, though, by what the experimental measure found. Poverty among the elderly rose, from 9 percent under the official rate to almost 16 percent, primarily because out-of-pocket medical expenses were so high. But poverty among children dropped from about 22 percent to 18, in part because children tend to benefit more from programs such as food stamps. Haskins worries that this could be used as an excuse to spend more on the elderly and less on kids.

Shawn Fremstad of the liberal Center on Economic and Policy Research, says the new poverty measure has many flaws.

SHAWN FERMSTAD: It doesn't take into account the fact that, you know, you're a mother and you can't afford child care. And you've got your child in a kind of inadequate situation, where she's staying with a relative or something else while you work. If you're uninsured, again, it doesn't get at the fact that you're uninsured and you can't afford to make out-of-pocket expenditures.

FESSLER: He also worries that it sets too low a standard with a poverty line of about $24,000 for a family of four. That's the complete opposite of what Robert Rector of the conservative Heritage Foundation believes.

ROBERT RECTOR: This is a measure of inequality and it's generally intended to completely deceive the American public.

FESSLER: Rector says what the government calls poverty isn't what most people have in mind, things such as hunger and inadequate housing.

RECTOR: Over 80 percent of poor families have air conditioning, two-thirds of them have cable TV, half of them have computers, a third of them have widescreen HDTVs.

FESSLER: And he thinks the new measure is worse than the old. Defining poverty is in many ways political. And government officials admit that the new measure is very much a work in progress.

Pam Fessler, NPR News, Washington. Transcript provided by NPR, Copyright NPR.