What Is The Poverty Level?

The nation’s poverty level rose to 12.7% which is the fourth consecutive rise. This, of course has some of the left’s pundits discussing how much Bush sucks. Over the past 15 years the poverty level has been as high as in the 15% range and as low as the 11% range. It was up and down over the last administration and to put that in perspective, the rate was 13.7% in 1996 and 13.3% in 1997. Those levels, under Clinton, were higher than the current one. What most people tend to overlook when we discuss the poverty level is the flawed analysis used to determine poverty. Here is the formula that the US uses:

To calculate poverty thresholds, the federal government estimates the annual amount of cash income minimally required to support families of various sizes. The methodology used in this calculation was established in the mid-1960s and has not been updated in the intervening years. The calculation uses pretax cash income and excludes non cash benefits such as public housing, Medicaid, and food stamps.

Notice that this calculation excludes non cash items as if they have no value or do not increase the quality of life. There is also a logical inconsistency in the formula. The fomula does not include food stamps but calculates how much a family must spend for food. If the food stamps cover a portion of that cost then the family would, logically, have more disposable income. In addition, items such as Medicaid and public housing remove a cost burden because the family would not have to pay for those items or any services from those items. Therefore, it is reasonable to conclude that while they might not be rich, they might also not be below the poverty level. In addition, how many of the people counted as below the poverty line are here illegally? If they have been included in the calculation then it is inherently flawed because they should not be counted as a poverty problem, they should be counted as a crime problem. If we deported all the illegals the poverty level might go down a great deal (if they are included) despite the flawed calculation process. The American Enterprise Institute published a report and this part reveals how flawed the calculation is:

Figures for the years 1973 and 2000 make the point. According to the Census Bureau, per capita income jumped by almost 60 percent over that period. The Labor Department says unemployment was lower in 2000 than in 1973 (4.0 percent versus 4.9 percent). And the 2000 edition of the congressional “Green Book” reports that income-tested social spending nearly tripled between 1973 and 1998—leaping from $136 billion to $392 billion (in constant 1998 dollars).

Despite all that, the official poverty rate actually maintains that a higher proportion of Americans lived in poverty in 2000 than in 1973 (11.3 percent versus 11.1 percent). Indeed, to judge solely by the poverty rate, the poverty situation in the United States has never been so good as it was back in 1973.

Does anyone remember 1973—the Nixon-era recession year when U.S. per capita income was 35 percent lower than today? Surely only a fatally flawed poverty measure could yield such a result.

This report shows that the calculations do not make logical sense and despite many societal changes, the level remains fairly consistent. In fact, the numbers show that people in poverty spend $2.31 for every pre-tax $1.00 they reported. This is explained more thoroughly in the report. The important item to take from it is that the wrong things are being measured. The report suggests that living standards should be taken into account:

That might help explain another striking finding in our national statistics: Contrary to the assumptions of our poverty rate, the objective living standards of the population below the poverty line have been increasing steadily.

According to the Census Bureau, in 1970 almost 30 percent of African American households below the poverty level lacked some plumbing facilities (hot water, flush toilet, and/or shower-bathtub). By 1999 the corresponding figure was less than 3 percent. By the same token, between 1970 and 1999, the proportion of poverty-level black households with telephones and clothes dryers jumped by more than 30 percentage points. Between 1985 and 1999 alone, median per capita floor space for poor black households rose by about 25 percent. In 1999, nearly 36 percent of all “poverty level” African-American households had central air conditioning—well over twice the figure for America’s white nonpoverty population in 1970.

It is reassuring to know that consumption levels and material living standards for America’s most disadvantaged citizens have increased substantially over the past three decades. The same cannot be said of our reliance on an official “poverty index” that fails to recognize any such progress, much less track it with precision.

I have had this argument with others yet it falls on deaf ears. Now I am not saying there are not poor people in this country and I am sure there are destitute people in this country. However, to use flawed methods of determining poverty and ignoring more accurate indicators is irresponsible and does a disservice to everyone.

It is also amazing to me that when a report comes out stating that poverty is at 12.7% some out there deride the President and point to this as one more reason he sucks yet they idolize his predecessor who had poverty levels higher than this during a portion of his administration. Once again, they demonstrate the double standard that is routinely applied.

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2 Responses to “What Is The Poverty Level?”

  1. Adam says:

    What double standard are you talking about? There is no double standard here. While I don’t believe presidents are completely responsible for the economy doing good or bad, their actions do effect it.

    I don’t deride Bush because poverty is at 12.7% but instead because the level has increased every year that he has been in office. Clinton started with a 15% poverty level, so yes, you are correct that it was higher than 12.7% at times of his presidency.

    What you aren’t admitting is that that the poverty level decreased nearly every year of his presidency stopping at about 10.5% before your buddy took office.

    The graphs are here, and my edited version is here. With Clinton there was a net decrease of 4.5%. So far with Bush there has been a net increase of about 2.2%. Given four more years it might just be back up to pre-Clinton levels. That’s sure not a legacy I’d want to hold on to. What do you think?

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