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Redefining poverty in the U.S.

Marketplace Staff Oct 17, 2008

Redefining poverty in the U.S.

Marketplace Staff Oct 17, 2008


Kai Ryssdal: We hear every day about people who are suffering in the economic crisis. Some have lost their savings; others have lost their jobs. But it’s worth remembering that a lot of Americans had been forced onto the bread line long before the credit crunch.

One big issue for the government is how to measure that poverty, how to establish where the poverty line is and therefore who ought to get help. There’ve been complaints for years that the federal formula isn’t accurate and ought to be recalibrated. But some cities aren’t waiting for Washington to fix it.

Rachel Dornhelm reports.

Miriam Juarez: Hi, this is Miriam from the help line can I still refer a client to you for a food pick up today?

Rachel Dornhelm: Miriam Juarez runs the help line for a food bank in Alameda County. She is the sole breadwinner in a family of five. She makes enough money that up to now, she hasn’t had to go to the food bank herself. But once she’s paid the rent on her two-bedroom house, she finds she barely has enough for basic necessities.

Juarez: Even two gallons of milk right now is like $6, and we have to ration our portions of milk.

Juarez finds it hard to make ends meet, but she doesn’t even qualify for benefits like food stamps. She’s not considered poor because she earns more than $24,800. That’s the official poverty line for a family of five.

Juarez: We’re considered above the income, so I guess we’re considered that we would be OK but in reality we’re not.

The government first started calculating the poverty line back in the ’60s. It drew the line based on the cost of food, on what a family needed to eat to survive.

Sheldon Danziger: Nobody thought that the measure adopted in the late ’60s would still be used today.

Sheldon Danziger is a public policy professor at the University of Michigan. He says the poverty line has risen with inflation, but the way it’s calculated, it ignores the reality of life for poor people. He says the calculation should factor in a host of things that American families need.

Danziger: Food, clothing, shelter, utilities and a little bit more, and the basket should be updated not for inflation, but by increased spending on those commodities by society at large.

For example food has gone from a third of a family’s costs in the ’60s to an eighth today. Now families spend more on things like rent, clothes. Public policymakers have talked about factoring adjustments like that into poverty calculations for years.

Jim McDermott, is a democratic Congressman from Washington state. Last Thursday, he introduced a bill to reform the federal poverty line.

Jim McDermott: My belief is that most people are serious about wanting to deal with people who are in poverty in this country. We are the richest country in the world, and there’s no excuse for having people in the circumstances that we do.

Many city administrations seem to feel the same. They’re working on changing poverty calculations on their own. New York City recently raised the poverty line for a family of four to $26,000 from just over $20,000.

Linda Gibbs: So it gives us the information that we need in order to shape policies that are relevant to today’s world.

Linda Gibbs is Deputy mayor of health and human services in New York. Imagine a map in her office. Before the poverty line was recalculated, it showed clusters of poor people in neighborhoods throughout the city. After the adjustment, those clusters spread out, showing Gibbs where the city’s poor really live. It’s helping her direct benefits to poor people more effectively. For example, the city has managed to reduce the number of children living in poverty.

Gibbs: The flip side is we see higher rates of poverty among the elderly, mostly based on pharmaceutical out-of-pocket costs, and so that tells us something new.

Gibbs says Los Angeles, Chicago and Miami are working on their own measures. But just because America’s big cities are moving to change the definition of poverty doesn’t mean the whole country will fall in line. Public policy experts like Danziger say wealthier states could agree easily on the federal measure, but states with a low cost of living might object for fear of losing federal aid.

I’m Rachel Dornhelm for Marketplace.

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