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A new way to measure the poverty line

Marketplace Staff Oct 21, 2009
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A new way to measure the poverty line

Marketplace Staff Oct 21, 2009
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TEXT OF INTERVIEW

Kai Ryssdal: Forty-seven million people in this country live in poverty. That’s seven million more than the official government estimate. The revision comes courtesy of a new formula the Census Bureau’s been playing with. The government’s been measuring poverty for 40 or more years. Yet the basic methodology hasn’t changed much at all. Sheldon Danzinger’s a professor of public policy at the University of Michigan. Good to have you with us.

SHELDON DANZINGER: Good to be here.

Ryssdal: How do we measure poverty right now, and what would a new set of numbers change?

DANZINGER: Right now we have a poverty line based on food. The new poverty line would be based on food clothing and shelter utilities. The current poverty line goes up only with inflation. The new poverty line would go up with how the typical household spends on these necessities. On the income side additional benefits would be counted. The two biggest ones today are the food stamp program and the earned income tax credit, which millions of low-income families get in the form of a tax rebate. So there would be people going from below to above and above to below. What the Census Bureau is saying that if they had been using this line for the last nine or 10 years, by 2008 the poverty rate would have risen more under the new measure than it did under the official measure.

Ryssdal: Wow, because we have changed the way we spend so much.

DANZINGER: The new measure is reflecting this spending on a broader basket of goods. Many of these could not have been foreseen when the official poverty line was being developed. It was a good line for its era, but in a day when there are so many more working families, child-care expenses have gone up, out-of-pocket medical costs obviously are much higher these days than they were, so in part it’s 45 years since this important indicator has been redefined.

Ryssdal: There are a couple of bills proposing to change the way we measure poverty floating around Congress. What might these numbers do to their chances of political survival and what might that mean?

DANZINGER: I would think that the chances of our getting a change in the measure are better now than they’ve been in a long time. There are some controversial issues that I haven’t mentioned. For example, geographical differences. The representatives from areas with high housing costs think the idea of adjusting for cost of living is a good idea. It’s often the case that the representatives and senators from areas where the housing costs are low don’t think it’s such a good idea. So there are some issues which I think are perceived as political. But given the current administration, as I understand it, candidate Obama had endorsed the Measuring American Poverty act, while he was campaigning, so I would think if the act passes Congress, then the president would certainly sign it.

Ryssdal: Sheldon Danzinger. He’s a professor of public policy at the University of Michigan. Thanks so much for your time.

DANZINGER: Sure. Good talking to you.

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