New measure shows more people in poverty

Sarah Gardner Nov 7, 2011

New measure shows more people in poverty

Sarah Gardner Nov 7, 2011

Bob Moon: Here’s a significant number to ponder: 16 percent. That’s the rate of Americans living in poverty, according to an alternate way of measuring the problem, released by the Census Bureau today (PDF). The official poverty level is nearly 1 percentage point lower. Under this new measure, a few groups — kids, for example — appear to fare a little better. But poverty rates for the elderly shoot up significantly.

All of which might be fascinating for policy wonks, but as Sarah Gardner reports, the new reading doesn’t change anything for the folks behind the numbers.

Diamond Smith: Mama, where’s all the utensils and stuff?

Leilani Smith: I don’t know, what are you doing?

Sarah Gardner: Forty-two-year-old Leilani Smith, her teenage daughter and 9-year-old son are navigating a new one-bedroom apartment in Pasadena, Calif. They got here thanks to a local charity that helped them after Smith lost her part-time job and the family became homeless.

Smith: This apartment was considered inexpensive, it’s $950 for a one bedroom.

Without a stove or refrigerator.

Smith: So we do have to eat out to get hot meals and that’s expensive. And sometimes I might eat once a day.

Right now Smith and her kids are living off unemployment and the disability benefit for her daughter’s bipolar disorder. That adds up to a little over $18,000 a year — slightly above the official poverty line for a household of three. But this new Supplemental Poverty Measure (PDF) takes into account the higher cost of living in places like L.A. And expenditures like childcare and out of pocket medical bills. The kind of things Leilani Smith likes to call “overhead.”

Smith: You have your utility bills, and then you have your house items and then your kids’ childcare, gas.

But the new measure also takes into account benefits that relieve poverty, like food stamps and tax credits. Smith’s family would probably slide below the poverty line under this new measure, especially because they live in an expensive city. But on a practical level, it doesn’t matter. That’s because government assistance will still be pegged, at least for now, to the official poverty measure, not this supplemental one.

Census Bureau statistician Chuck Nelson.

Chuck Nelson: We think it’s a measure people should look at but it’s still a work in progress.

Census Bureau economist Kathleen Short says policymakers can glean valuable information from it, like, are food stamps working? Short says today’s data shows the poverty rate would jump 1.7 percent without that government program.

Kathleen Short: So food stamps have been an effective way to pull people across the poverty line.

But living above that line, argue social workers, doesn’t necessarily mean you’re not struggling to meet basic needs. Many of the working poor are simply making hard choices like whether to pay for medicine or gas for the car. Or they’re doing without what most of us take for granted. Leilani Smith says she one day hopes to buy her kids something they’ve bugged her about for years: a home computer.

In Pasadena, Calif., I’m Sarah Gardner for Marketplace.

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