‘Poverty threshold’ update sought
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Members of the U.S. Congress are seeking to update the federal “poverty threshold” and measure figures that determine at what income level a household is considered poor.
Backers say the change will more accurately define poverty in America and show that the current measure underestimates the problem.
Opponents say the change is an attempt to raise support for wasteful spending on social services.
The “poverty threshold” — the line by which people’s incomes are measured to determine their economic status — is what the federal government uses to determine who receives how much in services.
“If we don’t have a sensible, reasonable baseline for where to begin our measurement, we are really just running in circles like we’ve done for generations in our state,” said Adren Wilson, a former Department of Social Services assistant secretary.
At stake for Louisiana are billions of dollars in aid used to pay for social services, such as food stamps, cash benefits, and child care assistance.
Shifting the definition could increase or decrease the number of Louisiana families eligible for aid. Because the federal government only pays part of the cost for those services, that could mean an increase or decrease in the need for Louisiana taxpayers to support social services.
“With Louisiana presently having one of the highest poverty rates in the country, it makes sense that every Louisiana citizen would want to embrace a modernization of the federal poverty measure,” Wilson said.
A recent graduate of the Kennedy School of Government at Harvard University, Wilson helped create the state’s Solutions to Poverty program.
Drew Murray, the director of DSS’s Solutions to Poverty program, said accurately defining families’ needs will help the agency make decisions on where to invest.
For example, the federal Temporary Assistance for Needy Families, or TANF, grant provides cash assistance for low-income families as well as a number of programs that encourage self-sufficiency, such as a savings program for people who want to buy a home.
Murray said the general consensus is that with a more sensitive and more accurate poverty measure, millions more people across the country would be considered officially poor.
“However, whether the number of people right now is undercounted or overcounted, it’s still too many,” Murray said. “There still are high costs associated with our state’s very high rate of poverty.”
According to the U.S. Census Bureau’s 2007 American Community Survey, 15 percent of all Louisiana residents and 27 percent of children in the state live below the federal poverty line.
There are two parts to calculating poverty rates: the “poverty threshold” sets the bar. Then a family’s income is compared to the threshold to determine whether it is above or below that threshold.
The “poverty threshold” was created in the early 1960s. It is largely based on a the idea that the average family spends one-third of its income on food.
The National Academy of Sciences made recommendations in 1995 asking for the threshold to be updated. The Washington, D.C., research organization also asked that the poverty measure take more than a family’s employment income into account when comparing it to the poverty threshold.
The Academy suggested that the cost of food, clothing, housing, utilities and medical expenses be considered. Income from non-cash benefits, such as food stamps and government tax credits, should also be counted, the academy said in its report.
Two bills that ask the U.S. Census Bureau to update the poverty threshold and measure have started their journey through the U.S. Congress. U.S. Rep. Jim McDermott, D-Wash., is sponsoring a bill in the U.S. House; U.S. Sen. Chris Dodd, D-Conn., in the Senate.
The bills outline what the bureau should take into account when reworking the figures.
Ron Haskins with the Brookings Institution said, to his knowledge, the bills working their way through Congress show the most promise of any attempt to modernize the measure.
The Institution is a nonprofit public policy and research organization in Washington, D.C.
“You can see the momentum building, a lot of people are interested, and it’s got that feeling that something could really happen,” Haskins said. “But then problems begin to crop up and you’ve got to figure out good solutions to them. And that’s the stage we’re at now.”
Earlier this month, Annie E. Casey Foundation senior vice president Patrick McCarthy said the definition of poverty is politically sensitive because of how it potentially affects issues like tax and budget policies.
The Casey Foundation, a Baltimore private charity, fosters public policies and provides funding to help children and families.
If a new poverty measure recognizes that families spend more than they did 50 years ago, the worry is that the poverty rate will go up and so will the pressure to do something about it, McCarthy said.
On the other hand, if the measure adds the government support that family’s receive, such as child care and housing assistance, to their income, the poverty rate might decrease, he said.
Robert Rector, a senior research fellow with the Heritage Foundation, said government agencies have always had the power to change the poverty measure to account for the value of assistance programs.
The reason those additions have not yet been made is because government groups want something in exchange: To raise the threshold so more people are determined to be in poverty, he said.
The Heritage Foundation’s stated mission is “to formulate and promote conservative public policies.”
Changing the poverty measure will simply encourage claims for more social service spending, Rector said. The United States already spends about $23,000 in aid for each poor person, he said
“That’s a lot of money,” Rector said. “We do not need essentially a bogus system that is a pretext for spending even more money without addressing the underlying causes of poverty.”
Haskins said most people working on the measure simply want a more accurate representation of what counts as poverty and how many families are living in it.
One point of contention is the billions of federal dollars in state grant money that, in one way or another, take into account the poverty measure, said Haskins, who co-directs the Brookings Center on Children and Families.
The pot of money will not increase, Haskins said. Instead some states would get more money and others would lose money based on the changes in their poverty rates, he said.
“And that is the kiss of death in federal legislation,” Haskins said. “Any time you mess with formulas you’re asking for huge trouble.”
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