Opinion Editorial | |
| Monday, October 25, 1999 | |
Redefining Poverty |
Last week, the New York Times reported that the Clinton Administration is planning to revise the definition of poverty that the Census Bureau has used since the early 1960s. (The Census Bureau has denied the report.) The poverty level for a family of four would rise from $16,600 to $19,500, the Times says, which would raise the poverty rate from 12.7 percent to 17 percent. Under the new definition, 46 million Americans will be living in poverty.
The problem with this new definition is that it is entirely subjective and less a measure of true poverty than a liberal ploy to justify more government programs. An honest effort to update the definition of poverty would show a decline in the poverty rate, not an increase.
The latest effort to expand the definition of poverty is based on a 1995 report from the National Academy of Sciences. Its principal recommendation was that the definition of poverty should change over time and reflect the fact that luxuries of the past have become the necessities of today. The Times article, for example, suggested that expensive Nike footwear is now a necessity for children living in poverty today.
The effect of adopting such a subjective definition of poverty, which would be vulnerable to political influence, will be to ensure that poverty never goes down. No matter how wealthy the nation gets, no matter how high the actual living standard of the poor rises, the standard of measurement will be adjusted upward to guarantee a higher poverty rate. This will be used to demand new government programs and increased spending.
The truth is that any objective measure would show declining poverty, not rising poverty (see figure). The Census Bureau's own data, for example, show that for most people in poverty their stay is brief.
Consumption data also show declining poverty. In part, that is because spending, and hence the actual standard of living, greatly exceeds income for many poor households. According to the Bureau of Labor Statistics, in 1997 average spending by the lowest 20 percent of households was more than twice their income: $16,008 for the former and $7,086 for the latter. Fully incorporating consumption data reduced the 1989 poverty rate from 12.8 percent to just 2.2 percent in one study.
There are indeed deficiencies with the way we measure poverty. But the real problem is that they overstate rather than understate its incidence.
Source: Bruce Bartlett, senior fellow, National Center for Policy Analysis, October 25, 1999.
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