NCPA - National Center for Policy Analysis

Debate Brews over New Method to Measure Poverty

November 9, 2011

Debate over how the federal government measures poverty intensified Monday when the Census Bureau announced a second way to calculate the number of America's poor, says USA Today.

The new method for the first time adds the value of food stamps, school lunches, housing subsidies and the earned income tax credit.  It also subtracts payroll and income taxes, child care costs and out-of-pocket medical expenses.

  • The new estimate says 16 percent of Americans lived in poverty in 2010, slightly higher than the official rate of 15.2 percent released in September.
  • Most important difference: The number of seniors termed poor almost doubled while the number of children classified as poor fell.
  • The poverty threshold for a family of four in 2010 was $24,242 in the new measure versus $22,113 in the official measure, a change that added about 3 million people to those considered poor.

 Analysts were divided on the new formula.

"The old way measured how much steak and potatoes you had," says Robert Rector, a researcher at the conservative Heritage Foundation.  "The new method measures how much steak and potatoes you have compared to everyone else."  The result is that most people living in poverty have adequate food, shelter and medical care, not to mention air-conditioning, cable television and DVD players, he says.

Curtis Skinner of the liberal National Center for Children in Poverty says the new measure is "far superior, although nothing is perfect."  The new measure will reflect geographic differences, he says. "The income needed is very different in San Francisco than rural Kansas," he says.

Source: Dennis Cauchon, "Debate Brews over New Method to Measure Poverty," USA Today, November 8, 2011.

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