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Rethinking Poverty

As we’ve been hearing for years, census data shows that serious poverty has been rising dramatically in the US. A new article in the New York Times, however, shows that those statistics may be less reliable than often claimed:

Concocted on the fly a half-century ago, the official poverty measure ignores ever more of what is happening to the poor person’s wallet — good and bad. It overlooks hundreds of billions of dollars the needy receive in food stamps and other benefits and the similarly formidable amounts they lose to taxes and medical care. It even fails to note that rents are higher in places like Manhattan than they are in Mississippi.

On Monday, that may start to change when the Census Bureau releases a long-promised alternate measure meant to do a better job of counting the resources the needy have and the bills they have to pay. ..

The fuller measures have also shown less poverty among children but more among older Americans, who are plagued by high medical costs. They have shown less poverty among blacks but more among Asians; less poverty in rural areas and more in cities and suburbs, where the cost of living is high. And they have found fewer people in abject destitution, but a great many more crowding the hard-luck ranks of the near poor, who do not qualify for many benefit programs and lose income to taxes, child care and medical costs. […]

One alternate census data set quietly published last week said the number of poor people has grown by 4.6 million since 2006, not by 9.7 million as the bureau reported in September. At least 39 states showed no statistically significant poverty growth despite surging unemployment, according to an analysis by The New York Times, including Michigan, New York, New Jersey, Ohio, Tennessee and Texas.

It’s shocking that the US has spent hundreds of billions of dollars on sometimes ill advised and poorly monitored problems to end poverty without a solid and accurate definition of the target.  Moreover, by not counting federal benefits in income calculations, we have been overstating the persistence of poverty and understating the results of our efforts to reduce it.

The kind of cynic we don’t want working here at Via Meadia might suggest that the poverty lobby has been deliberately using inaccurate figures for years to get bigger appropriations than accurately informed taxpayers and representatives would accept.  And a deep and ugly cynic would point to the poor record of the mainstream press at exposing and challenging this scam. Was it a state secret all these years that the poverty rate was “calculated on the fly” and that the headline numbers systematically overstated both the prevalence and the severity of poverty?  How many stories have we all read in which those bogus numbers were treated like gospel truth without any challenge from in-the-tank reporters?

All the more reason to applaud the introduction of better numbers, and kudos to the Times for featuring the story so prominently.  Too many more stories like this, though, and the Times might be in danger of losing its reputation as an advocacy outlet for the blue social model.

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  • Luke Lea

    Long overdue. And while they are at it, when calculating inequality it would be better if they measured the distribution of consumption rather than the distribution of income — and tax consumption instead of income (by making savings tax exempt). Consumption is what counts.

  • sonofagunforbeer

    It’s even more shocking when you consider that, for years if not decades the Census itself has said that the “Official Poverty Measures,” as mandated by Congress, were wrong and needed to be adjusted. There’s usually been someone from Census reporting on this very fact at every academic conference.

  • Neville

    Even worse is that poverty has been defined on a relative basis, so that it can’t ever disappear unless we all have unrealistically equal incomes. That was never anything more or less than job security insurance for the poverty industry, and for politicians who rely on being able to demagogue the issue.

  • Francis Menton

    Sorry, but there has been nothing honest about the so-called “poverty rate” for decades. The definition may have been created in good faith, but it was done on the fly, without thought to wrongfully sweeping in many categories of people who have nothing to do with “poverty” (e.g., people with ample savings taking a year off at mid-career and living off the savings). But advocates long ago realized that keeping such categories in the mix was highly useful because it made poverty appear a much larger problem than it really was, in ways that naive journalists could not see through.

    The deficiencies in the existing official poverty definition are well-known to insiders, but not widely reported. Among the worst is that the measured “poverty rate” as defined is completely impervious to reduction by the hundreds of billions of dollars spent on programs to help the poor. Medicaid doesn’t count (that’s over $10,000 per beneficiary in New York, over $40,000 for a family of four, compared to “poverty line” income of $22,350 for family of four); food stamps don’t count; public housing doesn’t count; etc. Medicaid spending can go up $100 billion, but “poverty” is unchanged!

    There is every reason to suspect that the new definition has been cynically constructed to respond to the most obvious criticisms while continuing to keep the rate artificially inflated in order to justify increased spending that in turn cannot reduce the rate. Note that the GWB administration made efforts to change the poverty definition that would have somewhat reduced the measured rate and that these efforts were successfully resisted by the poverty advocates; now the Obama administration has a new measure that magically does not reduce the rate at all. The basic game is to include in the definition of “poverty” many categories that have nothing to do with real poverty and that naive journalists never think of. In considering this new definition, one must ask the obvious questions. For example, where do people fall who are not poor at all but have no income this year for one reason or another? Where are Ph.D. students? Where are law students? Where are early, pre-social security retirees who live several years consuming a few hundred thousand dollars in savings? Where are elderly people in nursing homes being paid for by Medicaid? Where are drug dealers (no reported income)? Where are off-the-books nannies, housekeepers, construction workers? The NYT article gives insufficient information to answer these questions. The gist of the article is “see, they’ve fixed the problems and the poverty rate is the same.” Are we that easily fooled? I suggest that extreme skepticism is warranted.

  • dearieme

    The rule in Britain is that if the Official Statistics say one thing, and the Man on the Clapham Omnibus begs to differ, the way to bet is on the man on the bus.

  • Ed Snyder

    And some other people, cynical or not, who have been to places in the world where a “house” consists of sheets of corrugated metal and plastic bags lashed to a bush might wonder whether or not America has a poverty problem at all.

  • Corlyss

    “It’s shocking that the US has spent hundreds of billions of dollars on sometimes ill advised and poorly monitored problems to end poverty without a solid and accurate definition of the target.”

    Two observations:

    1) It may be shocking, but I think it’s typical of legislatures. They usually don’t understand 90% of what they legislate about. Why? Becaue they meddle in too much intent on favoring this or that group. I don’t mind the favoring part. I mind the ignorance and the indifference to details in which reside the unintended consequences that make so much of their efforts a travesty or a disaster.

    2) Let’s face it. If the NYT weren’t trying to salvage their boy in the white house, they wouldn’t be dissecting the poverty numbers and methodology even a little bit. They are only trying to prove the numbers misleading because the nekkid stat hurts, or should hurt, Obama’s re-election chances. If this were a Republican administration, they’d be trumpeting the numbers, praising the methodology, and demanding immediate action to redistribute some more wealth.

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