U.S. Plans New Measure for Poverty

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New York Times

By: Sam Roberts

March 2, 2010


The federal government announced on Tuesday that it would begin producing an experimental measurement of poverty next year, a step toward the first overhaul of the formula since it was developed nearly a half-century ago by an obscure civil servant in the Social Security Administration.

While the original definition -- the cash income collected by a family or individual -- will remain the official statistical measure for eligibility and distribution of federal assistance for the time being, "the new supplemental poverty measure will provide an alternative lens to understand poverty and measure the effects of antipoverty policies," said Rebecca Blank, the under secretary of commerce for economic affairs.

 

Advocates for the poor and technical experts have argued for years that the original standard, developed in conjunction with the Johnson administration's War on Poverty, was anachronistic. The civil servant who created it, Mollie Orshansky, based it on the Agriculture Department's cheapest meal plan, on the assumption that the average family spent a third of its income on food at the time. Her formula has largely remained the same except for inflation adjustments.

 

Ms. Blank said that for the sake of consistency and simplicity, the existing measure would remain. "I don't think this is on a track to be anything but an alternative, supplemental to the official definition," she said.

 

The new supplemental measure will be released for the first time in the fall of next year. It adapts National Academy of Sciences recommendations issued in 1995 and later embraced by, among others, the administration of Mayor Michael R. Bloomberg of New York to formulate antipoverty policies.

 

"They've shown the way," Ms. Blank said.

 

Federal officials describe the supplemental measure as experimental and a work in progress. It establishes a poverty threshold that depends on the cost of food, shelter, clothing and utilities "plus a little more" for "a population that is not poor but is somewhat below the median."

 

The original measure figured costs for two adults and two children. The new one covers one adult and two children, a family structure more prevalent these days among lower-income households, and would be adjusted to reflect living costs in different metropolitan areas.

 

The threshold would be adjusted to calculate the value of in-kind benefits, like food stamps, and whether homeowners have a mortgage. Tax credits would be added to the total income and benefits; taxes, work expenses (including commuting and child care), and out-of-pocket medical costs would be deducted.

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This page contains a single entry by Ernest Roberts   published on March 3, 2010 3:52 PM.

Nobel Prize Winner Opens Microfinance Program In Omaha: South Omaha Bank Sees 300 Borrowers was the previous entry in this blog.

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