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Poverty In America By The Numbers
“Why two government poverty yardsticks generate very different results? Poverty
defies simple explanation. We do not even have a common benchmark to measure
poverty. The Official Poverty Measure, in use for a little more than 50 years,
has its roots in a 62-year-old U.S. Department of Agriculture food consumption
survey. That survey determined a subsistence diet and budget. The Official
Poverty Measure builds off this, taking the cost of a subsistence diet and
multiplying it by three with the rationale being that the provision of food uses
about one-third of the poor’s income.
The Official Poverty Measure Ignores the Effect of the Cost-of-Living on the
Working Poor
The U.S. Congress has been aware of the Official Poverty Measure’s
cost-of-living weaknesses since 1974. By 1995, specific improvements to the
poverty threshold methodology were recommended and by 2010, 36 years later, the
U.S. Census Bureau and the Bureau of Labor Statistics were charged with
developing the Supplemental Poverty Measure (SPM). Unlike the Official Poverty
Measure, the SPM wasn’t intended to determine eligibility for government
benefits—it would be too controversial—rather, it was developed to advance our
understanding of poverty.
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Chuck DeVore <https://www.forbes.com/sites/
Opinions expressed by Forbes Contributors are their own.
* California having the highest poverty rate among the states at 20.6
percent.
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The newly released 2017 Greater Los Angeles Homeless Count indicates a 20
percent jump in the city of Los Angeles while Los Angeles County has spiked 23
percent. (Photo by David McNew/Getty Images)
By the official definition
<https://www.census.gov/
in America, New Mexico has the nation’s highest poverty rate, 21.8 percent,
while New Hampshire has the lowest, 6.6 percent. But a newer, more comprehensive
measure <https://www.census.gov/
poverty by the U.S. Census Bureau tells a different story, with California
having the highest poverty rate among the states at 20.6 percent.
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Why do two government poverty yardsticks generate very different results?
Poverty defies simple explanation. We do not even have a common benchmark to
measure poverty. The Official Poverty Measure, in use for a little more than 50
years, has its roots in a 62-year-old U.S. Department of Agriculture food
consumption survey. That survey determined a subsistence diet and budget. The
Official Poverty Measure builds off this, taking the cost of a subsistence diet
and multiplying it by three with the rationale being that the provision of food
uses about one-third of the poor’s income.
Thus, in 2016, a family of four making less than $24,250 was considered below
the poverty line in the 48 contiguous states. Alaska and Hawaii have different,
higher, poverty thresholds, reflecting those states’ higher cost of living.
Returning to New Mexico, the Official Poverty Measure calculates that state’s
poverty rate at 21.8 percent, as averaged over 2013 to 2015. Using this measure,
California has the nation’s 17th-highest poverty rate, 14.9 percent, just above
the national average of 14.4 percent. However, the cost of living in California
is about 20 percent higher than it is in New Mexico, according to the U.S.
Bureau of Economic Analysis’ Regional Price Parity calculation. The Official
Poverty Measure takes no account of this fact. In July, the average monthly rent
for a two-bedroom apartment in Albuquerque, New Mexico was $963. In Los Angeles,
a similar apartment rents for $2,904. Clearly, the cost of living matters,
especially for the poor.
A practical example helps illuminate the Official Poverty Measure’s
cost-of-living shortcomings. The average annual wage for food preparers and
servers was $27,380 in California, $3,130 above the poverty line. But the cost
of living in California is about 13 percent higher than the national average,
according to the U.S. Bureau of Economic Analysis. This means that the average
food service worker makes an effective annual wage of $24,145 in
California—below the poverty line for a family of four.
<https://www.forbes.com/null>
Texas Public Policy Foundation
The Official Poverty Measure Ignores the Effect of the Cost-of-Living on the
Working Poor
The U.S. Congress has been aware of the Official Poverty Measure’s
cost-of-living weaknesses since 1974. By 1995, specific improvements to the
poverty threshold methodology were recommended and by 2010, 36 years later, the
U.S. Census Bureau and the Bureau of Labor Statistics were charged with
developing the Supplemental Poverty Measure (SPM). Unlike the Official Poverty
Measure, the SPM wasn’t intended to determine eligibility for government
benefits—it would be too controversial—rather, it was developed to advance our
understanding of poverty.
The SPM differs from the Official Poverty Measure in four key respects:
* It accounts for regional cost of living differences;
* It includes the value of non-cash assistance to the poor, such as
Supplemental Nutrition Assistance Program (SNAP, formerly known as Food Stamps)
and Section 8 Housing vouchers;
* It calculates expenses incurred by the working poor, such as
transportation and childcare as well as out-of-pocket medical costs; and,
* It is a relative measure of poverty, based on the 33rd percentile of
national expenditures on necessity items vs. an absolute measure of poverty.
California, Texas, Florida, New York and Illinois have widely varying poverty
rates and are demographically diverse. Before accounting for the value of all
government benefits, expenses incurred by the working poor, and the
cost-of-living, Texas has the highest Official Poverty rate among the big five
states. But, once these factors are included, California moves firmly into the
top—and, in fact, has the highest poverty rate among all states—while Texas
moves to the second-lowest rate among the most-populous states, 14.9 percent.
Official Poverty Measure, 2013-15 Supplemental Poverty Measure, 2013-15
16.0% - Texas 20.6% - California
15.9% - Florida 19.0% - Florida
15.2% - New York 17.9% - New York
14.9% - California 15.1% - U.S. Average
14.4% - U.S. Average 14.9% - Texas
12.7% - Illinois 13.7% - Illinois
For in-depth studies on poverty, see the following two new papers from the
Texas Public Policy Foundation <http://www.texaspolicy.com/> : “Re-examining
Poverty Rates: A First Step in Reforming Anti-Poverty Programs
<https://www.texaspolicy.com/
author and “Poverty Rates, Demographics, and Economic Freedom Across America: A
Comparison of Nationwide Poverty Measures
<https://www.texaspolicy.com/
mic-freedom-across-america> ” by Courtney A. Collins, Ph.D.
Chuck DeVore is Vice President of National Initiatives at the Texas Public
Policy Foundation <http://www.texaspolicy.com/
was a California Assemblyman and is a Lt. Colonel in the U.S. Army Retired
Reserve.
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<https://www.forbes.com/sites/
umbers/>
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