Poverty Numbers are Shocking, but Not Shocking Enough

Today the U.S. Census Bureau released their estimates of the number of people who lived in poverty in 2009. Usually, the report’s annual release provides an opportunity to spotlight the persistence of severe economic hardship in our midst. But this year the numbers are especially startling. 43.6 million Americans were reported to live below the poverty line, which is the highest number of people since Census began tracking poverty in 1959.

The number is even more shocking when you think about what the poverty line means: for a family of two parents and two kids the poverty line was set at $21,756. If this number seems low to you, it should: if both parents were working full time at the minimum wage their yearly income would be just under $30,000.  A poverty threshold that makes minimum wage earnings look cushy should be looked at skeptically. 

As New America has been pointing out for a while not only is the current measure flawed as an indicator of the income a family needs to get by, the concept of assessing a family’s wellbeing against a snapshot of their income is also flawed. This is because social development is not determined at one point in time but over an extended period of time. Families need access to an array of resources and services to deal with unexpected events and economic hardship. This is where the importance of savings and assets comes into play. The severity of the Great Recession and its accompanying job loss and wealth drain have reinforced the need for a more sophisticated conception of  poverty and a revealing measure that can capture some of the contemporary dynamics of economic insecurity.

The good news is that the Census has recognized the limits of the current measure (which is still based on the price of a food basket from the 1960s!) and is working to implement a “modernized” income threshold which would account for other costs such as child care, transportation, and health care. But unless we account for the presence or absence of assets that a family is able to access, we still won’t have the panoramic view of vulnerability and opportunity that determine financial security.

As Reid Cramer argued in “The Misleading Way We Count the Poor”:

Critiquing the poverty measure is more than an academic exercise. The manner in which problems are defined portends their proposed solution. Defining poverty in terms of household income leads to proposals that focus on income supports. Yet the dynamics of a family’s welfare are best understood by considering how they control the resources under their disposal, requiring an accounting of both income and assets.

Put in other terms, prescriptions follow the diagnosis.  And in the case of measuring poverty, we’re using a thermometer, diagnosing a fever, and treating a symptom instead of using more sophisticated instrument to figure out what’s causing the fever.  Tylenol can make the fever abate, but it won’t get rid of an infection

The “heat or eat” phenomena illustrates this point.  Winter can bring severe weather and families face mounting heating costs on their delicate budgets.  While some items in that budget are fixed, like rent and utilities, others, like food, are not and can be cut back to offset increased expenses in other areas. In Boston, researchers found a 30% increase in the number of underweight infants and toddlers in the winter months over the rest of the year.  Programs like LIHEAP and SNAP (formerly food stamps) can be critical, temporary measures that see families from one day to the next.  But, in the long run, families need the resources to give them the stability to withstand shifts in their income and policies that are informed by a more complete picture of their wellbeing. 

While today’s poverty numbers are shocking, the truth of the matter is they understate the size and scope of the real problem, and until we truly understand what we’re dealing with, it’s going to be very difficult to provide meaningful solutions.