The federal government bases its poverty measure on a formula that was established in the 1960s and has not been updated since. Many experts and elected officials alike have made repeated calls for the measure to be changed, especially in light of a changed economy that has altered substantially in the nearly half-century that has passed since the federal poverty measure was first set.
Spotlight on Poverty and Opportunity is pleased to host a series of commentaries entitled “Poor Measurement” to discuss this issue. The series brings together experts, advocates and policy makers to address how, why, and whether to update the federal poverty measure.
Previous commentaries in the series have included the following:
“Changing How We Measure Poverty,” by Diana Pearce
“Time for a Comprehensive New Poverty Measure,” by John Quinterno
“Measuring Poverty in New York City,” by Mark Levitan
“A Truly New Approach to Measuring Economic Inclusion,” by Shawn Fremstad
“Poor Measurement,” by Rebecca M. Blank and Mark H. Greenberg
A little over two years ago, the Center for American Progress issued a benchmark report entitled From Poverty to Prosperity—A National Strategy to Cut Poverty in Half. The report introduced a detailed twelve-point plan to lift over 18 million individuals and children out of poverty over ten years through tax credits, an increase in the minimum wage, housing assistance, education, and employment, among other things.
The report, however, was produced before the current recession took hold of the nation and before the new Administration took office. While it may be several years before we truly know the impact of the recession on individuals and families, what is known is that record high unemployment rates coupled with the housing and healthcare crisis have had a destabilizing effect on many middle- and low-income families.
In order to cut poverty in half in ten years, sound and innovative public policies alone will not be enough. To reach our target of lifting nearly 20 million out of poverty, we will need the following: (1) a national mandate from the Administration and coordination of efforts among federal agencies, states, and localities; (2) an updated poverty measure that is reflective of today’s economic reality; (3) a systematic periodic review of benchmarks and progress at the federal and state levels; and (4) a deliberate strategy to move a sizeable percentage of the most vulnerable segments of our society out of poverty. They include single women heads of households, the elderly, and those who are living 200 percent below the current federal poverty line.
The recession and the new Administration provide fresh opportunities to explore what it will really take to cut poverty in half in ten years. Not since Franklin D. Roosevelt’s New Deal policies and Lyndon B. Johnson’s Great Society has the country been faced with the prospect of overhauling our social system and identifying the kinds of social investments that will be necessary to move individuals and families out of poverty and create a clear, sustained path to the middle class.
WHAT DO WE KNOW
Since the late 1970s, policies aimed at reducing or alleviating poverty have failed to move significant numbers of individuals, children, and families out of poverty. The war on poverty, initiated by Lyndon B. Johnson in 1964, gave us a blueprint for alleviating poverty and moving individuals and families toward the middle class, but many of the policies and initiatives were largely undone by subsequent Administrations. By the mid 1990s, much of the responsibility for social welfare programs had devolved to states, and policies aimed at alleviating poverty were all but eliminated with the passage of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996.
Today, it is estimated that more than 37 million people or 12 percent of the population live in poverty. When race and ethnicity are taken into consideration, poverty rates for African-Americans and Latinos greatly exceed the national average at nearly 25 percent. And over half of female-headed households with children live in poverty.
These statistics are made even starker when you consider that over the last two decades, economic growth and job creation have not been effective in moving people out of poverty and toward economic security. The economic boom of the 1990s created more jobs, but the wages that accompanied those jobs stagnated or decreased.
The Gross Domestic Product, how the U.S. measures its economic well-being, has grown steadily over the last 40 years, but the poverty rate has not substantially decreased.
What this implies is that our current economic reality, with its heavy emphasis on skills and technology, is out of step with many of the policies implemented over the last 40 years to move individuals and families out of poverty and into the middle class.
WHAT SHOULD BE DONE
A Return to the Great Society. The federal government and the Administration should once again take on a larger role in ensuring that individuals, children, and families move out of poverty and into the middle class. The mandate for cutting poverty in half over the next ten years must come from the government and be accompanied by a set of innovative policies and initiatives that can be implemented at the federal, state, and local levels.
Connectedly, policies and programs from various federal agencies designed to provide support services and safety nets to individuals and families should state clearly how those policies and programs will work to meet the federal goal of cutting poverty in half in ten years. There will also be a need for coordination of efforts among agencies to ensure that when policies are taken as a whole they address the full range of needs of individuals and families and do not undermine other agency efforts or initiatives. For example, an increase in tax credits implemented by the federal government would not lead to a decrease in housing benefits or other support services for individuals and families provided by the Department of Health and Human Services.
Update the Federal Poverty Measure. To get a true grip on the number of individuals and families living in poverty, it is imperative that the federal poverty measure be updated to reflect today’s economic and social realities. The antipoverty policies and initiatives implemented during the 1960s were based on the most sophisticated poverty measure available at that time. It would be nearly impossible to use that same tool today to accurately measure poverty and economic well-being in a technology-driven, skill-based global economy.
The new measure should take into consideration out-of-pocket medical, work, and child care expenses; geographic location; and the costs of fuel, food, clothing, and shelter. It should also be consistent with the median income and the real cost of what it takes to make ends meet in the United States.
Updating the federal poverty measure would allow us to zoom in on our goal by providing a starting point from which to begin to evaluate feasibility of various programs and initiatives and ascertain the depth of the problem.
Systematic Periodic Review of Benchmarks and Progress. There should be a systematic review and evaluation at least every two years by the Administration and states of the programs and initiatives implemented to cut poverty in half over the next ten years. Programs would be reviewed for cost-effectiveness, efficiency, and impact. The evaluation tool should be comprehensive and emphasize economic security and stability rather than formulaic decreases in numbers or incremental increases in income levels.
States and cities should also have goals and targets for reducing poverty and moving families and individuals into the middle class. These should be based on their demographics, rates of labor force participation and unemployment, geographic location, and other specific factors.
Focus on the Most Vulnerable. At least one half, or nine million, of the estimated 18 million individuals pulled out of poverty should come from populations considered to be the most vulnerable. These populations include single women heads of households, the elderly, and those who are living 200 percent below the current federal poverty line. By taking care to include these groups, there is a greater likelihood that policies enacted and implemented will take into consideration the multiple barriers faced by individuals and families that may prevent them from moving out of poverty and into the middle class.
Also, historically, these groups have not been as successful in moving themselves out of poverty with existing programs. By focusing a portion of allocated resources on the most disadvantaged, there is a tremendous opportunity to gain insight on what it takes to move into and remain a part of the middle class. It also provides an opportunity to examine our structures and institutions to determine what changes need to be made to help ensure success.
A SHIFT IN PERSPECTIVE
In order to cut poverty in half over the next ten years, sound and innovative public polices reflective of today’s economic reality must be wedded to a stronger and more involved federal government, an accurate tool to measure the number of individuals living in poverty, a periodic review of benchmarks and progress, and a deliberate focus on the most vulnerable in our society.
In the United States, the poor have always been considered a burden or a problem to be solved. Antipoverty initiatives have tended to be viewed as expenditures with little return rather than high-yield investments. As a result, policies implemented over the last few decades have been punitive in nature and have done very little to improve the overall economic well-being and stability of individuals and families.
Antipoverty poverty initiatives and programs should be viewed as social investments and economic stimuli. They should go hand-in-hand with the Administration’s current efforts to revive the economy and move families into the middle class.
C. Nicole Mason is Research Assistant Professor and Executive Director of the Women of Color Policy Network at New York University’s Robert F. Wagner Graduate School of Public Service