Monday, July 14, 2008

Counting the Poor

New York City has become the first local government in the nation to break with the federal government’s outdated and inaccurate measure of poverty and begin calculating its own numbers. Mayor Michael Bloomberg announced this weekend that the city will institute an alternative poverty measure, which will offer a more realistic picture of the number of New Yorkers living below the poverty line than the official numbers coming out of Washington.

Bloomberg made the announcement during a speech at the 99th Annual NAACP Convention, which is currently underway in Cincinnati, Ohio.

“If we are serious about fighting poverty, we also have to start getting serious about accurately measuring poverty,” Bloomberg said.

As I reported in February 2006 for In These Times, Washington currently measures poverty in the U.S. using a formula developed in 1963 by a young statistician for the Social Security Administration named Mollie Orshansky.

Using data from a 1955 Department of Agriculture survey, Orshansky developed a set of thresholds that set a poverty line at three times the annual cost of feeding a family of three or more under the Department of Agriculture’s “low-cost budget.” She developed the thresholds purely for her own research and said at the time that her data’s limitations would yield a “conservative underestimate” of poverty.

The limitations of the Orshansky formula are manifold. For one, food doesn’t account for one-third of a family’s budget today, making it an unrealistic cost-of-living measure. The model also fails to take into account housing, transportation or health care—which together can amount to more than triple the average cost of food. Add in regional variations, childcare costs and the growth of single-parent families, and it becomes clear that the Census Bureau has been systematically undercounting the number of poor Americans.

Critics have called on the government to revise the thresholds, which they say understates poverty in America anywhere from 6-10 percent depending upon whom you ask.

New York’s new alternative measure, which was developed over the past year by the City’s Center for Economic Opportunity, factors in food, clothing, shelter and utilities expenditures; counts tax credits and benefits - such as Food Stamps and Section 8 housing subsidies - and adjusts for differing geographic cost factors in housing. Using the method, New York’s poverty rate is 23 percent instead of the 19 percent reported by the federal government.

“For years there has been widespread frustration that the current measure does not reflect the true state of poverty in our nation,” said Deputy Mayor for Health and Human Services Linda Gibbs. “This new measure will allow us to better understand the impact of current social policies, see the real benefit of government assistance programs and make smarter, data-driven policy decisions going forward.”

Community representatives, poverty-reduction activists and mayors from cities as far away as Los Angeles joined together in commending Bloomberg for taking the first step in implementing a true measure of poverty in the U.S. Hopefully Bloomberg’s colleagues will do more than pay lip service and will follow his lead.