The first set of figures from the new formula will not be published until September 2011. However, the Census Bureau uses an alternative measure for poverty and the new formula is based on that (as well as a recommendation from the National Academy of Sciences on how to measure poverty). Using the Census Bureau alternative figures as a guide, it is expected that under the revised formula more people will be counted as living in poverty. Overall poverty is expected to increase from 13.2% (39.8 million people) to 15.8% (47.4 million). [Just wait, that statistic is going to appear in the next Freakonomics book. 'In September 2011, 7.6 million people instantly fell into poverty. The night before they were not living in poverty, but by the next day they were. Were their mass job lay-offs that day? Did a natural disaster occur that wiped out the homes and places of business for an entire major city? No, instead what happened was the government reformulated who was considered living in poverty.' P.S., if any Freakonomics authors stumble upon this (ha!), I want my cut!]. Furthermore, the number of older people classified as living in poverty is expected to double. Under the traditional measure, 9.7% of Americans 65 and older are classified as living in poverty (3.7 million); under the new measure the figure is expected to be 18.7% (7.1 million). That is nearly 1 in 5 older Americans. The difference is mostly due to out-of-pocket expenses due to rising Medicare premiums, deductibles, and a coverage gap in the prescription drug benefit. However, a Census Bureau chief said that while substantial increases are expected in the number of older Americans living in poverty, he thinks the final numbers could be cushioned somewhat because the new formula will take into account whether a person is more likely to own a home without a mortgage. In addition, child poverty is expected to be lower under the new measure (17.9%) than it was under the traditional measure (19%). The change is mostly due to the fact that single mothers and their children disproportionately receive non-cash aid such as food stamps (which wasn't previously counted) [However, I hope this measure is used appropriately. This drop in the number of children living in poverty shouldn't be used as a justification to cut or reduce benefits, especially if it was the benefits in the first place that helped them to be lifted above the poverty line. And being lifted above the poverty line doesn't necessarily mean the family is financially solvent. The poverty line for a family of four is $22,050. A family of four making $23,000 is not exactly financially set]. Also, under the new measure, the Northeast and West are expected to see a bigger jump in poverty due mostly to larger cities with higher costs of living such as New York City, Los Angeles, and San Francisco.
However, the new measure will not replace the official poverty rate (which is determined by the old/traditional measure); instead, the new figures will be published alongside the traditional figures as a "supplement" for federal agencies and state governments. Because it is just a supplemental measure, it will not change how billions of federal dollars for the poor are distributed for health, housing, nutrition, and child care benefits. How federal dollars are distributed for Medicaid, welfare, food stamps, and other aid programs will still be determined by the old official poverty line -- which is the threshold of eligibility for assistance programs. From a demographic standpoint, it will be nice to have these "supplemental" figures to provide a more accurate picture of the number of poor people in the United States. However, I cannot believe this new formula is just being considered a "supplemental" figure. It should replace the old formula. I know that this is all about politics, and changing how the official poverty line is calculated will bring about major change. Government assistance is already such a testy area for people (this perpetual idea that people are not worthy of government assistance -- except Medicare and Social Security -- and that they should just go out and get a job and pull themselves up by their bootstraps. Simple as that). I'm sure there are politicians that are not in favor of putting in place a new measure that will likely acknowledge there is more people living in poverty and thus will require an expansion or reconfiguring of government assistance. So it's easier to just do nothing. Essentially, by taking on this new "supplemental" formula, the government is acknowledging that the old system doesn't adequately measure the number of people living in poverty. And they're essentially acknowledging that the new formula will be more accurate and will take into account the current American family and what their costs are (this is not the 1960s anymore). So they acknowledge this, but then they're doing nothing about these people. They're not changing the system. That almost seems worse than ignoring them all the while. At least before, the government could claim ignorance and say they didn't realize there was a problem with the traditional formula -- they didn't realize all these people were being miscounted or that the measure was out of date (even though they should know that. But they could claim ignorance). By instituting the new supplemental formula, the government knows the traditional formula is limited. They see these figures of additional people that need help and that should probably be under the poverty line, but are not counted as such under the traditional formula. And yet they do nothing about it. We don't need these new statistics to just be written alongside the official statistics (providing only a demographic research purpose), we need changes to occur from these new statistics. We need to acknowledge there are people struggling in the United States even if they're not under the current official poverty line. We need to change how poverty is officially measured in this country, and then we need to increase resources and allocate resources accordingly. (Full Story) (Full Story)
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