Needed: New Year Resolve to Lower Poverty Rates

[Source: U.S. Census Bureau]

This past  summer, months before the September 15 release of the government’s poverty report on 2020, the Urban Institute was already predicting that poverty rates–the share of the population below the poverty lines–would fall sharply in 2021. That prediction was a shocker. Then in September came the report on poverty in 2020 and the news was pretty good. Using relatively new poverty lines called the Supplemental Poverty Measure (SPM), the Census Bureau  concluded that the national poverty rate fell from 11.8% to 9.1%. Employing the traditional or Regular Poverty Measure (RPM), in use since 1959, the national poverty rate increased from 10.5% to 11.4% of the population. 

The main reason poverty rates did not soar, regardless of method of measurement,  is simple. The federal government sent trillions of dollars out to the people and added a child tax credit that before it expired, lifted many families out of poverty

A lot of decisions go into counting income in both sets of poverty lines, but one thing is clear: In either case, the poverty thresholds below which a household is considered poor are way too stingy. Here are three of the 48 lines in the traditional RPM.

Sample RPM poverty thresholds for 2020. If your type of household had more annual income than the appropriate threshold, you were not counted as poor.

Two people in a household in which the head is 65 or older                $15,644

Four people in a family, two them under 18         $26,246

One person, under 65               $13,465

Ponder these numbers.  Can anyone take them seriously? If that family of four earned $27,000, it would be considered above the poverty line. Where would that non-poor family live?  In tents on a mountain somewhere in Appalachia near a creek that provided free water and close to a large communal vegetable garden? 

Several years ago the Economic Policy Institute calculated how much a family of four needed for a modest but adequate living standard. They used 2017 dollars, so the costs for 2020 would be a little higher. If the family of four lived in Harlan County, Kentucky, they needed $66,715. In Los Angeles County, they required $93,295. 

Poverty lines need to be much higher if we are to get real about how extensive poverty is. People shouldn’t be comfortable thinking that just a tenth of the population is poor. It is true that the old RPM has historical value as an indicator of how far we have come since 1959 using stable poverty lines that have been revised only to reflect price changes. That’s important. So let’s have three lines. The old RPM, the SPM that experts like, and a new set of higher poverty lines. If poverty lines had been  50% higher last year, the national poverty rate would have been 19.4%, not 11%. 

There is nothing sacred about current poverty lines. Their creation involved scholarly and political choices. In the early 1960s, Mollie Orshansky, working in the Division of Research and Statistics in the Social Security Administration, used the Department of Agriculture model food budgets to construct poverty lines. It was known that food budgets were, on average, a third of a family’s total spending, so Orshansky multiplied the two lowest budgets–the low-income and the emergency-economy budgets–by three to get two sets of poverty lines. She argued that the government should adopt the higher of the two–the low-income level–but the Bureau of the Budget ordered federal agencies to use the stingiest of  the budgets, the emergency budget. That was three fourths as high as the low-income budget. Truly lower than low.

Who needs help?

Many groups have been unfairly pushed down into poverty by warped social, political, and economic structures. In 2020, the poverty rate for Black people rose to 19.5%, and was twice the white (non-Hispanic) rate of 10.1%  and the Asian rate of 8.1%. Observers wearing rose-colored glasses may point out that poverty rates in 2019 and 2020 were the lowest ever for Black people. Realists can point out that there is something terribly wrong when a fifth of a particular population is below even the subterranean official poverty lines. Ditto for Hispanics, whose 2020 rate was 17%. For disabled people in the working-age group of 18-to-64, poverty rates were extremely high in 2019 before Covid at 22.5%, and they increased to 25% in 2020.  

In terms of your income level, it is better to work, and work full-time if you can. For those who worked full-time, year-round, the poverty rate fell from 2% to 1.6%.  People who did not work at all had very high poverty rates: 26.4% in 2019 and 28.8% in 2020. From such numbers conservatives conclude that people need to work more. And get married. It is true that married-couple families have poverty rates below 5%.

Still, as June Zaccone of the National Jobs for All Network points out, in 2020, 12% of all full-time, year-round workers earned less than the average poverty line for a family of four–$26,496. These people were being paid less than $13 an hour, though they were, presumably, serious workers.

What to do in 2022: A partial list

  1. Federal poverty lines–RPMs and SPMs–are a poor measure of economic deprivation in the United States. New poverty lines should be at least 50% higher. 
  2. New lines should count as income more federal benefits and highlight the anti-poverty effectiveness of various federal programs.
  3. The federal minimum wage, now $7.25 an hour, should be put on track to reach $20 soon. The Federal Government should create millions of good jobs and ensure that low-income people and those frequently discriminated against get an extra large share of new good jobs.
  4. Conservatives can stop stereotyping the poor as self-indulgent people who must not be coddled. Stop telling them to work for sub-poverty wages and start supporting a high-wage economy. Talk about the indulgences of the filthy rich. Think about $25 million for ten minutes in space.