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Counting what counts

By Douglas W. Nelson
August 29, 2007

For those of us who devote our working lives to helping vulnerable children and families, yesterday marked one of the most momentous days on the annual calendar: the Census Bureau's release of the nation's official poverty rate.

The event, held inside the Census Bureau's headquarters in Suitland, Md., attracted a throng of journalists and generated a flurry of news coverage.

This attention is all for the good. Not only does poverty impose short-term hardships on millions of Americans, but it has tragic long-term consequences for children. Overwhelming evidence shows that growing up in poverty — especially deep and sustained poverty — compromises children's health, dims their educational prospects, increases their risk of future arrest and incarceration and lowers their options for future success. Anything that reminds citizens of the vast number of American children handicapped by poverty — nearly 13 million as of last year — can only help.

This welcome attention, however, is steeped in a troubling irony. The poverty figure itself is deeply flawed and almost comically out of date. Developed in the 1960s, the poverty line was drawn by the federal government by calculating the cost of a rudimentary grocery budget and multiplying by three — because back in the 1960s food represented one-third of a typical family's budget. The dollar figure developed in the 1960s has only been adjusted for inflation, even though food is now one-seventh of a typical family's budget, and even though the formula takes no account of child care, health insurance and other expenses that are far greater today.

Further, thedefinition of income used to calculate poverty rates doesn't includenon-cash benefits such as housing assistance, the earned-income and other tax credits, and food stamps, and it doesn't account for necessary expenses like transportation and state/local taxes.

Today, virtually no one supports the poverty threshold — currently set at $20,444 for a family of two adults and two children — as a realistic assessment of families' genuine economic needs and circumstances. Indeed, scholar Nicholas Eberstadt of the American Enterprise Institute has dubbed the poverty measure "America's worst statistical indicator."

Unfortunately, efforts to update the poverty measure — which began in the 1970s — have foundered repeatedly due to political discord. Proponents and critics of the current system represent genuine philosophical differences about who should be counted as poor.

Conservatives have consistently sought changes that would reduce the number of Americans counted as poor. They note — correctly — that the vast majority of those counted as poor today have a much higher standard of living than those counted as poor 40 years ago. For example, most have televisions, microwave ovens and air conditioning. Liberals have sought changes that would increase the number of Americans counted as poor.

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