Wednesday, March 3, 2010

Measuring Poverty...

According to the Commerce Department, we will now have an alternative measure of poverty in the United States:

The Minneapolis Star Tribune reports:

The new measure will not replace the official poverty rate but will be published alongside the traditional figure next year as a "supplement" for federal agencies and state governments, according to the directive announced Tuesday by the Commerce Department and White House.

Demographers say the main impact of the change will be to highlight higher numbers of Americans in poverty than previously known, particularly among Americans 65 and over. Because it will be considered a supplemental measure, however, it will not change how billions of federal dollars for the poor are distributed for health, housing, nutrition and child-care benefits.

"The new supplemental poverty measure will provide an alternative lens to understand poverty and measure the effects of anti-poverty policies," said Rebecca Blank, the Commerce Department's undersecretary of economic affairs, a frequent critic of the traditional measure.

The question I have is: if you need an alternative measure, whether official or not, to better understand poverty and poverty policy, why not make it the official measure in the first place?

The federal poverty measure has long been the bane of those of us who work to understand the experiences, breadth, and magnitude of the impoverished in the United States. Many different measures have been proposed over time, but the federal government has shirked the responsibility of creating a more accurate measure due to the fact that it would increase the number of people officially poor, and therefore increase their responsibility in doing something about it.

Here, from the New York Times, the government, through Rebecca Blank of the Commerce Department, concedes that the measure of poverty will remain outdated, inaccurate, and problematic.

Ms. Blank said that for the sake of consistency and simplicity, the existing measure would remain. “I don’t think this is on a track to be anything but an alternative, supplemental to the official definition,” she said.

The new supplemental measure will be released for the first time in the fall of next year. It adapts National Academy of Sciences recommendations issued in 1995 and later embraced by, among others, the administration of Mayor Michael R. Bloomberg of New York to formulate antipoverty policies.

Federal officials describe the supplemental measure as experimental and a work in progress. It establishes a poverty threshold that depends on the cost of food, shelter, clothing and utilities “plus a little more” for “a population that is not poor but is somewhat below the median.”

The median income, in this country, is an amazing measure to reference here. According to the government's own statistics, the median family income, in 2007 was the same as in 2000 (despite some fluctuation).

What is more telling, however, is to compare the percent distribution of total income across income quintiles: from the lowest fifth to the highest fifth of the income distribution. That is, if you take the entire number of households in the United States and split them up into five groups based on income, from lowest to highest, the lowest three quintiles, 60 percent of the total number of households, in 2007 posses 26.9 percent of the total aggregate income. Compared to the top 20 percent, the highest quintile, and their 49.7 percent of the total aggregate income, the disparity is clear. Finally, the top 5 percent, the elite of the elite, hold 21.1 percent of the aggregate income in this country. 5 percent vs. 60 percent.

Here is hoping that, unlike most governmental works in progress, this experiment in measuring poverty is one comes to full fruition. And that it leads to something better than a majority of the money income in this country going to those a top the stratified social structure.