Old poverty line inadequate to reflect today's family needs

Experts struggle to find an alternative

September 13, 2000|By Kate Shatzkin | Kate Shatzkin,SUN STAFF

For more than 30 years, the U.S. government has defined who is needy by using a measure known as the "poverty line" - the income threshold that purports to determine who is poor and who is not.

But experts of virtually every stripe agree that the nation's official measure of poverty - never designed to be permanent - is outdated. And despite years of studies by economists and poverty experts, there is no agreement on how to repair it.

In an open letter to administration officials last month, 42 economists, social scientists, researchers and advocates urged action to improve the measure, calling its flaws "critical."

But updating the measure is a political minefield. Some experts say that, depending on the method used to determine a new poverty line, the number of "poor" could rise, placing greater demand on government programs. One Baltimore case study, for example, demonstrated that a family of four would need twice the current poverty level of $17,050 to meet basic needs.

Other experts believe the number of people considered poor could shrink, because a new poverty line would reflect the dollar value of government benefits, which are not now included.

If the measure is changed, the composition of the group labeled "poor" would likely change as well, adding more white, working and elderly people to the mix.

"It's the people who are, in some sense, playing by the rules who are not being currently recognized in our poverty measure," said David M. Betson, an economics professor at the University of Notre Dame who has studied the measure.

The U.S. Census Bureau and the Office of Management and Budget have been working for years to come up with more accurate definitions. OMB spokeswoman Linda Ricci said officials are working on a response to the open letter.

Some researchers fear that the political sensitivity of the issue and the paucity of data to support a new measure could scuttle reform attempts for years to come.

"Given that [the measure] has never been altered, the prospects that it will be altered in the future are certainly slim," said John F. Cogan, a fellow at the Hoover Institution at Stanford University and an economic adviser to presidential candidate George W. Bush.

Based on cost of food

The "poverty line" as we know it came from the work of Mollie Orshansky, a Social Security analyst who began experimenting with a yardstick in 1963. A former U.S. Department of Agriculture economist, she calculated a family's cost for a minimal diet that met basic nutritional standards.

Then, Orshansky - reasoning that food costs constituted about one-third of the typical family budget - multiplied that sum by three.

She sent the numbers to her boss, never guessing that a few years later they would become the official government standard, used both as a statistical measure of poverty and to determine eligibility for government programs.

Although the numbers are adjusted for inflation, the method of determining the poverty threshold - published annually by the Census Bureau - hasn't changed.

But living and spending patterns have changed. Housing and transportation costs each now require a larger share of the family budget than food, according to consumer surveys by the Bureau of Labor Statistics. Child care has become another significant expense.

The official poverty measure is applied identically to people throughout the continental United States - even though costs of living and average incomes vary widely. Alaska and Hawaii are assessed differently. Taxes and medical costs aren't considered; neither is the value of government assistance such as day care vouchers or housing subsidies.

Consider the monthly budget for the family of Tarsha Moreno, a Baltimore single mother with a full-time job - who showed up at a Towson food bank recently for help with food and her electric bill.

Moreno, 34, earns $20,800 a year working for a Hunt Valley collection agency - $3,750 more than the 2000 poverty amount for her household of four.

After taxes and other payroll deductions, Moreno nets about $1,300 a month. She spends $420 for her two-bedroom apartment in Northeast Baltimore; $150 for child care (the rest is subsidized); $140 for electricity. Although she receives some food stamps, she spends $175 of her wages on food - plus $120 to pay off a loan and $50 for diapers.

That leaves less than $250 each month to pay for her hour-long commute to work on public transportation five days a week, her phone bill, laundry, clothing, and household items for her two teen-agers and her 1-year-old. Moreno has not been receiving child support.

Although her children are covered under the Maryland Children's Health Insurance Program, Moreno has no medical insurance. Nor does she have a bank account.

"The system is backwards," Moreno said. "What happened to the people that's already working? Where's the money for the household stuff? Trash bags? Toothpaste?"

Change proves elusive

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