The method to mea­sure poverty in the U.S. is very out­dated. An alter­na­tive method to mea­sure poverty has long been advo­cated by aca­d­e­mics, and is only now being taken seri­ously by the US gov­ern­ment. Pres­i­dent Obama has said he would like the gov­ern­ment Cen­sus to use the method as part of a poverty reduc­tion plan.

The new method­ol­ogy takes into account other expen­di­tures a fam­ily has to make like health, trans­porta­tion and other essen­tials. It also counts non-income assis­tance such as food stamps and medicare. The old method only used food as an expen­di­ture and cash as income.

We have a look today at how the new methodt would effect poverty rates in the U.S.. It would mean a huge increase for the elderly, while a small drop for sin­gle moth­ers. From this Asso­ci­ated Press story, reporter Hope Yen crunches the numbers.

The over­all offi­cial poverty rate would increase, from 12.5 per­cent to 15.3 per­cent, for a total of 45.7 mil­lion peo­ple, accord­ing to rough cal­cu­la­tions by the Cen­sus Bureau. Data on all seg­ments, not only the elderly, would be affected:
C
_ The rate for chil­dren under 18 in poverty would decline slightly, to 17.9 percent.

_ Sin­gle moth­ers and their chil­dren, who dis­pro­por­tion­ately receive food stamps, would see declines in the rates of poverty because non­cash aid would be taken into account. Low-income peo­ple who are work­ing could see increases in poverty rates, a reflec­tion of trans­porta­tion and child-care costs.

_ Cities with higher costs of liv­ing, such as New York, Chicago and San Fran­cisco, would see higher poverty rates, while more rural areas in the Mid­west and South might see declines.

_ The rate for extreme poverty, defined as income falling below 50 per­cent of the poverty line, would decrease due to hous­ing and other non­cash benefits.

_ Immi­grant poverty rates would go up, due to trans­porta­tion costs and lower par­tic­i­pa­tion in gov­ern­ment aid programs.

The changes have been dis­cussed qui­etly for years in aca­d­e­mic cir­cles, and both Democ­rats and Repub­li­cans agree that the decades-old White House for­mula, which is based on a 1955 cost of an emer­gency food diet, is outdated.

The cur­rent cal­cu­la­tion sets the poverty level at three times the annual cost of gro­ceries. For a fam­ily of four that is $21,203. That cal­cu­la­tion does not fac­tor in ris­ing med­ical, trans­porta­tion, child care and hous­ing expenses or geo­graph­i­cal vari­a­tions in liv­ing costs. Nor does the cur­rent for­mula con­sider non­cash aid when cal­cu­lat­ing income, despite the recent expan­sion of food stamps and tax cred­its in the fed­eral eco­nomic stim­u­lus and other gov­ern­ment pro­grams. The result: The poverty rate has var­ied lit­tle from its cur­rent 12.5 percent.

Like

Unlike