Modernizing the Way We Measure Poverty

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This month, the US Census Bureau will be releasing key poverty information from two different data sets, the Current Population Survey (CPS, to be released this Thursday, 9/10) and the American Community Survey (ACS, coming on 9/23). WCCF and a zillion other organizations will be examining the data upon its release and seeking to tell the story behind the numbers. The CPS data is good for identifying national trends over time and includes good information on health care coverage, while the ACS offers more detail on local conditions and breaks poverty down by race and other demographic characteristics. But while the Census Bureau provides a wealth of data based on current measures of poverty, there is a problem. The very method currently used to gauge poverty is hopelessly out of date, and does not accurately reflect the big changes that have taken place in key household expenses and income sources over the years.

A number of improvements in the poverty measure have been proposed in recent years. Last month, Sen. Chris Dodd (D-Connecticut) reintroduced legislation that would modernize the way the poverty threshold in the United States is calculated. The Measuring American Poverty Act would direct the Census Bureau to develop a poverty measure based on a more realistic assessment of the costs of food, clothing, shelter and other basic necessities. The new measure would also take into account certain unavoidable expenses such as out-of-pocket medical costs and work-related expenses like child care. In addition, the new formula would factor in government programs like the Earned Income Tax Credit, food stamps, and housing assistance. The Act would also fix another weakness in the current measure by including geographic differences in the cost of living, both between states and between urban and rural areas within a given state. The legislation, which relies on recommendations from the National Academy of Sciences, has been referred to the Senate HELP Committee (Health, Education, Labor and Pensions). A companion bill was introduced in the House back in June by Rep. James McDermott (D-WA). The House bill has been referred to the Ways and Means Committee and the Committee on Oversight and Government Reform.

WCCF thinks it is crucial that we have reliable tools for assessing poverty in our communities in order to best plan and target our use of scarce resources for combatting poverty. Poverty has a devastating effect on kids; if we are going to succeed in addressing it on the public policy level, we need to have available the best possible information about who is poor, where they live, and what types of support they need in order to improve their living situations.

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