The US Department of Health & Human Services just released their poverty guidelines for 2011. These guidelines provide the federal government’s ruling on who is living in poverty and who is not living in poverty for the next year. According to these calculations, a family of four needs an income of at least $22,351 to live above poverty.
Federal poverty definitions have a poor reputation. They are often ridiculed for their detachment from reality and underestimation of true need. In defense of the federal government, quantifying one definition of poverty is difficult, if not impossible. Most people agree that a family of four with an annual income of $22,351 (technically above the poverty guideline) would have a difficult time providing the basic necessities of life--including rent, food, utilities, transportation, medical care, etc. So how does the government calculate the official measure and how can it be improved?
Understanding how it's calculated: For a good understanding of how the federal government calculates poverty, check out this link provided by Wisconsin's own Institute for Research on Poverty: IRP Page on Poverty Measures. The information provided on this page about Mollie Orshansky's formula, which is still the basis of the federal poverty measure, is particularly interesting.
Efforts to improve the measure: Efforts to create a "supplemental poverty measure" or supplement to the current formula, have been in the works for a few years. This initiative seeks a more accurate, responsive measure of poverty that captures things like cost of living adjustments between regions, healthcare costs, changes in food prices, transportation costs, etc. For more information on these efforts, check out this link: Commerce Department on Supplemental Poverty Measure.
If you're interested in more research on how to measure poverty, the US Census Bureau has a useful page on the latest research: Latest Supplemental Poverty Measure Research
Rereading this post so far, I recognize that this sounds like an academic exercise...something that may be interesting to discuss, but why should we invest time, resources, and worries into this issue? After all, if people are in need, why worry about if they fall above or below a precise income level?
Well, developing an accurate poverty measure would ensure that the true level of need in communities is not hidden by an antiquated formula. On a practical note, an accurate poverty measure will help inform budgetary decisions made by elected officials by showing the true scope of need and a better understanding of how policies impact low-income households.
So how do you define poverty? Any thoughts on what a supplemental poverty measure should capture?
Dave Celata
Intergovernmental Affairs & Research Manager
Social Development Commission