Monday, November 7, 2011

New Poverty Standards to Show Poor Aren’t Really Destitute – They Are Just Plain Poor

Including Government Assistance Reduces Number of Poor People – Who Still Lead Lives of Quiet Desperation

One of the excuses that Conservatives make for the increase in poverty in the U. S. is that the numbers are deceptive because they do not include the income and benefits of government assistance that go to poor people.  This argument, that the poor are not really poor, is one of the rationales that high income and very wealthy people use to support cutting government programs for the poor and cutting taxes for the wealthy.

The Dismal Political Economist has addressed this issue before, and showed, pretty convincingly in his mind, that if one just looks at the income level that defines poverty that income is insufficient to provide decent housing, food, clothing and other essentials for a family.  In short, based on income levels a poor family is really, really poor.  In fact that family cannot survive without government help.

Travis Dove for The New York Times
John William Springs, a retiree who gets nearly $12,000
a year in Social Security and disability checks, is $1,300
 above the poverty threshold: officially, not poor.

But now the Census Bureau is going to produce a revised study of poverty, in which it will included government assistance.  This week

the Census Bureau releases a long-promised alternate measure meant to do a better job of counting the resources the needy have and the bills they have to pay. Similar measures, quietly published in the past, suggest among other things that safety-net programs have played a large and mostly overlooked role in restraining hardship: as much as half of the reported rise in poverty since 2006 disappears.

That’s right, if we just change the definition of poverty the rate of poverty and the number of poor people decline significantly!  We don’t need more programs, more money, more support of individuals and families whose economic condition leaves them unable to supply basic necessities, we just need to re-define them out of poverty.

One alternate census data set quietly published last week said the number of poor people has grown by 4.6 million since 2006, not by 9.7 million as the bureau reported in September. At least 39 states showed no statistically significant poverty growth despite surging unemployment, according to an analysis by The New York Times, including Michigan, New York, New Jersey, Ohio, Tennessee and Texas.

In North Carolina, poverty has risen by more than 250,000 people by official count, but stayed flat under the alternate measure despite soaring unemployment.

Wow, 5.1 million poor people are rendered not poor because of counting government assistance like the Earned Income Tax Credit, Food Stamps and other programs keeps them from malnutgrition.  They must be thrilled with this high level of income and the better life style.

Here is an illustration of how the new math works.

In Charlotte, Angelique Melton was among the beneficiaries. A divorced mother of two, Ms. Melton, 42, had worked her way up to a $39,000 a year position at a construction management firm. But as building halted in 2009, Ms. Melton lost her job.

Struggling to pay the rent and keep the family adequately fed, she took the only job she could find: a part-time position at Wal-Mart that paid less than half her former salary. With an annual income of about $7,500 — well below the poverty line of $17,400 for a family of three — Ms. Melton was officially poor.

Unofficially she was not.

After trying to stretch her shrunken income, Ms. Melton signed up for $3,600 a year in food stamps and received $1,800 in nutritional supplements from the Women, Infants and Children program. And her small salary qualified her for large tax credits, which arrive in the form of an annual check — in her case for about $4,000.

Along with housing aid, those subsidies gave her an annual income of nearly $18,800 — no one’s idea of rich, but by the new count not poor.

Congratulations Ms. Melton, you are no longer poor.  Bet you can't wait to tell them down at the Food Bank where you get your undeserved handout, or over at the Goodwill Store where you buy desiginer used clothesing or at the Country Club where you can now hang out and enjoy the good life.

An income of nearly $1,500 a month to provide housing, food, clothing, medical care, transportation and all that other non essential stuff for a family of one adult and two children, that is not poverty?  Except it is poverty, and rather close to destitution.  Don’t believe it, go to Charlotte and try it.

So no, this extra assistance doesn’t move a family out of poverty.  In Ms. Melton’s case here is what it does

“They help you, my God,” Ms. Melton said. “I would not have made it otherwise.”

Earlier this year a very Conservative Think Tank, the Heritage Foundation issued a report on poverty that described poor people as living a very nice life, with all of the comforts of the middle class.  The report received the coveted “Odie” award from The Dismal Political Economist, an award given to the most odious economic report.  Here is one author of that report with an updated comment.

While most scholars have called the fuller measure a step forward, Robert Rector, an analyst at the Heritage Foundation, argues that both census counts — old and new — sharply overstate the amount of deprivation in the United States. In a recent study, he cited government data showing many poor families had game systems like Xbox.

“When the American public hears the word poverty, they are thinking about material hardship — bad housing, homelessness and hunger,” he said. “Most of the people that are defined as poor by the government are not poor in that sense.”

Yes, many poor families have an Xbox!   Everyone feel better now.  Everyone feel we can now support tax cuts for the wealthy and benefit cuts for the poor.  Absolutely, as long as the poor have an Xbox their lives are complete.

But before anyone gets all excited about how great the life of the poor has become, there is this item from the Centers for Disease Control (thanks to the great health care/health economics site The Incidental Economist)

During 1999--2010, the percentage of working-age adults who reported that in the past 12 months they needed prescription drugs but did not obtain them because of cost was higher among those in families with low income than in families with higher income. The percentage that reported not getting needed prescription drugs increased for all income groups during the period 1999--2010. In 2010, 21.5% of those below the poverty level did not obtain needed prescription drugs compared with 3.9% among those at or exceeding 400% of the poverty level.

Well okay, now we know how an adult with two children makes it on $1,500 a month.  They skip the medicine part.

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