New poverty calculus: Cause for alarm or political deception?

When the Census Bureau started counting food stamps and tax breaks as income, the poverty rate went up, not down. Some say the new poverty rate is a nuanced picture. Critics say its a ruse.

The Census Bureau's attempts to improve how the government measures poverty have unleashed criticism from conservatives who say the move is a bid to politicize America's class struggles.

The new Census measure suggests that the ranks of the poor – at 49 million – are 3 million larger than previously thought. The increase comes in the new way poverty is measured. The new Census report for the first time includes government subsidies and benefits such as food stamps as a part of household income, but it also factors in rising costs, such as health-care expenses. The result creates a new poverty line and a new view of who in the US is poor. 

The new threshold for poverty for family of four, for example, is $24,343, as opposed to $22,113. And the revision reveals greater poverty trends among Asians, Hispanics, whites, and the elderly, and declining poverty for blacks and children, who tend to be greater beneficiaries of food stamps.

Sociologists say the new numbers give greater nuance to the portrait of poverty in the US, highlighting the degree to which government programs are keeping struggling Americans afloat. Critics counter the numbers are engineered precisely to make government assistance appear indispensable and to pave the way for a broader redistribution of American wealth toward the poor. 

The debate comes at a time when concerns about economic justice are at a high pitch amid ongoing Occupy Wall Street protests around the country, and with Republicans claiming that the Obama administration's efforts to tax millionaires amount to "class warfare."

The Census changes are the first revisions to how the poverty rate is calculated since 1963. Since then, it has been gauged solely by cash income per household. But the new figures give a larger sense of what impact government spending has on poverty, says Timothy Smeeding, an economist at the University of Wisconsin in Madison.

"An awful lot of this is where you set the levels and calculate the level of the poverty line," he says. "But it also reflects the programs that you really care about, that we've been using to fight poverty, including public housing, tax credits," and food stamps.

This plays to attempts by Democrats and the Obama White House to bolster public support for government aid for poorer Americans, critics say, which is why Republicans, if they gain control of Congress next year, would likely work to dismantle the new poverty rate measurement by defunding it.

Critics add that that the new measures make it impossible to shrink poverty rates without ensuring that poor people's wages rise faster than middle-class wages. 

"This [new count] is a deliberate deception, a Trojan horse to smuggle the goal of income leveling in under the slogan of poverty," says Robert Rector, a poverty expert at the conservative Heritage Foundation. "The reason they call it poverty instead of income inequality is that there's not a lot of political demand for income equalization in the United States."

A large part of the increase in poverty comes from rising medical costs, the Census Bureau says, which affected the poverty rate jump among older Americans – from 9 percent under the old formula to nearly 16 percent under the new one.

The new figures, tied now more directly to cost of living, also gave insights into the geographical configuration of poverty, showing that the suburbs, the Northeast, and the West are more likely include poor people than under the old system.

But the overall rise in poverty under the new calculations clashes with other analyses of government figures. In fact, 39 states report no changes in the poverty rate even through the depths of the recent recession. An alternate set of data quoted by The New York Times last week showed that the number of poor people didn't grow by 9.7 million people since 2006, as the Census Bureau pointed out in September, but by 4.6 million people.

Moreover, critics say, the US definition of poverty – even before the change – incorporated many people who might not fit the typical image of living in poverty. 

Government data not highlighted in the new study show that 60 percent of poor Americans have cable TV, 30 percent have wide screen or plasma TVs, and a majority live in a well-kept house with more square footage than the dwelling space for a middle-class English family.

An overwhelming majority of both Democrats and Republicans in a Rasmussen poll in September said they believe that someone who has adequate housing, air conditioning, cable TV, and a computer in the house – which government data show is typical for a poor family – is, in fact, not poor.

The real poverty rate, by the measurements of Mr. Rector, who helped engineer President Clinton's welfare reform in 1996, is likely closer to 4 percent.

"When the average American thinks about poverty, they're thinking about significant material hardship, where you're living in a boarded up house and your kids are malnourished," he says. "I'm not saying they're living in luxury, but to pretend that [deprivation] is typical of someone in poverty is ridiculous. Those people are an even smaller portion of this new poverty population that's being defined."

Acknowledging the push-back, the Census Bureau added on Monday that the new measure is a "work in progress" and needs to better reflect housing and commuting costs, at least.

Yet quibbling over how to fine-tune the poverty rate misses the central point that economic stress is enveloping ever greater numbers of Americans, says Duke University economics professor William Darity. 
“There is no exact way of measuring poverty," he says in an e-mail. "The measures are contingent on how we conceive of and define poverty. Efforts to develop more refined measures have been dominated by researchers who intentionally want to provide estimates that reduce the magnitude of poverty."  

“For the Census Bureau to introduce a new measure that shows little change in the incidence of poverty in the midst of the deepest economic crisis since the Great Depression is absurd," he adds. "What we want to capture is the degree of deprivation and economic stress that is being felt by individuals and families – and certainly that has intensified greatly for the worse during the Great Recession.”