What is poverty and who is poor in America? Policymakers must stop and think about these questions as they write legislation in these challenging fiscal times.
The Census Bureau is trying to answer these fundamental questions by proposing a new and more accurate method for calculating poverty.
The new formula, called the Supplemental Poverty Measure, factors in out-of-pocket expenses and non-cash incomes that are ignored by the official formula.
So when the cost of housing, clothing, transportation, childcare and utilities are included as they should-logically we see more people struggling to make ends meet and nearing the poverty line, even if they are not “officially” poor.
The new formula places poverty in America at 16%, up from the 15% reported in September. That’s a whopping 49.1 million people. And for the first time there are more Hispanics living in poverty (28.2%) than African-Americans (25.4%). This may be explained by the low participation of immigrants and non-English speakers in public programs.
Overall, the elderly bear the largest increases in poverty, which nearly doubled to 16% for them as a result of largely medical expenses.
What’s more important about this ostensibly wonky calculation is that the exercise of rethinking who’s poor helps us understand the critical role that safety-net programs play in keeping people out of poverty. Despite the increase in destitution, the new measure shows that about 98 million Americans are lifted above the poverty line by public programs.
The lesson to learn is that government programs like unemployment benefits, Medicaid, Medicare and tax credits for the poor should be shielded from politically-driven spending cuts. If our legislators succeed in protecting these programs from insane deficit-reducing proposals, maybe next year Americans will have something to thank Congress for.