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Poverty: It's worse than you think

Remember how the New York Times said the other day the Census Bureau's new, fuller accounting of poverty would likely reduce the poverty rate in America? Remember how I bought it?

I was wrong:
There were 49.1 million poor using the SPM definition of poverty, more than the 46.6 million using the official definition of poverty with our universe. For most groups, SPM rates are higher than official  poverty rates.
So that's embarrassing.

The Times' logic wasn't crazy: By adjusting poverty estimates to include more than cash income—things like food stamps and other government-based assistance, and adjusting for regional cost-of-living differences—it seemed likely that the poverty rate would come down. What's a welfare state for, after all?

But the new estimate also improves on the older count by more fully reflecting how people must spend their money. The official definition of poverty from 1964 to this year reflected the cost of food for a small family; the new measure also includes things like taxes, work expenses, child care costs, and out-of-pocket medical bills. On, roughly, the necessities of life—not frivolities.

And it turns out when you actually have to factor in the costs that people have to pay to actually be productive members of society, the poverty rate goes up. This shouldn't be a surprise. (Those medical costs, actually, take up a huge chunk of the bill—which I, about to have my third surgery of the year tomorrow, find not even mildly surprising.)

As Kevin Drum points out, this new measure would be more useful if we had a sense of the trend over time. The country has grown more urban over time, and cities generally cost more to live in than rural areas—they also have more job opportunities—so I wouldn't be surprised to see poverty rates track with the citifying of the nation. It would also be interesting to see what the '90s-era welform reform bill did to these numbers.

Final thought: One conservative line of thought is that if poor people would just get married and have babies, they'd be more likely to enter the middle class. I think that confuses correlation with causation. The new Census measure seems to view kids, economically at least, as a drain on the family resources. It's a good reason not to view everything in economic terms, but I also can't think of any way in which my 3-year-old son actually adds to my income. The new Census figures suggest that kids are less impoverished because of welfare-state programs—and the new methodology suggests not that poor people can escape poverty by making babies, but that people who have escaped poverty are more free to do so. In any case, this report should be fodder for a whole new round of debates.


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