Economy
In reply to the discussion: Weekend Economists Examine the Root of All Evil: February 28-March 2, 2014 [View all]Demeter
(85,373 posts)WELL, THAT'S BEFORE MY TIME...
http://www.alternet.org/economy/hiding-poor-govts-formula-measuring-poverty-dates-when-loaf-bread-cost-22-cents?akid=11544.227380.Ya9tLU&rd=1&src=newsletter962911&t=6
Why is Congress still measuring poverty based on a 1963 trip to the grocery store?
To determine who is officially poor in America, the federal government compares a familys annual cash income to a figure produced by an arcane formula that's based on the price of food in 1963, when a loaf of bread was 22 cents and a burger less than a quarter. Starting under President Lyndon Johnson, the government's official way of defining who is poor comes from calculating a minimum food budget for a family of four, tripling that figure to cover other living costs, and then indexing it annually for inflation. The result is the federal poverty level. For 2014, that threshold was $23,850 for a family of four. Smaller families can subtract $4,060 per person. Individuals making $11,670 or less in 2014 were officially poor. Many government programs, from School Lunch to the Earned Income Tax Credit to Obamacare's subsidies, decide eligibility by comparing ones annual cash income to the official poverty levelor to a multiple of it, say 150 percent.
Cities, states, advocates and academics have known for years that this measure of who is poor undercounts millions of Americans. They know that the 1960s-based formula ignores modern living costs, such as today's cheaper food but higher housing and other expenses. And they have developed alternative ways to track living costs that confirm poverty and economic insecurity of households just above the poverty line is far more widespread than Congress wants to admit. But the 1960s poverty formula persists, and not without other pernicious effects. This heads-in-the-sand approach works against Congress spending more on current programs because lawmakers aren't using numbers that honestly depict the extent of economic insecurities. And an outdated methodology pre-empts a contemporary discussion of what a basic, dignified living standard costs, based on variables such as family size, ones age and stage in life, and location.
In the 1960s, the poverty measure was a focal point for the nations growing concern about poverty, an April 2013 report by New York Citys Center for Economic Opportunity said, recounting this history and shortcomings. Over the decades, society evolved and policies have shifted, but the official poverty measure remains frozen in time. As a result it has lost its credibility and usefulness.
In 2011, our poverty line for the two-adult, two-child family comes to $30,945, the NYC agency said, after using a more sophisticated modern formula. The 2011 official [federal] poverty threshold for the corresponding family was $22,811.
...Social scientists have known for decades that the 1963-based poverty line didnt include necessities such as shelter, utilities, healthcare, childcare, clothes, commuting and other out-of-pocket costs. In 1995, Congress asked the National Academy of Sciences (NAS) to create a formula including those factors. It did, but for years that sat on the shelf. It was used for academic research but not to recalibrate government policy and actions....
SEE LINK FOR THE DISCUSSION ON SOCIAL SECURITY BENEFITS....