Measuring income deprivation and poverty

[dajoki]

The Mobility Agenda
http://www.mobilityagenda.org/about
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The Mobility Agenda is a think tank in Washington, DC that seeks to stimulate and shape a dialogue to build public support for strengthening the labor market, benefiting our economy, workers, and communities.
July 17, 2008
A New Poverty Measure is Not Real Change
Margy Waller, Executive Director
http://www.mobilityagenda.org/home

This week, Mayor Michael Bloomberg proposed changing the formula for measuring poverty. Now Congressional leaders are holding a hearing on adopting a similar change at the national level.

This is all much ado about almost nothing.

At the national level, the proposal would move the bar ever so slightly, so that being poor equals household income of less than $21,818 for two adults with two children, up from the current $20,444. http://www.nyc.gov/html/ceo/downloads/pdf/ceo_poverty_measure.pdf

To be sure, the new measure would be a better reflection of the rate of material deprivation in our nation than the current one.

Today’s measure still uses a formula based on 1950s household expenditures – before housing and transportation costs went up and two-income households became the requirement, causing average child care expenses to soar. In contrast, the new measure would allow for regional reflection of differences in the cost of living and would count some federally-funded employment benefits as income for the first time.

Yet, it’s important to note that we aren’t really accomplishing what we desire with this goal – even with a more accurate formula! This is especially true since this high-level reconsideration of the formula is occurring at a time when there are numerous calls for a national goal to reduce poverty by 50 percent over the next ten years.

What’s wrong with expending a whole lot of energy on this discussion?

First, it’s only a proposal to measure income and not the other resources that communities need for a strong economy and full participation in our democracy and civil society. The proposal isn’t about quality education or clean air or reasonable housing costs or access to health care or reducing prejudice…. and so on.

Second, a if we want a measure of income, a relative measure would be a much more useful test of how well our nation is doing at making sure all residents can contribute to a strong society. As higher income earners do better, low-wage workers must see increases in income relative to the higher earners – otherwise poverty increases. As one leading paper said of a new relative measure:

Certainly, the…relative poverty measure is hard to budge…Yet, when all the research shows that it is how one's income compares to the average that drives one's health, happiness and opportunity, the target must be the right one.

Third, while we do need a better standard for measuring progress as a nation on income deprivation, we’re not likely to succeed in achieving the goal of better policy outcomes if we insist on maintaining a subsistence standard. Indeed, if the goal is based on any measure of “poverty” as it is currently understood in this country – material deprivation blamed on immoral or ill-considered personal choices – we should not expect much policy progress on efforts to strengthen our economy.

At The Mobility Agenda, we’re engaged in a conversation about developing a goal that is more consistent with widely supported policy proposals – which tend to go way beyond income deprivation and which include paid time off at work, worker voices at the table for establishing workplace policy, fair wages, and access to affordable health insurance.

When we put the poverty headline over these policy options, policymakers face real resistance created by the widely-held public beliefs about causes of poverty. We cannot change these beliefs by adopting a goal to end or reduce poverty – regardless of which formula we use to define the term.

Of course, we should adopt a more current measure of income deprivation. Mayor Bloomberg and members of the House should be applauded for their effort to make the more up-to-date but unofficial Census measure more official.

Unfortunately, we're not doing so well on the policy front as it is, and changing the formula will not have much of an impact on this reality. Progress on policy requires a different goal and new measures for testing our progress toward that goal.