New York City has begun a concerted effort to reduce poverty.  They found that they needed a more accurate measure of income and expenditures among low-income people in order to assess whether their proposed anti-poverty policies would work.  Mark Levitan, Director of Poverty Research for the New York City Center for Economic Opportunity, was one of several researchers and policy experts who testified in favor of modernizing the nation’s poverty standard at a hearing held by the House Subcommittee on Income Security and Family Support (of the House Committee on Ways and Means) on Thursday, July 17.  The hearing sought comments on draft legislation called the Measuring American Poverty Act of 2008 (http://waysandmeans.house.gov/media/pdf/110/mapa.pdf), sponsored by the Subcommittee Chair, Jim McDermott (D-WA).
Dr. Levitan and the others testifying pointed out that the poverty measure currently in use was devised in the 1960s, and based on research then that showed poor people spent about one-third of their income on food.  The poverty standard originally developed estimated a barebones diet, adjusted for differing family sizes, and simply multiplied by three.  Since that time, apart from adjusting for inflation, very little has changed about the measure.  But much has changed in the lives of poor people.  Food is now one-seventh of a family’s budget, according to Douglas Nelson, President and C.E.O. of The Annie E. Casey Foundation, who presented testimony at the hearing.  Rising costs of housing and work-related expenses such as child care and transportation are not counted.  Neither are regional differences in costs.

Another important shortcoming in the current measure is that it does not include the value of certain public benefits such as food stamps, refundable tax credits, and housing assistance in calculating income.  As a result, when Congress increases any of these programs, the impact is never shown in the official poverty figures released every year.

Chairman McDermott’s draft bill is based on recommendations by the National Academy of Sciences for changing the way the poverty standard is derived.  The bill updates what is counted both as income and expenditure.  It also calls for regional differences in the poverty standard.  Recognizing that measuring deprivation is not a substitute for assessing what it takes to have an adequate standard of living, the bill further calls for the development of a Decent Living Standard. This higher level would likely be similar to measures such as the Self-Sufficiency Standard utilized by Wider Opportunities for Women (http://www.wowonline.org/ourprograms/fess/sss.asp), which takes into account actual costs incurred in meeting family needs.

Of great importance, the McDermott draft states that the new standard will not change eligibility for means-tested programs.  Under current practice, the Census Bureau sets its annual poverty threshold for research purposes, while the White House Office of Management and Budget establishes poverty guidelines for calculating program eligibility.  They are similar but not identical.  The new legislation would not change eligibility determination, although it may be that the new poverty measure it creates for research may eventually lead to some changes.

While researchers have pointed out flaws in the poverty measure for years, the New York City experience shows an important new impetus for making the standard more accurate.  New York is one of a number of cities or states starting to set anti-poverty goals.  Advocates have called for a federal goal as well, such as the Half in Ten:  From Poverty to Prosperity campaign (http://www.halfinten.org/index.html).  Concrete steps to do something about poverty require a gauge that shows whether those steps have the desired effect.

Chairman McDermott was impressed with the packed hearing room, but did not seem to expect quick action on this legislation.  As with much else in Congress these days, the hearing set the stage for possible changes if a new Administration seeks to make poverty reduction a national goal.

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