Let's face it: lots of things in society are outdated and the poverty rate is no exception. 51 years ago, Lyndon Johnson and his administration declared a "war on poverty." The absolute poverty line was set up to be the absolute standard of what households need to meet their basic needs. Theoretically, it sounds like a good, logical decision.
Here's why it's not:
The official poverty line came about more due to convenience rather than meticulous and thorough analysis. Economist Mollie Orshansky was working for the Social Security Administration when she developed the current basis for the the poverty rate in 1963. Orshansky decided that the poverty rate would be set at three times the cost of a basic diet because most families spent a third of its income on food and called it the "Orshansky Poverty Threshold." Her calculations came at an opportune time and the Johnson administration adopted the threshold a couple years later.
The family that the poverty line was designed around is quickly disappearing. A writer for The Atlantic found an excerpt from a report by the Social Security Administration described the ideal family living under the poverty line should be able to cut back on kitchen spendings, so long as "the housewife will be a careful shopper, a skillful cook, and a good manager who will prepare all the family's meals at home."
Despite how dated the doting housewife stereotype may be, this report is not from 1960s as you may believe, but actually from 1992. Furthermore, this type of family is no longer prominent. The poverty rate does not take into account the changing family structure or the nature of the population. Single-person households are becoming more popular, as are single-parent families. The housewife-chef-maid trope is being replaced by a hard-working, employed individual who may or may not be female. It also doesn't take into account the ages of these households. The majority of these single-person households consist of either young or elderly persons, which have extremely different spending habits.
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The threshold has hardly changed since it was adopted in 1965. It mostly has been adjusted for inflation, rather than spending habits.Whereas the average family used to spend half of the family budget in 1900 on food and clothing, they now only spend less than a fifth of the budget on those. Families now spend more on healthcare and services than food and clothes. But the poverty line doesn't reflect these consumer statistics.
The poverty rate is based on a pre-tax income and doesn't take into account non-cash benefits, such as Social Security payments. So things like housing subsidies and food stamps, which families spend like cash are ignored, even though they greatly benefit the poor.
These are only some of the problems associated with the outdated poverty line. However, it just shows how hard it is to define and measure such an abstract and broad concept as "poverty." The holes in the equation are so prominent that the Census Bureau has begun publishing a "supplemental poverty measure" or SMP, which is essentially the poverty rate but accounts for additional expenses such as the geographical cost-of-living and medical care. It also considers government benefits, such as food stamps. The number isn't that different than the official poverty rate -- it usually ends up being less than a percentage point higher.
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When a group of researchers from Columbia University applied these SMP standards to history, they found that the United States has actually done better than the original rate lets on when it comes to fighting poverty. The group also found that without these government benefits, the poverty line would have risen from 25 percent to 31 percent from 1967 to 2012 rather than falling from 19 percent to 16 percent.
Sure, 16 percent still isn't good. In fact, it's actually pretty bad. There's no doubt about it - the poverty rate needs to be reevaluated, but these numbers show the progress we've made since 1965 when President Johnson began this initiative. However, it also shows that this war is far away from being won.
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