Tuesday, February 26, 2008

37 million destitute

37 million people in the USA live below poverty level. Wow. To get more specific, according to the Census Bureau, in 2006, there were 36.5 million people living in poverty, or 12.3% of the American population, which meant that in 2006, the population of the United States had to be around 297 million-ish.

As you know from my other post on the John Edwards speech that quoted the 37 million poverty figure, I am astounded at this number. 12.3% means that for every eight people in the US, one is living under conditions of poverty. That is staggering. This means that 1/8 of Americans are struggling to put a roof over their heads, put food on the table, put clothes on their backs, pay bills, survive.

To top it all off, the income levels for "what qualifies you as poor" seem unbelievably low. Where the hell did they come up with these ridiculously low figures? (Actually, want to see some truly stupid math? Here are the formulas.) A couple needs to be making less than $13,690 to qualify as poor! So if a couple is making a combined $15K, they are above the poverty level? Give me a break.

So let's address John Edwards and his agenda for a second. 37 million or 12.3%. Presumably, he was laying this figure at the feet of George Bush and the Conservative Republicans, right? But in 2000, the poverty figure was at 11.3%. So yes, the poverty numbers have gone up, but frankly, things have not become all that much worse in the last eight years. George Bush didn't invent poverty.

But the numbers are still way too high. 37 million destitute people is unacceptable to me.

Let's backtrack. Why was I initially so skeptical about these numbers? I just finished reading Freakonomics, which included a chapter dedicated to a discussion about lying and exaggerating with numbers and statistics.

Consider the case of homeless advocate Mitch Snyder, who claimed that there were three million homeless people in the United States, and that 45 homeless people die every second (get out your calculator...that would mean that 1.42 billion dead Americans each year, quite a trick considering there are 303 million people in total in the USA). Since Snyder was considered an expert in his field and a reliable spokesperson, journalists and pundits quoted his figures regularly, for years. After all, people, especially advocates for social causes, are presumed to be normal, not lying psychopaths! Finally, Ted Koppel brought Snyder on "Nightline" and asked him for the source for his figures. Snyder admitted that he made them up. Yes, made them up. Advocates for social programs defended Snyder's little fib and called it "lying for justice." Uh, no. It was lying to serve his own agenda.

Lest you think that lying to further your own cause only takes place on the left, consider John Lott. Lott fabricated data in a series of studies that proved that "more guns lead to less crime." And the lying doesn't only occur as outright invention or falsehood. Sometimes "scholars" quote actual statistics, but the methodology used to arrive at those statistics is flawed or the data is manipulated to fit into their conclusions.

Rea Hederman had an interesting article in the Washington Times, reprinted here by The Heritage Foundation, criticizing the US Census Bureau's criteria for measuring poverty:

The official poverty measure counts only monetary income. It considers antipoverty programs such as food stamps, housing assistance, the Earned Income Tax Credit, Medicaid and school lunches, among others, "in-kind benefits" -- and hence not income. So, despite everything these programs do to relieve poverty, they aren't counted as income when Washington measures the poverty rate.

We're talking about big bucks here. In 2002, the federal government spent $522 billion on low-income assistance programs. But $418 billion was not considered cash income and not included in calculating any family's income. Did that $418 billion do nothing to alleviate poverty?

It's time to scrap this outdated definition of income. After all, government has changed how it combats poverty: Direct-cash subsidies are out; benefits that can be used only for essentials, such as food, shelter and health care, are in. But because of how we measure poverty, progress is unreported, even if families do better.

Since 1995, the National Research Council has recommended the Census Bureau include programs that distribute in-kind benefits, such as food stamps, that are the equivalent of cash, and include the effect of taxes and tax refunds such as the EITC. And why not? Noncash assets such as houses and cars are routinely used to assess economic worth. Taxpayers consider an IRS tax refund as monetary income and income taxes as lost income. Yet the Census Bureau ignores the effect of taxes
and doesn't count the EITC refund as income.

Then there's this intersting article by Robert Rector, that supports the idea that using income as the sole criteria to measure poverty might be pointing us to the wrong families and individuals. He goes back to the Census Bureau to illuminate the living condtions of those who are included in the 37 million poor. For example, according to the Census Bureau and the Department of Energy, 43% of these 37 million destitute are homeowners. 78% own a VCR or DVD player. 75% of poor households own at least one car. 31% own 2 or more cars. One third of the poor households own a dishwasher. 25% own a large screen tv.

So what does this mean? That there are no poor people in America? That the poor people in America all own houses and flat screen tvs? No. Wrong conclusion. What it means is that when you use cash income as the sole litmus test for poverty, you are going to come up with an inflated figure that includes people who are not necessarily poor. These are not the people who can't put food on the table, clothing on their backs, roofs over their heads. Destitute people don't own cellphones and large screen tvs.

I'm not an expert on sociology, poverty or statistics, but it seems to me that the Census Bureaun needs to 1) adjust its income criteria for poverty. To say that a family of four must be making no more than $20,650 in order to qualify as poor is outrageous and ridiculous. 2) use non-cash assets in their poverty formulas. If a family owns 2 cars, a home, has central air-conditioning, a flat screen tv, and cell phones, they cannot possibly qualify as a poor family, regardless of what their cash income might be. It doesn't make sense and it does a disservice to those who are genuinely poor to include them in the figures on poverty.

I would be curious to see how that 37 million figure would adjust if these changes were applied. Until we can accurately measure poverty in America, can we faithfully address the problem?

I was in a large kosher supermarket in Five Towns last week, waiting on line to pay my groceries. A kollel couple was waiting on line ahead of me to pay for their groceries. I know they were a kollel couple because I started chatting with the wife. I admired her sapphire earrings, which I recognized from a Ross-Simons catalogue, and wished I could afford to buy them. Her husband was on his Blackberry most of the time that the cashier was ringing them up. They paid for their purchases with....food stamps. I'm sure they obtained them legally...after all they were dripping in children and I'm guessing their combined incomes were quite low, since he learned in kollel and she was a part-time school teacher.

These are two of the faces of the 37 million destitute. Is that fair?


abandoning eden said...

hmm, i could be wrong on this, but I think that even though some people with more assets can be technically below the "poverty level", that accumulated assets (savings, a house, cars, etc.) are taken into account when determining whether people are eligible for programs like welfare and food stamps.

I think you are confusing poverty for destitution/homelessness. Plenty of people who are "Poor" own homes (actually if you get a good mortgage, it is cheaper than paying rent). These homes are not in good neighborhoods though...and are falling apart. I think in parts of philadephia (like the southwest/northeast part) you can buy a house for around $20,000- which is less than I pay for 2 years worth of rent. That doesn't mean that people who live in those houses are secretly rich or something. Just that their homes suck and are in bad neighborhoods.

And owning that home is not going to help them put food on the table at the end of the day when they are supporting their family of 4 on a salary of less than $20k. If you have no savings, you still need income to pay for things like food and mortgage payment, etc.

If you are interested in reading more on the topic, there is a great book by Kathy Edin called "making ends meet" where she goes into the homes of people who are the working poor and some people who are living on welfare, and documents how it is these people are able to make ends meet on such a low income.

Oh and FYI, the heretige foundation is super right-wing, and is not considered a reliable source of anything (and newspaper coloumns aren't considered reliable either). And re: the Rector article and 75% owning a car: for most areas in the country a car is necessary to have any kind of job, since there is no good public transportation outside of big metro areas.

Oh and your estimate of the US population is correct for 2006- at http://www.census.gov/ they have current population estimates on the home page.

/sociology geekdom

WebGirl said...

The Heritage Foundation may be right-wing, but Rector's numbers all came from the Census Bureau. The tables are all there. Besides, what is the right-wing agenda here, We Hate the Poor? Anyone, right or left, who cares about poverty would want to see it accurately measured, no? Accurate, not high, not low.

I'm not the only one confusing poverty with destitution. Let me quote John Edwards again:

"One America where no child will go to bed hungry because we will finally end the moral shame of 37 million people living in poverty."

I guess my point is, 37 million people are not going to bed hungry. Politicians like Edwards are milking that figure for their own agenda and playing on the consciences of good people who would be HORRIFIED to imagine 37 million people who can't put roofs over their heads or food on their tables. I'm not saying that the people who have large screen tvs and own homes, albeit in bad neighborhoods, aren't struggling to make ends meet, and I'm not saying they don't deserve some help. But if the 37 million include that Kollel couple with their sapphire earrings and blackberry, I'm not horrified at how the country could sink that low and things just aren't that bad.

rea hederman said...

"mm, i could be wrong on this, but I think that even though some people with more assets can be technically below the "poverty level", that accumulated assets (savings, a house, cars, etc.) are taken into account when determining whether people are eligible for programs like welfare and food stamps"

That's true for food stamps. There are asset tests look to see if you have too much in savings then you're not eligible for food stamps. This is pretty bizarre and we at Heritage have pushed at changing some of these rules. For example, some retirement accounts (401Ks, IRAS) are counted as assets so someone wouldn't be eligible for foodstamps if they're doing the right thing and saving for retirement. So some of my colleagues are trying to get some retirement savings excluded from the asset tests.

I'm glad you enjoyed the editorial. Excluding the largest anti-poverty cash outlay program we have, EITC, from counting as income that reduces poverty just doesn't make sense. We've expanded the EITC to encourage work and the official statistics doesn't reflect the success of the EITC.

As you might guess, changing the definition or income or the poverty threshold seems easy but is very tough politically.

Again, I'm glad you enjoyed my piece and I plan on writing on the differences of taxes/transfer programs again in the next 2 months.
rea hederman