There may be millions more poor people in the US than you think

http://inplainsight.nbcnews.com/_news/2013/05/03/17671753-there-may-be-millions-more-poor-people-in-the-us-than-you-think?lite

By Erin McClam, Staff Writer, NBC News -
Fri May 3, 2013

t is responsible for an estimated half-trillion dollars in federal spending every year, is hated by nearly everyone who studies it and is based on an American lifestyle older than the space program.

Yet the figure known as the “poverty line” is almost certainly here to stay. That’s partly because a more accurate measure of who is poor could add millions of Americans to the rolls — something few lawmakers want to have happen on their watch.

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The poverty line was conceived by a civil servant named Mollie Orshansky who worked for the Social Security Administration and was herself the daughter of poor Ukrainian immigrants. She totaled up the cost of the cheapest three-meals-a-day plan that the federal government considered nutritionally adequate in 1963.

A decade earlier, the Eisenhower administration had calculated that the typical family spent a third of its money on food. So Orshansky multiplied by three. It was that simple. The poverty line was born.

The problem, as social scientists and at least some legislators see it, is that measuring poverty that way is not just outdated but simplistic:

The federal poverty line — $11,945 in cash income for a single adult, $23,283 for a couple with two kids — is the same whether you are poor in New York, the most expensive city in the United States, or poor in a small town in Nebraska.
It is the same whether you take transit to work or are hostage to the whims of gas prices. It is the same whether Medicaid helps you with medical expenses or you pay out of pocket. It is the same whether you receive food stamps or pay for child care.
It is the same regardless of how poor you are. For the purposes of some federal benefits, someone making a dollar below the poverty line is treated the same is someone making virtually nothing.

“There are better ways to measure,” said Robert Haveman, a professor of economics and public policy at the University of Wisconsin and an expert on poverty. “Nearly any one of them is a better indicator of true poverty than the one we use.”

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The Census Bureau, which is responsible for updating the poverty line every year to account for inflation, makes no secret of its flaws as a way to determine who qualifies as poor.

Two years ago, the bureau and the Labor Department agreed on a different way — a poverty line that accounts for medical expenses, geographic differences, the cost of shelter and clothing and other factors.

SSA History Archives

Mollie Orshansky, the civil servant who developed the poverty line, pictured in 1967. She died in 2006.

It’s called the Supplemental Poverty Measure. But it exists only for federal number-crunchers. It has no teeth.

Look into the numbers and it’s easy to see why: Using the existing poverty line, there are 45.8 million poor people in the United States, or about 15 percent of the population. Using the supplemental measure, there are 2.6 million more.

West Virginia’s poverty rate would fall about four percentage points if the supplemental measure were updated — meaning fewer federal dollars for its people. California’s poverty rate would soar, from 16 percent to 23 percent.

“Some states would get gored, and some states would be happy,” Haveman said. “You get all sorts of political opposition. It’s a gridlock.”

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