Tuesday, April 5, 2011

Poverty: A Wider View

Poverty measurement as we know it began in the 1960s. Mollie Orshansky, an economist working for the Social Security Administration—but, nota bene, she had also spent thirteen years working for the U.S. Department of Agriculture—developed the first definition of a poverty threshold in 1963. In 1965 the Office of Economic Opportunity adopted the thresholds. In 1967 the Bureau of the Census began to publish poverty statistics. In 1969 the old Bureau of the Budget (BOB), forerunner of the White House Office of Management and Budget (OMB) gave this measurement an official status by a directive.

So how did Orshansky calculate what poverty meant? She used as her basis the lowest of four so-called “food plans” the Department of Agriculture had developed, called the Economy Food Plan, thus a minimum adequate diet for families of different sizes. She used the cost of this food plan as her basis. Next she multiplied the total by three to include all other expenses. That multiplier also came from Agriculture, specifically a 1955 survey conducted by the Department. It showed that the ratio of food to other expenses for families was 1:3. The concept is simple enough. If a family’s income is equal to or greater than the Economy Food Plan times three, the family is all right—not well off, but coping. If not, the family is in poverty. This approach has remained essentially unchanged, although Congress has offered, but not passed, legislation to modernize the measure in light of the much changed economy.

With this definition on hand, and data from the Consumer Price Index available for adjusting the purchasing power of food for any year, poverty data have been projected back to 1959. The graphic that follows shows the history of this threshold from 1959 through 2009. The shaded bars indicate recessions.

Three striking features of this graphic:

• A portion of the population keeps slipping in and out of poverty all depending on the economy’s performance.

• The poverty rate (percent of the population below the threshold) has hovered between 11 and 15 percent since 1966 and has never dropped lower than 11 percent. Thus that percent appears to be people experiencing hard-core poverty. That’s around 33 million people.

• The recent trends are contrary to earlier patterns. Poverty did not ease after the 2000 recession, as it eased in earlier ones. Nor did the rate improve.

The next graphic shows participants in the Food Stamps program, a Department of Agriculture venture. I’m showing data from October 2008 through January 2011. I’ve indicated total persons and households at the beginning and end of this period—and they are essentially the same as counts of persons and households in poverty. A little food helps when you’re in poverty. I am showing the average monthly value of the program for participants. The last, most recent rates were $132.81 per months for persons and $282.84 for households.

The source for the historical graphic is here, the source for the Food Stamps Program graphic (officially the Supplemental Nutrition Assistance Program) is here. The historical data from Census may be obtained here in numerical format. Select Table 2 from the list for an Excel spreadsheet.

1 comment:

  1. This look at poverty—along with the previous post—is quite sobering, particularly when you think about just how low ones earnings must be to even qualify (an odd word to use) as poor. To this, the idea that approximately one in five children in the United States is being raised in a family living at or below the poverty line, well, things have certainly gotten out of wack.

    You've chosen a good topic to look at this week as the discussions of what all and how deeply to cut federal programs goes on in Washington this week.