Last week, the U.S. Census Bureau reported that the national poverty rate declined for the first time since 2006, down to 14.5 percent. The rate was 15 percent in 2012, so it would appear that the trend is moving in the right direction. However, these numbers are misleading.
While the poverty rate did go down, the details behind this are complicated. Even with the decrease in poverty, many social disparities still remain, including that the poverty rate is still extremely high compared to prerecession levels, and black and Hispanic families still have lower median incomes than before the recession.
What’s most troubling is the fact that one out of five American children live in poverty.
Another issue is that the methods the U.S. government uses to track the poverty rate may be flawed.
The approved measure of poverty was developed about 50 years ago by Mollie Orshansky, a Social Security Administration official. Orshansky set poverty thresholds by developing a typical family budget, which was based almost entirely on food and multiplying it by three.
This measure, adjusted for inflation, is still used by the government to measure poverty today.
The problem with this method is that family budgets today are much different from family budgets in the 1960s.
The average family only spends about one-eighth of its budget on food, not one-third.
Other costs such as health care, child care and housing have gone up dramatically, but these costs are not appropriately accounted for.
The current poverty formula also assumes a national standard that does not consider different costs of living from state to state and different living styles, such as rural versus urban. In addition, variances — such as taxes, deductions and government assistance like welfare and food stamps — are not calculated into the poverty measurement.
Clearly, the government is underestimating the issue of poverty in America.
If we used the same measures developed by other industrialized nations, our poverty rate would increase by half. About 68 million Americans would be considered poor.
In 2011, the Obama administration released a new way of tracking poverty: the Supplemental Poverty Measure. As an unofficial measure released separately from the Census Bureau report, the measure accounts for government assistance and subsidized housing. It also excludes expenses such as taxes and work-related costs.
In 2012, the official measure of poverty was 46.2 million people, while the Supplemental Poverty Measure was 49.1 million. Although the measure does a better job of giving a better overall portrait of poverty, it is far from perfect.
If consumer expenditures in housing, utilities and food decline, then this measure declines as well, which can be problematic if a recession hits.
The measure gives us a better understanding of what is really happening with poverty, but it still should not be entirely relied on.
Despite an extensive effort by the federal government, poverty in America is a persistent and significant issue. The war on poverty started 50 years ago, and since then, we have spent more than $22 trillion combating poverty, and no gains have been made.
We can’t expect poverty levels to ever reach zero, but 8 to 12 percent is a realistic expectation.
To achieve this goal, we need to improve our educational system, encourage an increase in family income and create high-paying full-time jobs rather than low-wage part-time jobs.
We can’t fix poverty overnight, but we can’t even begin to solve the problem until we understand and measure it more accurately.
Nick Eagle is a UF political science and economics senior. His columns appear on Mondays.
