March 3rd, 2010

The White House announced yesterday that for the first time in over 40 years, the commerce department is adopting a new formula for measuring poverty. Called the “supplemental measure of poverty,” it will not replace the current official measure of poverty. However, it will factor in expenses such as  the local cost of housing, clothing, transportation, health care, and taxes, as well as benefits including food stamps and tax credits when determining the minimum subsistence income.

You may be surprised to learn that the official measure of poverty does not take into account these expenses and these benefits when setting the federal poverty line. Instead, the formula is based solely on the cost of food. It was established in the early 1960s on the premise that every family spends approximately one-third of their income on food. Thus, to calculate the minimum amount of money that an individual or a family would need to subsist upon, the formula multiplies a low estimate of the cost of food for a day times 3, times 365.

Here’s how it works: the current poverty estimate for Jefferson County calculates the minimum cost of food for an individual for one day as only $9.40.  So, by this estimation,

$9.40 x 3 x 365 = $10, 296: the federal poverty line for an individual living in Birmingham.

Federal and state governments have long recognized that this measurement is much to low for the average person to live on, and thus grant federal aid to individuals and families living on up to 200% of a so-called poverty income.

The new “supplemental” measure of poverty recognizes that food is no longer the largest expense for a family or individual (comprising only about one-seventh of low-income families’ expenses), and that the arbitrary calculus no longer tells us anything remotely useful about the cost of living with basic necessities. This measure will be applied to the 2010 census data to give us a more accurate picture of true poverty in the United States.

By the way: under the old measurement, 1 in 4 children and seniors in Alabama are living below the poverty line. An AP article asserts that the new measurement nearly doubles the number of seniors considered to be living below the poverty line. If that holds true for Alabama, then nearly half of our senior citizens may be living in poverty. Can we live with that measurement?

Posted by Robyn Hyden