Recalculating the USA’s Poverty Rate

If we use a scalpel instead of an ax in dissecting the poverty rate in the USA, we get a different but, sadly, grimmer picture:

The poverty rate among older Americans could be nearly twice as high as the traditional 10 percent level, according to a revision of a half-century-old formula for calculating medical costs and geographic variations in the cost of living.

The National Academy of Science's formula, which is gaining credibility with public officials including some in the Obama administration, would put the poverty rate for Americans 65 and over at 18.6 percent, or 6.8 million people, compared with 9.7 percent, or 3.6 million people, under the existing measure….

The overall official poverty rate would increase, from 12.5 percent to 15.3 percent, for a total of 45.7 million people, according to rough calculations by the Census Bureau.

What was wrong with the current way of calculating the poverty rate?

The original government formula, created in 1955, doesn't take account of rising costs of medical care and other factors….

The current calculation sets the poverty level at three times the annual cost of groceries. For a family of four that is $21,203. That calculation does not factor in rising medical, transportation, child care and housing expenses or geographical variations in living costs. Nor does the current formula consider noncash aid when calculating income, despite the recent expansion of food stamps and tax credits in the federal economic stimulus and other government programs. The result: The poverty rate has varied little from its current 12.5 percent.

Just so our conservative friends don't think that the new way of calculating the poverty rate is a vast liberal conspiracy designed to increase welfare rolls and besmirch the image of the USA as a beacon of prosperity for all, the new way makes for some happier results:

The rate for children under 18 in poverty would decline slightly, to 17.9 percent.

Single mothers and their children, who disproportionately receive food stamps, would see declines in the rates of poverty because noncash aid would be taken into account….

The rate for extreme poverty, defined as income falling below 50 percent of the poverty line, would decrease due to housing and other noncash benefits….

…. more rural areas in the Midwest and South might see declines.

But, alas, the myth that the USA is a beacon of prosperity for all is just a myth. The new rate does make the poverty rate of other demographic groups look bleaker:

Low-income people who are working could see increases in poverty rates, a reflection of transportation and child-care costs.

Cities with higher costs of living, such as New York, Chicago and San Francisco, would see higher poverty rates….

Immigrant poverty rates would go up, due to transportation costs and lower participation in government aid programs.

The truth is often such a pisser.

Related articles by Zemanta

• America's most stressed-out cities (msnbc.msn.com)
• Number Of Poor In U.S. Likely Increased By 1.5M Last Year: Report (huffingtonpost.com)
• GOP Still Pushing "Screw The Poor" Strategy In Health Care Reform (oliverwillis.com)