Next week, the Census Bureau will release its estimates of the
number of Americans who lived in poverty in 2014. The official poverty
measure is an important metric—particularly since it’s been in place for
nearly 50 years, and its measurement methodology hasn’t had major
revisions over that time. As shown in the figure below, the share of
Americans living at or below the official poverty line fell in the 1960s
and stayed within a small range over the last four decades or so,
generally rising in recessions and falling in expansions. Since 2000,
the official poverty rate has seen a lot more up than down—the poverty
rate at the end of the business cycle in 2007 was higher than at the
beginning. 2013 was the first year the poverty rate turned the corner
and saw some meaningful improvement since the start of the Great
Recession. On Wednesday, September 16, we will see whether that progress
has continued. While it would be great to see reductions in poverty
over the last year, the fact is had economic growth over the last four
decades been
broadly shared, we could have made much more progress in reducing poverty, rather than just treading water.
Poverty rate, 1959–2013
|
Actual poverty rate |
| 1959-01-01 |
22.4% |
| 1960-01-01 |
22.2% |
| 1961-01-01 |
21.9% |
| 1962-01-01 |
21.0% |
| 1963-01-01 |
19.5% |
| 1964-01-01 |
19.0% |
| 1965-01-01 |
17.3% |
| 1966-01-01 |
14.7% |
| 1967-01-01 |
14.2% |
| 1968-01-01 |
12.8% |
| 1969-01-01 |
12.1% |
| 1970-01-01 |
12.6% |
| 1971-01-01 |
12.5% |
| 1972-01-01 |
11.9% |
| 1973-01-01 |
11.1% |
| 1974-01-01 |
11.2% |
| 1975-01-01 |
12.3% |
| 1976-01-01 |
11.8% |
| 1977-01-01 |
11.6% |
| 1978-01-01 |
11.4% |
| 1979-01-01 |
11.7% |
| 1980-01-01 |
13.0% |
| 1981-01-01 |
14.0% |
| 1982-01-01 |
15.0% |
| 1983-01-01 |
15.2% |
| 1984-01-01 |
14.4% |
| 1985-01-01 |
14.0% |
| 1986-01-01 |
13.6% |
| 1987-01-01 |
13.4% |
| 1988-01-01 |
13.0% |
| 1989-01-01 |
12.8% |
| 1990-01-01 |
13.5% |
| 1991-01-01 |
14.2% |
| 1992-01-01 |
14.8% |
| 1993-01-01 |
15.1% |
| 1994-01-01 |
14.5% |
| 1995-01-01 |
13.8% |
| 1996-01-01 |
13.7% |
| 1997-01-01 |
13.3% |
| 1998-01-01 |
12.7% |
| 1999-01-01 |
11.9% |
| 2000-01-01 |
11.3% |
| 2001-01-01 |
11.7% |
| 2002-01-01 |
12.1% |
| 2003-01-01 |
12.5% |
| 2004-01-01 |
|
| 2005-01-01 |
12.6% |
| 2006-01-01 |
12.3% |
| 2007-01-01 |
12.5% |
| 2008-01-01 |
13.2% |
| 2009-01-01 |
14.3% |
| 2010-01-01 |
15.1% |
| 2011-01-01 |
15.0% |
| 2012-01-01 |
15.0% |
| 2013-01-01 |
14.5% |
2013: 14.5%
196019701980199020002010051015
2025%
Source: EPI analysis of Current Population Survey Annual Social and Economic Supplement Historical Poverty Tables (Tables 2 and 4), Bureau of Economic Analysis National Income Product Accounts public data, and Danziger and Gottschalk (1995)
The poverty measure has an important function of historical
significance, but it also has limitations. It shows how many people live
in severe economic deprivation, but that’s not to say that people who
live above the poverty line are doing well. In an admittedly
oversimplified characterization, the official poverty threshold is a
family-composition-adjusted
basic food budget in 1963 multiplied by three,
adjusted for inflation over time. The official poverty measure includes
Social Security and unemployment insurance as a form of income, but
misses some important government supports, like food stamps (SNAP) or
the Earned Income Tax Credit. It fails to take into account the fact
that the prices of some necessary items, like health care, have grown
much faster than overall inflation. It fails to change the items in the
basket of costs it measures, neglecting the cost of child care, which
became increasingly important as women entered the labor force over the
last 50 years. And, it fails to take into account for the vast
differences in the cost of living across the country.
The map below shows the poverty threshold for a two-parent, two-child
family in 2014—$24,008, everywhere throughout the country, despite the
fact that it costs significantly more to live in New York City than it
does in Tennessee.
Federal poverty threshold
Source:
EPI analysis of US Census Bureau Historic Poverty Tables “Poverty
Thresholds for 2014 by Size of Family and Number of Related Children
Under 18 Years.”
The poverty threshold is not only insufficient at capturing
differences in the cost-of-living across the country, but it is
insufficient at measuring what it truly costs to get by. EPI’s
Family Budget Calculator
measures the income a family needs in order to attain a secure yet
modest standard of living in 618 metropolitan and rural areas across the
country. The budgets are calculated by estimating community-specific
costs of housing, food, child care, transportation, health care, other
necessities, and taxes. The budgets differ by location, since certain
costs, such as housing, vary significantly depending on where one
resides. Compared with the federal poverty line, EPI’s family budgets
provide a more accurate and complete measure of economic security in
America.
Family Budget MapThe cost to secure a decent but modest standard of living for a two-parent, two-child family
The cost of living in
• • • is:
• • •per year
• • •per month
Note:
Data for all 10 family budget types and all 618 family budget areas,
including those in Alaska and Hawaii, are available via EPI’s
Family Budget Calculator.
Notably, these budgets do not include several components of what
might be considered part of a middle-class lifestyle. In particular,
they do not include any savings: There are no savings for a rainy day
(e.g., job loss or unexpected medical bills), savings for retirement
(except through Social Security payments), or further investments in
their children (e.g., enrichment activities or college savings). Thus,
these are adequate but decidedly modest family budgets—they show what it
takes to get by, but not to thrive. To show just how inadequate the
poverty threshold is compared to the real cost of living, the map below
subtracts the federal poverty threshold from the family budget for each
area across the country.
The difference between the federal poverty line and the actual cost of living for a two-parent, two-child family
The cost of living in • • • is • • • more than the federal poverty threshold.
Note:
Data for all 10 family budget types and all 618 family budget areas,
including those in Alaska and Hawaii, are available via EPI’s
Family Budget Calculator.
Source:
EPI analysis of US Census Bureau Historic Poverty Tables “Poverty
Thresholds for 2014 by Size of Family and Number of Related Children
Under 18 Years and EPI
Family Budget Calculator (Gould et al. 2015a)
This map illustrates just how insufficient the poverty threshold is
in measuring economic well-being. It takes an additional $25,106 to live
in the cheapest budget area (Morristown, Tenn.) and another $82,485
above the poverty threshold to live in the most expensive (Washington,
D.C.). In the median family budget area for this family type (Des
Moines, Iowa) a two-parent, two-child family needs an additional $39,733
to make ends meet, above the poverty line.
Reducing poverty is a low bar for policy. It’s important to
help those having the hardest time make ends meet, but it’s also
important to raise our standards and find ways to increase economic
security.
The Most Important News from the Progressive Movement brought to you by the Agenda Project Action Fund
JOURNEY FOR JUSTICE…CALIFORNIA WINS … SILENCING SONARS … TAX REFORM IN MASSACHUSETTS… VOTER REGISTRATION VICTORIES...ECONOMIC SNAPSHOT...
JOURNEY FOR JUSTICE - The NAACP has succeeded in their historic 1,000 mile Journey for Justice march, which started in Selma, Alabama and concluded on Capitol Hill in Washington, DC as participants advocated for the restoration of the Voting Rights Act. Learn more about the history making march HERE.
VOTER REGISTRATION LANDMARK - The Brennan Center for Justice is celebrating a landmark victory in California as automatic voter registration passes through the state legislature. Read their press release HERE.
BILLIONAIRES vs. TEACHERS - Brave New Films has released their latest film that shines a light on how the top 25 hedge fund managers make more money and pay less in taxes than all kindergarten teachers in the U.S combined. Watch the brief film HERE.
SNEAK ATTACK- The Free Press Action Fund is calling on Congress to stop the attacks on Net Neutrality that are hidden in the appropriations bill. Stand with the FCC’s rules on Net Neutrality by signing the petition HERE.
HISTORIC HEALTH COVERAGE GAIN- The Center on Budget and Policy Priorities has released its predictions and analysis on the upcoming Census Bureau’s estimate of the U.S population’s health coverage for 2014. See the data that shows historic health coverage gain in our country HERE.
MASSACHUSETTS TAX REFORM - Raise Up Massachusetts has successfully placed an initiative that would implement tax reform for top earners in the state on the 2016 ballot. The initiative calls for all incomes of over $1 million to be taxed at 4% higher rates. Read more information about the initiative HERE.
WEEKLY DEMOCRACY WINNER- The Democracy for All Video Challenge $1,000 winner this week is from the group Student Debt Crisis. Watch the winning video HERE.
CITIZENS UNITED IN CALIFORNIA COURT- The California Supreme Court has announced that they will hear if Proposition 49, the Overturn Citizens United Act, should be on next year’s ballot after it was initially rejected. Read more about upcoming hearing from California Common Cause, a lead organization in the fight HERE.
PROTECTION HOTLINE- Lawyer’s Committee for Civil Rights Under Law has paired up with various organizations to provide over-the-phone assistance to people who are registering to vote on September 22, National Voter Registration Day. To find out more about the hotline click HERE.
SILENCING SONARS- A huge victory for the Natural Resource Defense Council and marine animals around California and Hawaii as the U.S Navy agrees to silence their sonars that often leave marine animals deaf and at risk. Read more about the sonars that are being silenced and the effects they have on the ocean HERE.
ECONOMIC SNAPSHOT- The Economic Policy Institute has released this week’s economic snapshot analyzing the decline in labor’s share of corporate income and the $535 billion less for workers because of it. Read the publication HERE.
… From the Wonk Wire…
It’s Not Just Uber: Why the Taxi Industry Needs an Overhaul- Top Wonk Caroline Fredrickson, the President of the American Constitution Society for Law and Policy, writes about the need for both Uber and the taxi industry to comprehensively reform their structure in a way that services riders and drivers. Read her article HERE.
2015 National Fair Housing Conference, Residential Segregation- Economic Policy Institute research associate and Top Wonk Richard Rothstein joined housing policy experts to discuss residential segregation and diversity in America’s cities for the 2015 National Fair Housing Conference. Watch the discussion HERE.
American Constitution Day Symposium- American Constitution Society for Law and Policy has started a blog series discussing the Constitution written by various constitutional scholars. The blog series will run all week and first few posts can be found HERE.
