http://www.npr.org/templates/story/story.php?storyId=112641330
In New York
City, Poverty Defined In New Terms
by Pam Fessler, September 10, 2009
New census figures Thursday are expected to show that the poverty rate rose
in 2008. But the government still measures poverty the same way it did more
than 40 years ago, and many experts think that gives an inaccurate measure of
what's going on.
New York City developed a new measure last year based on recommendations
by the National Academy of Sciences that takes into account expenses such as
child care and health care costs. The result, according to backers of the new
formula, is a more realistic picture of today's world. They're pushing the
federal government to make a similar change.
Living At The Line
It's not easy to define who is or isn't poor.
Take Sandra Killett, a divorced mother of two, who lives in Harlem. Killett
recently got a job at a foster care and adoption agency. It pays $29,000 a year
— which puts her well above the federal poverty line. But Killett — a very
upbeat New Yorker — is still struggling.
"When you're in a crisis with your family and you don't have the
financial means to resolve that, I call that poverty," says Killett.
In fact, she isn't doing all that much better than when she was unemployed
and eligible for more government benefits.
"You know, you get the job, and it's like, 'Oh boy, breathing room.'
And so I said to my son, 'Well, you know, it's still tight. It ain't tight
tight,' " Killett says.
Killett lives in one of the most expensive cities in the world, but the
federal poverty measure doesn't take that into account. It's the same whether
you live in New York or North Dakota.
Killett isn't considered poor by federal standards, in part, because the
poverty line was created back in the 1960s. At the time, Americans spent about
a third of their income on food. So the government simply took the cost of a
basic food plan and multiplied it by three. Since then, the poverty line has
been adjusted for inflation, but that's it — even though Americans today spend
far less of their income on food, and far more on other things, such as health
care.
"We quickly realized that we needed a more up-to-date and accurate
measure," says Linda Gibbs, New York City's deputy mayor for health and
human services.
Gibbs says the "aha" moment came when the city found a new way to
help low-income residents take advantage of something called the earned income tax credit — a significant benefit for the
poor.
Gibbs says Mayor Michael Bloomberg was excited at the prospect of using the
tax credit and asked Gibbs how much the change would reduce poverty in New
York.
"And I had to say, well, not at all," says Gibbs. That's because
the earned income tax credit is not included as income in the federal poverty
measure.
The official poverty rate only looks at income before taxes.
So New York City decided to do what many experts are pushing the federal
government to do — change the way it measures poverty to better reflect today's
world.
How It Works
Killett uses her cell phone to keep track of her 16- and 14-year-old sons.
For her, a cell phone is a necessity. And New York agrees. It includes the cost
of phones, as well as other utilities, in calculating its poverty line. It also
includes basic housing, food and clothing costs.
It compares that amount to a family's after-tax income, plus the value of
any government benefits such as food stamps or housing. Killett lives in a
two-bedroom apartment where her rent is subsidized. She pays $600 a month, but
the going rate is more than twice that amount.
Then, the city subtracts medical costs in calculating poverty. Killett
checks her records to see how much is taken from her paycheck for premiums:
almost $7,000 a year, in addition to other out-of-pocket health expenses.
Killett doesn't pay to commute — she walks to work — but commuting and other
work-related costs are also taken into account in New York's poverty measure.
That makes a lot of sense to Antonia Santiago, a single mother of three.
Santiago drives between her Manhattan job and her Brooklyn home. The commute
takes a slice out of her paycheck.
"If I just go straight to work and straight home, I spend about $60 a
week. So about $240, round it up to $250 in gas alone," she says.
Santiago drives because her children get free day care right near her job.
She used to pay more than $150 a week for child care. And child care is another
expense New York looks at in determining poverty. Santiago's $36,000 salary
puts her well above the federal poverty line of $22,000 for a family of four.
Still, she just filed for bankruptcy, so she doesn't understand why she isn't
considered poor. [Story continues after chart]
New York City's measure of poverty differs from the U.S. government's
methodology in several key ways:
New York's formula results in a higher poverty line than the Census Bureau's
formula — usually by at least a few thousand dollars.
|
Federal Poverty
Thresholds For 2008 |
||||||
|
Size of Family |
Number of
Children Under 18 |
|
||||
|
None |
One |
Two |
Three |
Four |
|
|
|
1 |
$11,201 |
|
|
|
|
|
|
2 |
14,417 |
14,840 |
|
|
|
|
|
3 |
16,841 |
17,330 |
17,346 |
|
|
|
|
4 |
22,207 |
22,570 |
21,834 |
21,910 |
|
|
|
5 |
26,781 |
27,170 |
26,338 |
25,694 |
25,301 |
|
Families with 1 and 2 people are under age 65.
Source: U.S.
Census Bureau
Because New York's alternative measure is based on 2006 data, it is difficult
to compare poverty thresholds for New York City to the latest federal numbers.
|
Poverty Thresholds
For NYC, 2006 |
||||||
|
Number of Adults |
Number of
Children Under 18 |
|
||||
|
None |
One |
Two |
Three |
Four |
|
|
|
1 |
$12,114 |
18,280 |
21,702 |
24,906 |
27,941 |
|
|
2 |
17,081 |
23,006 |
26,138 |
29,116 |
31,969 |
|
Source: The
New York City Center For Economic Opportunity (PDF)
[Photo] Pam Fessler/NPR Antonia Santiago and her son, Maddy, in their Brooklyn, N.Y., home. Santiago's $36,000 salary puts her well above the federal poverty line even though she considers herself poor.
Santiago and her children, ages 7, 10 and 16, share a two-bedroom apartment
in what she says is not the "nicest area" of Brooklyn.
The building's elevator smells faintly of urine, and her apartment is dark
and sparsely furnished. But paying just $800 a month in rent helps Santiago to make
ends meet.
"I consider myself to be poor, because once I pay rent, then I come
home, I have to pay bills. I mean, I don't have the little luxury amenities, as
far as like washer-dryer. Even though it sounds minor, it all adds up,"
Santiago says.
'Constituency For Inertia'
Rebecca Blank, undersecretary for economic affairs at the Commerce
Department, which produces the federal poverty rate, admits that the measure
answers only a limited set of questions. For example, she says the figures show
how job-related income fluctuates — important in a recession.
"What this won't show you, which is quite important, is the extent to
which federal programs might buffer the loss of cash income. So some people who
lose their jobs are going to get more food-stamp income. Some of them are going
to be able to claim more earned income tax credit income," Blank says.
Blank says her agency is trying to find better ways to analyze how those
programs affect poverty, and the Census Bureau does produce some alternative
poverty figures used primarily by researchers. But Blank doesn't expect the
official measure to go away soon. It's used to determine eligibility for
programs, such as Medicaid. And changing it is not only complicated, but
political. There are bound to be winners and losers. New York's alternative,
for example, produced a lower poverty rate for single-parent families with
children, who generally receive more government benefits, and a higher rate for
the elderly, who tend to have high medical expenses.
"There's a big constituency now for inertia on this thing," says
Nicholas Eberstadt, a researcher at the American Enterprise Institute.
Eberstadt says everyone wants to know how changing the formula affects them.
As a result, most of the proposals to update the measure, at least initially,
would not affect eligibility for programs but would be used instead — as in New
York — to help shape policy. There are bills in Congress calling for an updated
poverty measure, and the Obama administration has expressed some interest in
making a change. Eberstadt, who says the measure would be more accurate if it
focused on consumption rather than income, thinks something needs to be done
soon.
"I'm very worried that our existing poverty rate is a broken compass,
and it's just going to misguide us — and now, of all times, while we're in the
middle of a big global economic crisis. We need to have good instrumentation to
inform us about who's in need," Eberstadt says.
Killett couldn't agree more.
"I'm so confused about what's poor and what's not poor," Killett
says. "And I have to keep going back and saying, 'If you knew your basics
were covered, maybe I wouldn't consider myself to be poor.' "
But she knows that for her, and many others, they're not covered — no matter
what the official numbers say.