A poverty of concern about poverty

By Lee Russ

Friday, September 01, 2006 at 05:20 PM

You may have missed it, but earlier this week the government released their 2005 figures on poverty in America. Still not good. Still mostly of no concern to anyone who "counts" in the country. And the global statistics are even worse.

So here's a rundown on the stats and where they come from.

The data presented here are from the Current Population Survey (CPS), 2006 Annual Social and Economic Supplement (ASEC), the source of official poverty estimates. The CPS ASEC is a sample survey of approximately 100,000 household nationwide. These data reflect conditions in calendar year 2005.

HIGHLIGHTS

The official poverty rate in 2005 was 12.6 percent, not statistically different from 2004.

In 2005, 37.0 million people were in poverty, not statistically different from 2004.

Poverty rates remained statistically unchanged for Blacks (24.9 percent) and Hispanics (21.8 percent) between 2004 and 2005. The poverty rate decreased for non-Hispanic Whites (8.3 percent in 2005, down from 8.7 percent in 2004).

After 4 years of consecutive increases, the poverty rate stabilized at 12.6 percent in 2005 higher than the most recent low of 11.3 percent in 2000 and lower than the rate in 1959 (22.4 percent), the first year for which poverty estimates are available.

The poverty rate in 2005 for children under 18 (17.6 percent) remained higher than that of 18-to-64-year-olds (11.1 percent) and that of people 65 and older (10.1 percent) all were not statistically different from 2004.

In 2005, the number in poverty remained statistically unchanged from 2004 for people under 18 and people 18 to 64 years old (12.9 million and 20.5 million, respectively). The number in poverty increased for seniors 65 and older 3.6 million in 2005, up from 3.5 million in 2004.

2. A more detailed look at the numbers:

Total People in poverty, 2005
# people 36,950,000
% people -12.6

By Region: -# people % people
Northeast -6,103,000 -11.3
Midwest 7,419,000 -11.4
South -14,854,000 14.0
West 8,573,000 12.6

Really interesting is that the number of people in poverty went down from 2004 to 2005 in the Northeast and Midwest, the typical Democratic areas, but went up in the South and West, the typical Republican areas

3. Even more people within 25% of poverty line:

People whose incomes are 1.25 times the poverty rate or less: 49,327,000, which is 16.7% of the population

4. How the Census Bureau Measures Poverty:

How the Census Bureau Measures Poverty (Official Measure)

Following the Office of Management and Budget's (OMB) Statistical Policy Directive 14, the Census Bureau uses a set of money income thresholds that vary by family size and composition to determine who is in poverty. If a family's total income is less than the family's threshold, then that family and every individual in it is considered in poverty. The official poverty thresholds do not vary geographically, but they are updated for inflation using Consumer Price Index (CPI-U). The official poverty definition uses money income before taxes and does not include capital gains or noncash benefits (such as public housing, Medicaid, and food stamps).

Income used to compute poverty status:

Money income

-Includes earnings, unemployment compensation, workers' compensation, Social Security, Supplemental Security Income, public assistance, veterans' payments, survivor benefits, pension or retirement income, interest, dividends, rents, royalties, income from estates, trusts, educational assistance, alimony, child support, assistance from outside the household, and other miscellaneous sources.

Noncash benefits (such as food stamps and housing subsidies) do not count.

-Before taxes.

-Excludes capital gains or losses.

-If a person lives with a family, add up the incomeof all family members. (Non-relatives, such as housemates, do not count.)

Measure of need (poverty thresholds):

Poverty thresholds are the dollar amounts used to determine poverty status

Each person or family is assigned one out of 48 possible poverty thresholds

Thresholds vary according to:

-Size of the family
-Ages of the members

The same thresholds are used throughout the United States(do not vary geographically)

Updated annually for inflation using the Consumer Price Index for All Urban Consumers (CPI-U).

Although the thresholds in some sense reflect families needs,
-they are intended for use as a statistical yardstick, not as a complete description of what people and families need to live
-many government aid programs use a different poverty measure, the Department of Health and Human Services (HHS) poverty guidelines, or multiples thereof

Poverty thresholds were originally derived in 1963-1964, using:
-U.S. Department of Agriculture food budgets designed for families under economic stress
-Data about what portion of their income families spent on food

Computation:
If total family income is less than the threshold appropriate for that family:
-the family is in poverty
-all family members have the same poverty status
-for individuals who do not live with family members,their own income is compared with the appropriate threshold

If total family income equals or is greater than the threshold,the family (or unrelated individual) is not in poverty

Example:
Family A has five members: two children, their mother, father, and great-aunt.

Their threshold was $23,108 dollars in 2004. (See poverty thresholds for 2004)

Suppose the members' incomes in 2004 were:
-Mother: $10,000
-Father: 5,000
-Great-aunt: 10,000
-First child: 0
-Second child: 0
Total family income: $25,000

Compare total family income with their family's threshold: Income / Threshold = $25,000 / $23,108 = 1.08

Since their income was greater than their threshold, Family A is not "in poverty" according to the official definition.

The income divided by the threshold is called the Ratio of Income to Poverty.

Family A's ratio of income to poverty was 1.08.

The difference in dollars between family income and the family's poverty threshold is called the Income Deficit (for families in poverty) or Income Surplus (for families above poverty)

Family A's income surplus was $1,892 (or $25,000 - $23,108).

People whose poverty status cannot be determined:

Unrelated individuals under age 15 (such as foster children)
-income questions are asked of people age 15 and older
-if someone is under age 15 and not living with a family member, we do not know their income
-Since we cannot determine their poverty status, they are excluded from the "poverty universe" (table totals)

People in:
-institutional group quarters (such as prisons or nursing homes)
-college dormitories
-military barracks
-living situations without conventional housing (and who are not in shelters)

Authority behind official poverty measure:

The official measure of poverty was established by the Office of Management and Budget (OMB) in Statistical Policy Directive 14.

To be used by federal agencies in their statistical work.

Government aid programs do not have to use the official poverty measure as eligibility criteria.
-Many government aid programs use a different poverty measure, the Department of Health and Human Services (HHS) poverty guidelines, or variants thereof
-Each aid program may define eligibility differently

Official poverty data come from the Current Population Survey (CPS) Annual Social and Economic Supplement (ASEC), formerly called the Annual Demographic Supplement or simplythe "March Supplement."

History:
"The Development of the Orshansky Thresholds and Their Subsequent History as the Official U.S. Poverty Measure," by Gordon M. Fisher.

5. The global situation

Here's a sampling of information about poverty and relative wealth on the planet ("sources" can be found at the site where the link above takes you):

An analysis of long-term trends shows the distance between the richest and poorest countries was about:
3 to 1 in 1820
-11 to 1 in 1913
-35 to 1 in 1950
-44 to 1 in 1973
-72 to 1 in 1992
**source 11

A few hundred millionaires now own as much wealth as the world's poorest 2.5 billion people.
**source 14

"The combined wealth of the world's 200 richest people hit $1 trillion in 1999; the combined incomes of the 582 million people living in the 43 least developed countries is $146 billion."
**source 16

The world's 497 billionaires in 2001 registered a combined wealth of $1.54 trillion, well over the combined gross national products of all the nations of sub-Saharan Africa ($929.3 billion) or those of the oil-rich regions of the Middle East and North Africa ($1.34 trillion). It is also greater than the combined incomes of the poorest half of humanity.
**source 23

Consider the global priorities in spending in 1998
Global Priority $$
-(U.S. Billions )
Cosmetics in the United States 8
Ice cream in Europe 11
Perfumes in Europe and the United States -12
Pet foods in Europe and the United States -17
Business entertainment in Japan -35
Cigarettes in Europe 50
Alcoholic drinks in Europe 105
Narcotics drugs in the world -400
Military spending in the world 780

And compare that to what was estimated as the total additional costs we would incur in order to to provide universal access to basic social services in all developing countries:

Global Priority $$
-(U.S. Billions )
Basic education for all 6
Water and sanitation for all 9
Reproductive health for all women 12
Basic health and nutrition -13

**source 25

6. Conclusion?
Everybody gets to derive their own conclusion. To me, it looks like we have poverty of resources compounded by poverty of conscience and concern, and poverty of ideas and imagination.