Controversy over U.S. poverty rate continues

 

Conservative 4.5% estimate ignores reality; 45% more likely

IAntiPovertySoldiern August of 2011, Tavis Smiley and Dr. Cornel West set out on a week-long bus tour of 18 cities in 11 states to reveal how the swelling scourge of poverty has affected America across racial, cultural, and geographic lines.

 

This journey, which began on the Lac Coutre Oreilles Indiana Reservation in northern Wisconsin and ended in Memphis, Tennessee, was later showcased in a five-episode series on PBS titled The Poverty Tour: A Call to Conscience.

A few months later, Smiley and West co-authored and published The Rich and the Rest of Us: A Poverty Manifesto. Their book, while reflecting on their recent poverty bus tour, suggests that the mounting epidemic of poverty is perhaps the most perilous threat to America in the 21st Century.

At the time of both the Smiley-West tour and their subsequent book, the news media, financial analysts and scholars were pondering the latest data demonstrating that the number of Americans living in poverty was approaching 50 million. Yet in a 2012 interview with The Huffington Post, Smiley made a provocative comment that further elevated the discussion on poverty and exactly who in America is poor.

He noted that poverty is not a racial issue but rather an “American catastrophe.” He asserted that a more accurate accounting of the situation shows that around 150 million Americans are either living in or are on the brink of poverty.

The debate on whether or not the federal poverty guidelines that are used in the United States are a sound measure of poverty is as just about as old as the actual guidelines. The National Academy of Sciences suggested decades ago that these guidelines be revised. In recent years, studies by the Stanford University Center on Poverty and Inequality and the University of Wisconsin Institute for Research on Poverty have further demonstrated the inadequacy of how poverty is currently measured in America.

Likewise, instruments such as MIT’s Living Wage Calculator and the National Low-Income Housing Coalition’s (NLIHC) annual Out of Reach report illustrate just how tenuous the financial wherewithal of millions of Americans, including those considered middle class, is today. In 2013, the Oregon Center for Public Policy developed its Basic Family Budget Calculator to precisely assess what it takes to maintain economic security. This tool comes very close to validating Smiley’s claim and suggests that approximately 45 percent of Americans (140 million people) are either poor or in real danger of falling into poverty.

Regardless of these compelling figures, at least one economist has completely flipped the script regarding the actual U.S. poverty rate. Writing for Forbes in March of 2015, Tim Worstall concurs that the official poverty rate of around 15 percent is not accurate. Worstall argues instead that this rate is far too high.

He contends that the “true poverty rate” in America is a relatively paltry 4.5 percent. His argument centers around the notion that “non-cash benefits” received by those in poverty such as SNAP (Supplemental Nutrition Assistance Program) and other means of public assistance are “not counted as income when calculating who is above or below the poverty line.” Thus, in essence, he believes that the benefits received by roughly 30 million Americans are enough to lift them from the ranks of the poor.

I take issue with Mr. Worstall’s conclusions on several fronts. First of all, his ideas appear to suggest that those receiving public assistance must also be living some sort of charmed life. It absolutely goes without saying that is not the case. Public assistance programs certainly help low-income families’ access critical goods and services, but they don’t alleviate the myriad of conditions that bring about poverty in the first place.

Most importantly, his assertions are largely inapplicable to this debate as they fail to take into consideration what has already been argued in this column: that the formula for determining poverty in the United States is already woefully out of date. Developed in 1964, the formula that measures poverty in America continues to ignore geographical variances and neglects critical indicators such as housing, transportation, health care, child care and utility costs.

And while the federal poverty line is adjusted for inflation, consider that in 2015 the poverty threshold for a family of four is $24,250, which means a four-person household with an annual income slightly above that is somehow not considered poor. I believe the true poverty rate is apparent in the comprehensive research of aforementioned entities such as MIT and the NLIHC.

The MIT Living Wage Calculator demonstrates that a four-person household here in Ramsey County must earn close to $70,000 each year to achieve economic security, while the NLIHC reports that an hourly wage of more than $17 is required to afford a fair-market two-bedroom apartment in Minnesota. It is this kind of research that truly shows nearly one in every two Americans is in or near poverty.

 

Clarence Hightower is the executive director of Community Action Partnership of Ramsey & Washington Counties. Dr. Hightower holds a Ph.D. in urban higher education from Jackson State University. He welcomes reader responses to 450 Syndicate Street North, St. Paul, MN 55104.