The U.S. Census Bureau’s announcement Sept. 16 that the number of Americans living below the poverty line fell between 2014 and 2015 is good news. But before we get too excited, it’s worth noting that the federal poverty line was a meager $12,000 for a single person living alone in 2015, and only $24,000 for a married couple living with two children.
To be officially counted as poor today, a family has to be much poorer compared to the typical American family than it had to be in 1963. In fact, if the federal poverty line today was set at the same place relative to median income as it was in 1963 it would be about $33,000, rather than $24,000.
In 1963, the poverty line for a family of four was 50 percent below the median family income. Today, however, the poverty line for a family of four is nearly 75-percent below the median family income.
Why hasn’t the official poverty line been adjusted over time? The reasons are largely political.
In the early 1960s, Mollie Orshansky, a Social Security Administration employee, developed working estimates of what it meant to be poor at that time. The data available to Orshansky wasn’t particularly sophisticated, or even timely. For example, she based her estimates on a food-consumption survey conducted in 1955. When the federal government started using her calculation of the poverty line in the mid-1960s, officials understood it would need to be adjusted.
But two things happened that year. First, officials in the Johnson Administration prohibited this kind of adjustment, likely in part due to concerns that the updated figures would show an increase in poverty.
Second, Richard Nixon was elected president. His budget office issued a directive making the Orshansky thresholds the “official” poverty measure, and specifying they would be adjusted for inflation only.
In 1970, Orshansky said this decision would likely “freeze the poverty line.” There have been repeated recommendations to reform the poverty measure since, but no president has been willing to revise the Nixon directive.
The Census Bureau has an alternative measure of poverty, called the Supplemental Poverty Measure, an improvement in many respects. But even this approach puts the poverty line at about $25,000 for a family of four – still too low.
Here’s a better approach: Dump the current official poverty measure and replace it with two different measures. One would be anchored to half of the typical (median) American family’s income in 2016 then adjusted for inflation over time; the other would be adjusted annually using the median income over a five-year period. This way, the poverty line won’t drift away from mainstream living standards of living over time.
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