Counting U.S. Poverty: Is The New Way Better?

This month, the Census Bureau introduced a new method to calibrate the U.S. poverty rate. The old formula had been used for nearly half a century. To learn how the two measurements compare, and how the new guidelines might give a more complete picture of national poverty, host Michel Martin speaks with Michael Tanner of the Cato Institute and Robert Greenstein of the Center on Budget and Policy Priorities.

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MICHEL MARTIN, HOST:

I'm Michel Martin and this is TELL ME MORE from NPR News. Coming up, many men say they'd go the extra mile for their wives, but would they wade through a 10-foot pile of landfill garbage? They might if they'd accidentally thrown out her engagement ring. Oh, yeah. We'll tell you what Brian McGuinn did for love in a few minutes.

But first, here's a real segue way here. One that most experts in the matter agree on that really stinks is the way this country measures America's poor. The Census Bureau has used the same formula for nearly half a century but earlier this month, the agency introduced a new method.

It's known as the supplemental poverty measure and while it doesn't replace the old one, it does attempt to provide a clearer understanding of who is and who is not living in poverty.

We wanted to know more about this new measure and why it matters. And not surprisingly, there are different perspectives about it, so we've called two people with different views. Robert Greenstein is the president of the Center of Budget and Policy Priorities. That's a progressive think tank. He served as administrator of the Food and Nutrition Service in the Department of Agriculture under President Carter. He helped design the Food Stamp Act of 1977.

Also with us is Michael Tanner. He's a senior fellow at the Cato Institute. That is a libertarian think tank, which is to say its fellows generally believe in a minimal role for government. He's the author of several books, including "The Poverty of Welfare: Helping Others in Civil Society."

And I welcome you both. Thank you so much for coming. So, Robert, let me being with you. People from all sides of the political spectrum generally believe that the government's official poverty measure is flawed. Before we get into the nuts and bolts of the new method, what's wrong with the old one?

ROBERT GREENSTEIN: Well, the main things that are wrong with the old one, the new one does address. The old one counts all cash income, but that means that it doesn't count things that really affect your disposable income. It doesn't count food stamps. It doesn't count a check you might get from the IRS as a tax refund through the Earned Income tax credit. It doesn't count the value of a rental voucher.

And equally problematic, it ignores the fact that, if you work, some of what your wages are could be withheld from your paycheck and payroll tax. You never see them. Or that you could have to incur significant child care costs in order to hold down a job.

So the current measure is not a good measure of the disposable income that families actually have available to meet the necessities of life.

MARTIN: And the new one is better, why? Or is it better, in your view?

GREENSTEIN: The new one is better in the view of the overwhelming array of experts, frankly, across the political spectrum. Not everybody, but the overwhelming array. The new one is based on the work of an expert nonpartisan or bipartisan panel convened by the National Academy of Sciences in the '90s.

So the new one says food stamps, we counted, or an income credit, we counted. Value of housing subsidies, all sorts of benefits like that are counted. They affect your well-being. If there's not...

MARTIN: So Michael - okay. Go ahead. Finish that thought.

GREENSTEIN: And it nets out, income and payroll tax that are withheld. Child care costs you have to incur in order to work and out of pocket health care costs which, in most cases, if you're really sick, they're a necessity.

MARTIN: Michael Tanner, presumably, you believe that any new poverty measure should count for government transfer programs, subsidy programs, anti-poverty measures, etc. What about the new measure? In your view, does it address those flaws?

MICHAEL TANNER: Yeah. I think this is going to be surprising, but I largely agree with Bob on this. I think that this is a much improved measure. I think it should include non-cash benefits. I think it also needs to include the expenses that people incur if they're working and I think it needs to take into account taxes, as someone just above the poverty level is taxed back into poverty is just as poor as somebody who doesn't earn the money in the first place.

My one disagreement with it is that it essentially tags this to the increase in income so that you basically have a relative poverty measure. Basically, you could never, under this measure, wipe out poverty because, unless you decreased or lets you sort of level the income, you'd always have people poor. You're creating sort of a relative measure of poverty within it, rather than an absolute measure and I think that's a mistake.

MARTIN: I don't understand that. Help me understand that.

TANNER: Sure. Essentially, the way it is, is under this, if you doubled everybody's income, the number of poor people wouldn't change because you'd be doubling people at the top of the scale, as well as people at the bottom of the scale and you'd set up, essentially, an equivalence there so that it really wouldn't change.

MARTIN: That's interesting. Robert Greenstein, is that true?

GREENSTEIN: Well, I agree with Michael's criticism that, if you had a relative measure like that and you doubled income for everybody else, it wouldn't make sense. But that's not what this measure does. It's not a relative measure in that regard.

What it does - this is a little complicated - is it sets the poverty line at the level that equals what the household - that is, if the 33 percent point in the income - one-third households below it, two-thirds above it. It looks at what that household spends on, like, food and rent and then, at the 20th percentile, four-fifths better off, one-fifth worse off, what they spend on other basic things and you add it up and that's the poverty line.

MARTIN: But isn't that the argument that conservatives have made about this figure is that it doesn't address the qualitative aspects of poverty, which is to say that many people in this country who are described as poor have access to technology, have access to the things that alleviate hardship that are not available in other countries and so, therefore, the qualitatively doesn't really capture an experience of sort of poverty. And therefore, it's a political argument. It's a political measure designed to aid distribution. So tell me about that.

GREENSTEIN: No, no. If it's anything but a political measure. Again, it comes out of the National Academy of Science, as a totally nonpolitical panel. But the important thing about it is the part Michael and I agree on, on what it counts. You know, if you wanted to have a different measure of what the poverty line is that was simply adjusted by the Consumer Price Index each year, like the current measure is, rather than the feature Michael objects to, that's not the key issue about this poverty line.

And in terms of the issue of - are these people really in trouble - you know, if you look at the census data, half of all families with children that are below, the official poverty line, have various forms of hardship. There's food insecurity or hunger or they can't meet the rent or they live in overcrowded housing.

You know, if we were doing a poverty line 50, 60 years ago, somebody might say this isn't a good measure of poverty because these people have indoor plumbing. You know, the standards of what the basics are change over time. When you look at the actual aspects of these people's lives, most of them are in pretty tough shape.

MARTIN: What about that, Mr. Tanner? Do you think that that's true? Do you feel there really isn't that significant poverty in this country accounting for what people do consider contemporary standards, like most people in this country do have indoor plumbing, things of that sort?

TANNER: Well, I think you could go too far in either direction. I think that some conservatives who argue that there's no such thing as poverty in America because poor people have cell phones is probably an exaggeration. On the other hand, if you look at the poor in America and compare them to the rest of the world, the real 99 percent out there are generally living with far less food, clothing and shelter than the poorest in America. So I think that we can go too far in either direction.

MARTIN: You know, one of the things I'm curious about is that, if you use the new figure - it's called a supplemental measure, but for purposes of our discussion, we'll just call it the new figure. Then more people are described as poor, but the increase from the previous number is less and there are a number of other differences. For example, the new figure shows less poverty among children, but more among the elderly; less poverty among blacks, but more among Asians. Why might that be? Michael Tanner, why might that be?

TANNER: Well, I think part of it is because of who gets various types of benefits that are now being included in this and, if we're looking at the real disposable income that people have, that does shift in many ways. And I think this is very important because if we're going to talk about anti-poverty programs, we want to target those programs in ways that do the most good. I mean, we spend about $680 billion every year on means tested or otherwise anti-poverty programs in this country and have a relatively modest impact on poverty.

It may be that we're simply not targeting this money well or not spending it right. In order to know what you're doing, you've got to have good metrics in order to be able to judge outcomes.

MARTIN: Robert Greenstein?

GREENSTEIN: I really have to comment on Michael's $680 billion figure. The overwhelming bulk of that by far is the Medicaid program because health care costs a lot and poor people, like everybody else, if you get really sick and you have major operations, it costs a lot of money. That doesn't go into your pocket to help you buy food or shelter.

You know, it's interesting. Under this new alternative measure, the number of people below the poverty line is a bit higher - it's not a lot - than under the official measure. The number of people in deep poverty, below half the poverty line, is smaller than under the official measure and the reason is clear.

When you count things like food stamps, they have a big impact in lifting people out of deep poverty and the same reason is why there are fewer families with children who are poor under the new measure than the official measure.

What we see is that things like the Earned Income tax credit and food stamps lift millions and millions of children out of poverty.

MARTIN: Well, very briefly, then each of you can - and I gave the first word, I'm going to give Mr. Tanner the last word. So I'll go to you first, Mr. Greenstein. What do you hope will happen as a result of this new measure being used? What do you hope we'll learn?

GREENSTEIN: Well, I think we will better be able to measure the success or lack thereof of various kinds of policies in reducing poverty. You can't measure the impact of something in reducing poverty if you don't count it. And, hopefully, it will - and it tells us that things like the Earned Income credit and food stamps and rental subsidies are having a very large positive impact. And, hopefully, it will help us more intelligently set our path for the future in reducing poverty.

MARTIN: Mr. Tanner?

TANNER: Well, I think you've got to have good metrics if you're going to measure results and I think, too often, our anti-poverty efforts have been based on good intentions and not good science. I think that what we really need to do is look at the impact of individual programs and we're spending a lot of money and we're not significantly reducing poverty. So I think that, clearly, we've got to try something different.

MARTIN: Do you think - is it possible to reduce poverty or is that, in fact, a measurement or political question in and of itself?

TANNER: Well, I think we need to...

MARTIN: Isn't poverty, at the end of the day, a statement of values about what we think is acceptable?

TANNER: Well, that's right. What we consider poor, as I said earlier, a lot of the world would consider wealthy. But I think we want to create more prosperity in this country. We want people who are poor to have more in this country and that's something we should already do.

MARTIN: Michael Tanner is a senior fellow at the Cato Institute. He's the author of several books, including "The Poverty of Welfare: Helping Others in Civil Society." He joined us in our Washington, D.C. studios, along with Robert Greenstein, the president of the Center on Budget and Policy Priorities. He worked in the Department of Agriculture under President Carter, where he helped design the Food Stamp Act of 1977.

Thank you both so much for speaking with us.

GREENSTEIN: Thank you.

TANNER: It was a pleasure.

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