Episode 487: The Trouble With The Poverty Line

Sep 22, 2013
Originally published on September 20, 2013 8:48 pm

According to the government, there are 46.5 million Americans who live below the poverty line. In other words, that's how many people are officially poor. But pretty much everyone who studies poverty agrees: The way we arrive at this figure is completely wrong.

On today's show, we figure out how we got here, why still measure poverty in a way that so many people agree is wrong, and how could we do it better.

For more, see our stories:

* A College Kid, A Single Mom, And The Trouble With The Poverty Line

* The Poverty Rate Ignores Programs That Fight Poverty

Music: Local Natives' "Wide Eyes." Find us: Twitter/ Facebook/Spotify/ Tumblr. Download the Planet Money iPhone App.

Copyright 2016 NPR. To see more, visit http://www.npr.org/.


I met this woman named Marion Matthew at a food pantry in the Bronx. She's a single mother raising a teenage son.

MARION MATTHEW: I work 12-hour shifts. I'm a home health aid. On a regular basis, I work like 52 hours, but it's not enough.

FESSLER: She earns less than $23,000, and that's in a good year. Marion lives in subsidized housing. She gets food stamps and other help, but she's struggling.

MATTHEW: I went in my checking account yesterday. I had $86. I don't have anything.

FESSLER: Marion considers herself to be poor, but the government doesn't. The government has an official poverty measure and under it Marion Matthew is not poor.


But according to the government, this guy is.

RICO SACCOCCIO: I'm Rico Saccoccio. I'm from Cheshire, Conn., and I am going into my junior year at Fordham University here in the Bronx.

BLUMBERG: Now, Saccoccio is a struggling student. He and his family are not rich. He makes about $8,000 a year doing odd jobs. His off-campus apartment sometimes doesn't have hot water, so he has to heat it up in the microwave to wash his hair. He survives on a diet of egg whites and bagels, but he's pretty sure this isn't a permanent state.

SACCOCCIO: I really don't think of the, quote, unquote, "poor college kid" as actually somebody who is in poverty. It is temporary, and it is a temporary investment. And you don't have to live like you do in college after you leave school.

FESSLER: According to the government, there are 46.5 million Americans who are officially poor, but pretty much everyone who studies poverty agrees that the way we arrive at this figure - it's completely wrong. And they've agreed about it for decades. Back in 1995, Congress commissioned a report that said the poverty measure didn't really measure poverty very well.

BLUMBERG: And yet so much rides on this flawed poverty measure whether or not you qualify for Medicaid, for food stamps, for subsidized housing. It's all tied to the poverty measure. Hundreds of billions of dollars in federal aid are also tied to it. How much schools get for lunch programs or other education funding - it all has to do with how many people the government considers to be officially poor.

Hello and Welcome to Planet Money. I'm Alex Blumberg. And I'm joined today by NPR's Pam Fessler. Pam, you are NPR's poverty correspondent. You're hanging out with us here at Planet Money for a few months. We're very excited to have you here.

FESSLER: And I'm very excited to be here.

BLUMBERG: This is your inaugural podcast. So I think maybe you should do the honors.

FESSLER: On today's show, we're going to look at how we got here, why we still measure poverty in a way that so many people agree is wrong and how we can do it better.

BLUMBERG: That was really good. Have you been practicing in the mirror?



BLUMBERG: So the government's poverty measure does include middle-class college kids from Cheshire, Conn., and does not include struggling single parents in subsidized housing with 86 bucks in the bank. So let's start by talking about how did we arrive here at such a flawed measure in the first place?

FESSLER: Well, it all started with one woman, and her name was Mollie Orshansky. She worked in the Social Security Administration more than 50 years ago, and in 1963, she was given an assignment. She was asked to do this research project, and it was called Poverty as it Affects Children.

BLUMBERG: Now, this was around the time that poverty was entering the national discourse in a big way. President Kennedy had campaigned in West Virginia in 1960 and been shocked by the conditions he observed there. Several years later, Michael Harrington's book about poverty "The Other America" was published and went on to become a huge bestseller.

FESSLER: But when Orshansky went to do her report, there was a big problem. There was no agreed upon definition of poverty or a way to actually measure who was or wasn't poor. So Mollie Orshansky, who was a very resourceful economist, came up with her own measure. And she based it on something that the Department of Agriculture did. And that was they had this nutrition guideline. It was something called the Thrifty Food Plan. It was basically the minimum amount of food the government said a family would need to survive. So Orshansky took the cost of that food plan for a year, and she multiplied it by three.

BLUMBERG: She multiplied by three because at the time, people spent about a third of their income on food. So Orshansky thought if your income is at least three times what your food costs are, then you're making enough not to be considered in poverty. She took this measure she came up with, used it in her research, and that might have been the end of the story except for what happened next in 1964.

FESSLER: President Lyndon Johnson declared a war on poverty, and the government needed a way to measure the thing that they were fighting, so in the end, they went with Orshansky's formula. And they came up with the poverty line. Fall below the line you're poor, above it - you're OK. The line has been adjusted for inflation since, but nothing else about that formula has changed since the day Orshansky came up with it.

BLUMBERG: Think about that, nothing. It's been a half century. Lots of other things about the way we live today have changed significantly. We spend a lot less of our money on food. We now spend about a sixth over income instead of a third. Back when Orshansky was coming up with her measure, food was just more expensive. So it made sense to base a poverty measure around access to food, since hunger was a big part of poverty. Today, of course, there's still hunger, but it is not nearly as widespread as it was in the '60s. Instead, other costs have increased, things like childcare, medical expenses, commuting costs.

FESSLER: For Marion Matthew, the single mother in the Bronx, a big expense is her subway card.

MATTHEW: Now that is over $100 'cause I ride there monthly.

FESSLER: In fact, what it means to be poor in the U.S. is something entirely different today

FESSLER: than it was in the 1960s. Marion talked about this in a way I've heard from other inner-city mothers, especially those who have teenage sons. She has expenses that some people might think of as frivolous. But to her, they're necessities.

MATTHEW: You've got to worry about making sure his shoes, you know - his sneakers. That's what they wear out. That gym and that basketball and la, la, la. And then he likes that games and the computer that keeps him out of the street and keep him out of trouble.

FESSLER: Marion Matthew lives in a high-crime neighborhood in the South Bronx, the kind of neighborhood where bad things can happen to kids on the street. Her whole goal is to keep her son safe and on track to get him through high school and college. And that means buying stuff to keep him busy.

MATTHEW: Hey, that's the point. That was the goal. Keep him home. Keep him busy. Occupy his time. He didn't know and I remember paying for him to go to karate classes. I remember paying for him to go to swimming classes.

FESSLER: Clearly, a poverty measure developed in 1963 is not going to capture Matthew's world.

BLUMBERG: And so, not surprisingly, many people are now looking at ways to improve the way we measure poverty. In fact, the government itself is developing an alternate measure. It has not replaced the official rate, but it tries to be more accurate. It takes into account where you live, an expensive place like New York or an inexpensive place like South Dakota. And also it gets a more accurate picture of what you're actually living on. It includes things like food stamps and subsidized housing as income.

FESSLER: But other experts say let's move beyond just looking at income, that maybe a better way to measure poverty is to look at what kinds of hardships people face. Can they keep the lights on? Do they avoid going to the doctor because they don't have enough money?

BLUMBERG: And then there are people who are going even further than that saying essentially it's 2013, people. We're one of the richest countries in the world. Can't we aim a little bit higher than just finding out if people can keep the lights on or not? Let's focus on overall quality of life. Let's not just look at whether people can survive, but whether they can thrive.

FESSLER: We talked to one of these people, Julie Rusk. She works for the city of Santa Monica in California. And she's leading an effort there to come up with what the city calls a well-being index. They're developing a measurement system that will ask about a lot of things besides economics, things like health and something that she calls social connectedness.

JULIE RUSK: Do you have five people you can call in an emergency? And that's considered a proxy for are there people in your life who are there for you if you need them? And do you know how to reach out to them and get that kind of help? So it could be some of those kinds of things.

FESSLER: And, Alex, there are a lot of efforts like this, like the one that's going on in Santa Monica. In England, for example, they asked people not only do you have a warm coat or shoes, but also can the parents have a date out once a month without the kids? The country of Bhutan has what it calls a gross national happiness index, where they literally try and find out how happy their citizens are.

BLUMBERG: And it seems pretty likely that gathering data like this will paint a more accurate picture of the lives that people are leading. But when I hear about stuff like this, my mind always goes to, OK, once you know that - I don't know - say, 25 percent of the population feels disconnected from their community, what do you as a government do about that? If not enough citizens can get away for date night, should the government intervene in some way with - I don't know - some national babysitting service or something? And what should a government do if its citizens are unhappy and what can it do? You know unhappiness is a pretty personal thing.

FESSLER: Well, I think what most of the people who are working on these measures would say until you really know what the problems are, until you actually measure them, you don't know what the government should be doing.

BLUMBERG: So until one of these alternate measures becomes the official measure, we are stuck with Mollie Orshansky's formula from 1963. It's unclear exactly what she would think of all this. She died at age 91 in 2007. But one thing we do know - she was not a fan of how popular her very simple formula had become. She once wrote this, quote, "the best that can be said of the measure is that at a time when it seemed useful, it was there."


LOCAL NATIVES: (Singing) For to see it with my own eyes, For to see it with my own eyes.

BLUMBERG: Pam, you know how to do this?

FESSLER: (Laughter) I have no idea.

BLUMBERG: (Laughter) OK. All right. Repeat after me...

FESSLER: Help me through.

BLUMBERG: Repeat after me. As always...

FESSLER: As always...

BLUMBERG: You can find us - now I forgot. As always we want to hear what you thought of the show.

FESSLER: We want to know what you thought of the show.

BLUMBERG: You can email us at planetmoney@npr.org.

FESSLER: You can email us at planetmoney@npr.org.

BLUMBERG: You really sold it. Or, of course, you can find us on Facebook, Twitter, Spotify and definitely, definitely check out our Tumblr seedtoshirt.tumblr.com. That's Tumblr spelled T-U-M-B-L-R. Leave out the E, people. It has updates on all the stuff that we've been doing on our T-shirt project. You can find photos from Cartagena and Bangladesh and all sorts of beautiful pictures of cotton. It's all right there - seedtoshirt - all one word - .tumblr.com. I'm Alex Blumberg.

FESSLER: And I'm Pam Fessler.

BLUMBERG: Thanks for listening.

FESSLER: Thanks for listening. Transcript provided by NPR, Copyright NPR.