The Poverty Rate is Just the Begining of the Story

Every year, the U.S. Census Bureau issues a report on annual poverty data from the American Community Survey. Last month, the Census Bureau reported the poverty rate for 2012 was 15%, virtually unchanged since 2011. For Oklahoma, the rate was 17.2%, also the same as last year.

When the current poverty rate is measured against the historically low rate of 11.1% in 1973, the news seems disheartening. Yet, as Sheldon H. Danziger points out in a recent New York Times opinion piece, comparing 2012 to 1973 without further context can give people the wrong idea about the true state of the war on poverty.

One thing to keep in mind is that poverty measures do not capture all the relief provided to low-income families under current safety net policies. Non-cash benefits, such as the Supplemental Nutrition Assistance Program (SNAP), housing assistance and tax credits, raise millions of people above the poverty line. These programs help to combat the worst effects of poverty, namely, starvation, homelessness and the inability to meet the basic needs.

Writing for the Center on Budget and Policy Priorities (CBPP), Arloc Sherman points out that when SNAP, rent subsidies and the tax credits for working families are included as income the poverty rate in today’s America is actually lower than in the 1960s, even with today’s weaker economy. Sherman also discusses how the average household income for the poorest one-fifth of Americans was actually 75% higher in 2011 compared to 1964, if we count tax credits and adjust for inflation and changes in household size.

This is important information to know when critics try to discredit the progress America has made fighting poverty, but it needs to be balanced with the reality that poverty still exists. Even when we take non-cash government assistance into consideration, the poverty rate does not begin to approach zero.

The safety net may save many families from hunger and homelessness, but these programs lack sufficient funding to help all eligible families and they sometimes include eligibility guidelines that make a smooth transition to a higher income impossible. (See previous blogs Long Lines and Dashed Hopes  and Cliff Effects for more on those issues).

Another related point is the weakening of the social safety net that has protected vulnerable Americans in the recent past. Cuts to SNAP has been proposed by both the House and Senate, as previous posts have pointed out, but something we’ve not covered recently is the weakening of Unemployment Insurance.

In another piece for the CBPP, Sherman said the number of jobless workers who receive no unemployment benefits is a “pivotal factor” contributing to our high poverty rate. He says that while the overall number of jobless workers has been falling, the number of unemployed workers receiving no unemployment benefits is actually “higher now than it was at the bottom of the recession in 2009.”

There are several causes for the drop in unemployment benefits. Sherman explained that one reason for the decline in benefits is the length of the job slump, with many workers seeing benefits end before gainful employment can be secured.

Compounding this problem of long-term unemployment is the fact that several states cut the number of weeks a worker is eligible for state-funded unemployment benefits. Finally, there have been federal cuts to extended unemployment insurance as well.  The overall result of these factors is that nearly a million more people are living below the poverty line than there would be otherwise.

So what does all this really mean? It means that looking at the poverty rate alone does not tell the whole story. As policy and programs change over time, they impact not only the number of people living in poverty but the standard of living for those who fall below the poverty line.

There are two things I carry away from the discussion on the poverty rate. First, all current safety net programs need to be strengthened and protected. Second, we need to address barriers that keep families in a cycle of intergenerational poverty. We often talk about efforts to increase access to early childhood education, and this is an important goal that will have a long-term impact on poverty rates. However, we also need to provide quality education for adults struggling with unemployment so they can build the skills needed to obtain steady jobs with a living wage.