Thursday, August 27, 2009

New Ways to Measure Poverty?

We talked in a recent blog post about the problems with the Federal Poverty Level: basically, it uses an outdated means of determining income and applies it uniformly to the 48 contiguous states. But what else is out there?

Mark H. Greenberg at the Center for American Progress just wrote a great article explaining this recommendation, which originated in the 1990s and is being considered by Congress as a replacement of the Federal Poverty Level. The Measuring American Poverty Act would create a new measure of poverty as well as a new “decent living standard.” Under the NAS threshold, the actual cost of food, clothing, and shelter, along with a little additional money, would make up the new poverty level. It would vary geographically, and count money available through food stamps, tax credits, and other subsidies as part of a family’s resources. At the same time, it would not count money that must be used to pay taxes, child support, or certain other out-of-pocket expenses as available resources. There are strengths and weaknesses to this method, with strengths including a more relevant, applicable, and logical measurement, and weaknesses including a poverty threshold that may still be too low to accurately reflect needs.

Since the late 1990s, PathWays PA has released The Self-Sufficiency Standard for Pennsylvania every two years to show the basic cost of living in every county in Pennsylvania. The author of these reports, Dr. Diana Pearce, published an article last month comparing the Standard, the NAS guidelines, and the current FPL (she also references another project PathWays PA partners with, The Working Poor Families Project, which looks at the needs of working families earning less than 200% of the FPL). Her article is a great tool for learning more about how the NAS is calculated as well as some of the differences between the NAS and the Standard. The Standard, as we have discussed before, shows the cost of living for 70 different family configurations in each county in a given state based on the cost of food, housing, healthcare, childcare, transportation, and miscellaneous items. It includes the impact of taxes and tax credits on a family, and has room to incorporate the impact of subsidies as well.

While the NAS guidelines are more often referred to in current federal legislation (the Measuring American Poverty Act), the Self-Sufficiency Standard is also included as an alternative measure. As we move towards developing a new measure of poverty, it is important that we look at the strengths and weaknesses of both measures, and of others that are available.

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