Will decreasing our national poverty rate actually improve lives?

By Molly M. Scott :: July 31st, 2014

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Thanks to the release of Paul Ryan’s poverty plan, poverty’s back on the agenda again. Overall, that’s great news, but it’s important to think about what the long-term goal of this or any other anti-poverty plan might be.

What does “living in poverty” actually mean? All of our national poverty statistics reflect economic poverty. As such, they measure households’ total income, including earned income and transfer payments (such as SSI, disability, unemployment insurance, etc.) and benchmark these numbers against fixed income thresholds by household size.

When politicians talk about reducing poverty, they’re often talking about how get people to work more in order to minimize transfer payments and expenditures on safety net programs (i.e. SNAP, Housing Choice Voucher, etc.) that help the poor make ends meet. While this strategy may indeed reduce public spending on poor households, it may do little to make a difference in their lives.

The problem is that the arbitrary poverty line is a bad indicator of material poverty, the amount of hardship people experience meeting their basic needs. Families both above and below the poverty line have serious difficulty making it through each month and often have to make trade-offs among essentials like food, housing, health, and transportation.  Often, the only differences between “poor” and “non-poor” families lie in the mix of resources they use and the costs associated with work.

Take one hypothetical example: Let’s say Family A and Family B-- both with a single mother and two elementary school-age children-- live next to each other in identical apartments in Washington, DC.  Both mothers have less than a high school education and earn only the minimum wage of $9.50 an hour.

These two seemingly identical families cobble together roughly the same amount of resources to get them through the month. Family A pieces things together with 20 hours of employment, SNAP benefits, and a Housing Choice Voucher that covers most of the rent. Family B pays the bills by working 60 hours a week and receiving a more modest SNAP benefit.

In terms of economic poverty, Family B is much better off, registering an annual income nearly $20,000 greater than Family A, and about $10,000 above the federal poverty line of $19,790. Family A, in contrast, lives at less than 50 percent below the federal poverty line. However, at the end of the month, Family B is struggling just as much, if not more, than Family A. How can that be?

Table

The biggest differences lie in monthly expenses. While the cost of rent and food is exactly the same, the mother in Family B can’t work just during school hours and has to pay for child care for her two children. In addition, she has to pay a lot more for transportation just to get to and from work every day. In all practicality, that means the mom in Family B would be immediately facing some hard decisions. She’d have to consider moving to smaller or lower quality housing, leaving her children home alone some of the time while she works, and/or frequenting her local food pantry.

True, Family B is not economically “poor” and costs the federal government less money. But is that what we should be aiming for?

If we really want to address poverty, we need to make sure our policies and programs do more than swap out subsidies for low-income wages that won’t change people’s quality of life. Struggling families-- both “poor” and “non-poor”--  need real ladders of opportunity and supports along the way.

6Comments

  1. Rachel West  ::  1:38 pm on July 31st, 2014:

    Good illustration of how our poverty measure falls short—and how any political agenda to simply decrease program enrollment ignores the reality families face. I think you’ve left out an important piece, though: the EITC. The EITC goes a long way toward contributing to the effective take-home of both families in your example. (Take a look at http://www.cbpp.org/eic2012/calculator/, for example.) Obviously, the EITC is not truly a safety net program: it doesn’t help people who lose a job; families can’t collect it in advance in the case of a financial shock; and it is paid out only once per year. I might argue that the amount and the design are insufficient. Nonetheless, the tax credit is designed to circumvent exactly the situation you describe: it’s supposed to ensure that families who choose to work don’t find themselves worse off for it.

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  3. Sthern007  ::  8:51 am on August 5th, 2014:

    I think this is a perfect example. i myself had to choose between food or dental work. Child care or food. There are a lot of hard choices that we as working single parents must make. I think this thing should be thought about carefully because sometimes it’s discouraging to see someone that works so hard trying to get by. Nonworking person paying 50.00 for rent while a working person paying 1200 dollars for the same type of apartment. There child may be able to get braces with medicaid while a working parent has to struggle to get a downpayment for braces. It’s disheartening.

  4. DaveR  ::  2:51 pm on August 14th, 2014:

    Your scenario, while being fairly accurate (minus the EITC mentioned by Rachel), only addresses the result of poor life choices, not the decisions that led to those results. To improve lives, most of the heavy lifting must come at the front end; before people become poorly educated single mothers with multiple children, usually from multiple fathers who are not supporting them and are not involved in their lives. The culture that encourages young people to make irresponsible choices must be changed.

    This can only come from those who have been in similar situations but made choices that led to greater opportunity, stability, and to greater financial and material resources. They must be encouraged to share their paths and become the community leaders needed to foment the cultural changes.

    I understand you wanting to ‘fix it’, but the fix is already in….

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