A Stitch in Haste

The Urban Institute recently published a report called “Poverty Facts, 2004.”

In 2004, 36.6 million people — or 12.6 percent of the U.S. population — were poor. The “poverty gap” — the amount of additional income required to remove all Americans from poverty — was $105.6 billion. Poverty rates were highest for African Americans, Hispanics, women, and persons under 25. Without government benefits, 61 million people would be poor. Social Security and other social insurance programs remove 21 million people from poverty. Means tested programs remove 3 million people from poverty. If food and housing assistance were counted as income for poverty purposes, an additional 7.6 million people would be counted as not poor.

The report packages government data on American poverty in a variety of ways, all pegged to the official federal poverty level thresholds and most of which are unbiased and informative. But I do have some hasty stitches:

–I found it annoying at best, and evasive at worst, that nowhere in the 15-page report could they be bothered to disclose what the federal poverty level actually is; the best they do is bury a hyperlink to the Census Bureau in a footnote near the end of the report.

In fact, the federal poverty level in 2004 (the year studied) was $9,827 for a single adult under 65, $12,334 for a childless non-elderly couple and $19,307 for a family of four.

Now is also as good a time as any to note that the “poverty level” is an essentially arbitrary number

originally derived in 1963-1964, using U.S. Department of Agriculture food budgets designed for families under economic stress [and] data about what portion of their income families spent on food[.]

The poverty level is also not adjusted for geography (so, for instance, heating costs in the North and air conditioning costs in the Southwest are not factored in). Also ignored are housing cost differentials between urban, suburban and rural settings. It’s strictly a food-oriented construct — and therefore of very limited usefulness.

–In any case, as low as $9,827 undeniably is, it is still orders of magnitude better than “$1 to $2 dollars a day.” As unfortunate — or even tragic — as poverty is, one simply cannot escape the truth that “American poverty” is — thanks to capitalism — very, very, very different from “global poverty.”

–The report breaks down poverty in several ways, one of which is by age: 12.9 million people under 18 were in households beneath their federal poverty threshold — 17.5% of the under-18 population. While fully acknowledging the almost instinctive revulsion that all civilized people, especially libertarians, feel toward anything that could possibly be corrupted into “eugenics,” one cannot help but wonder whether the focus of anti-poverty efforts should shift toward the simple notion of persuading poor people not to have poor babies.

–One way the report does not at all break down the numbers is by immigration status (i.e., citizens versus legal immigrants versus illegal aliens). Does the Urban Institute think such a partition is irrelevant? I don’t.

–The report commits one egregious sin: misstating the anti-poverty impact of Social Security —

Social insurance, including Social Security and other programs available to persons regardless of income remove 21 million people from poverty.

The term “social insurance” is meaningless gobbledygook. An entitlement is either welfare (“anti-poverty”) or it isn’t. Social Security isn’t. It is an intergenerational transfer from the young to the old, pure and simple.

Moreover, the “21 million” figure is overstated for the pesky reason that Social Security itself contributes to poverty. By seizing one-eighth of the working poor’s paychecks — week-in, week-out — over their entire working careers in exchange for low (or zero or even negative) rate of return income streams, Social Security is an anchor around the neck, making it difficult for the working poor to tread water, let alone swim away from the undertow of poverty.

Data on American poverty are always useful — including for those who would use the poor as pawns to further their own agendas. Keeping the data objective and well-presented therefore becomes all the more important.