The Measure of Poverty

By Pablo Einsenberg

Vol. 2, No. 7, 1980, pp. 5-6

When Lyndon Johnson proclaimed his unconditional War on Poverty in 1964, no one knew precisely the number or even the definition of "poor." As a result, the Council of Economic Advisors quickly sought to designate the poverty population and concluded among other things that in 1961 a family of two or more making under $3,000 a year had been in official poverty.

An estimated food budget was the basis for determining the poverty index for different families. Based on 1955 surveys by the U.S. Department of Agriculture, the Council found that food expenditures accounted for one-third of a low-income family's total budget. With that evidence, the cost of the 1961 "economy food plan" was multiplied by three, yielding a total amount needed by that family to meet all costs. This figure became the official poverty line.

Questions about the adequacy of the food plan were raised early. Even the author of the formula wrote in 1965 "with this plan, adequate nutrition is obtainable, but in practice, nearly half the families spending so little fell far short of adequacy. Of families spending at this rate in 1965, more than 40 percent have diet providing less than two-thirds of their requirements."

In 1969 the model took on further administrative status when the Bureau of the Budget designated the index as the official government measure of poverty. From that point on all federal programs were required to use this official measuring system in determining eligibility and funding in many key legislative efforts to combat poverty.

Under the official measure, the current poverty index figures for families of various sizes are divided between farm and nonfarm.

Family Size Nonfarm Farm
1 $3,400 $2,910
2 4,500 3,840
3 5,600 4,770
4 6,700 5,700
5 7,800 6,630
6 8,900 7,560

In order to place the figures in context, one can look at the $6,700 a year allowed for an urban family of four. Officially speaking, such a family is not poor, although their income is under $130 a week, out of which all costs are supposed to come.

Suppose such a family lives in a small apartment or home. Even at a low temperature setting; the fuel bill could easily be $700 or more for the year. Rent (actual home ownership is unlikely) might be guessed at a conservative $150 a month, or $1,800 a year. The total of $2,500 for home and heat alone leaves $4,300 for all other costs. Food, clothing, medical care, transportation, and everything else are to be covered with scarcely $20 a week for each family member.

Of course, this family may receive food stamps or some other forms of assistance. Nevertheless, under the existing measure it is not officially poor. Yet families with three and four times the income of this hypothetical family of four are today wondering how to make ends meet.

For more rural people the problem becomes even more difficult. The federal government continues to assume that rural living costs are substantially less than urban costs. The 1979 poverty threshold for an urban family of four is inadequate enough at $6,700; a non-urban family of four is supposed to be able to get by on $1,000 less than that before it is included among the official low-income population.

The assumption that rural means cheaper is based on the idea that rural housing is less expensive and that family gardens and farms can help reduce grocery bills. However, the actual cost of basic commodities in rural areas can often be higher than in urban areas. Take as one current example transportation costs. Public transit rarely exists in rural areas. People are forced to drive more and pay more for gas than their urban counterparts.

While many rural people are

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able to maintain gardens, they still must purchase basic needs. Rural stores, lacking the high volume markets which enable cheaper quantity purchasing, often charge more than larger, urban outlets. Additional transportation costs also increase the prices for items ranging from flour to hair brushes.

Extensive research by the Bureau of Labor Statistics and others has shown that variations in the cost of maintaining fixed standards of living are very slight across the country. Nonetheless, the federal poverty line is roughly 15 percent less for rural areas. Is this supposed to mean that rural people should accept a 15 percent lower standard of living?

And while rural life does offer such non-urban virtues as openness, cleaner air, and a lack of rush hours, rural people also often have fewer recreational, social and cultural facilities. Medical care is generally harder to find, if indeed it is available at all. School districts are often underfunded, and jobs and other opportunities for youth are more limited. While some absolute costs may be lower in rural areas, they are more than offset by other factors preventing rural people from enjoying the same overall standard of living as city people.

The official poverty index fails to indicate accurately the extent of both absolute and relative poverty. Estimates are that 10 million more people—about a 40 percent increase—would be added to the poverty population if the measure were based on a diet incorporating more nutritional needs and current spending patterns.

In 1979, for example, the poverty index for a family of four stood at $6,700. The technique used to set that figure assumed that food would represent one-third of the budget or $186 a month. That translates into $1.55 per person per day for food. By any measure, a $1.55 a day per person for food is not adequate or rational.

Not only is the nutritional value of the plan questionable, but the current system for determining the food budget does not take geographic or cultural differences into account. Nor does it consider the changing dietary needs of persons at different stages of life. The elderly often have particular dietary needs that are expensive. Young mothers and growing teenagers certainly require diets that can easily exceed the food cost allowances.

Currently, the poverty level is raised by the increase in the consumer price index; however, the price of food and other basic necessities have increased at a far greater rate for most poor people.

Between 1977 and 1978, the cost of living for all items increased 7.6 percent, Nonetheless, the adjustment in the poverty index reflected the smaller, overall figure.

Since 1969 food has risen 94 percent while the total index has risen 78 percent. Costs for two other basic necessities—housing and energy—have also increased at a faster rate than the general price index. In 1978 as much as one-third of the income of the average poor household may have gone to pay for energy.

From both a numerical and human standpoint, then, poverty in America remains very real and significant. No amount of statistical manipulation can deny the poverty which is listed officially, let alone that which any more rational form or definition would reveal.

Perhaps government officials and others who should be outraged at the extent and persistence of poverty believe the rhetoric that these are conservative times and that programs are more likely to face cut-backs instead of expansion. In and outside of government, many people have lost a sense of the impact of poverty and are unaware of what an official definition of poverty means for poor people. It is hard to believe that after more than 15 years of anti-poverty efforts, we continue to utilize a poverty measure which is so far removed from real costs faced daily by millions of families.

Major reform in the poverty definition is an essential first step in a revitalized effort against poverty. In view of the mood of the times, though, advocates of the poor and near-poor must portray their concerns in ways the general population can appreciate. Poverty, after all, is more than just a moral wrong. It is also a fiscal and physical waste of resources. All society pays for poverty.

By whatever reasonable and realistic measure we may want to use, it is clear that this country has an enormous and not so invisible poor population—one that probably exceeds 25 percent of the entire population. We cannot escape this fact, no matter how hard we try to pretend that such poverty is not there. Widespread poverty means continued misery for the poor themselves and a waste of general human potential for all of us. It stands as a continuing challenge to our democracy.

This article is adapted from a publication of the Center for Community Change, a Washingtonbased organization assisting local community development in low-income urban and rural areas. Pablo Einsenberg is the Center's president.