Tuesday, August 22, 2006

The temporary poor   posted by Coffee Mug @ 8/22/2006 11:08:00 PM

There is an interesting article concerning the Official Poverty Rate in the latest issue of Policy Review. The thrust is that in the past 3 decades the OPR shows stagnation while all sorts of other indicators of the well-being of the lowest income portion of Americans are rising. How come? The OPR is based on income instead of expenditures, and income is a funky measure because year-to-year variance in income has been rising. A larger percentage of people who spend and live like they are above the poverty line are having occasional off-years where they dip below the income marker, but everything else points to steady improvements in the conditions for low-income families.

To summarize the evidence from physical and biometric indicators: Low-income and poverty-level households today are better-fed and less threatened by undernourishment than they were a generation ago. Their homes are larger, better equipped with plumbing and kitchen facilities, and more capaciously furnished with modern conveniences. They are much more likely to own a car (or a light truck, or another type of motor vehicle) now than 30 years earlier. By most every indicator apart from obesity, their health care status is considerably more favorable today than at the start of the War on Poverty. Their utilization of health and medical services has steadily increased over recent decades.

All of this is in one sense reassuring. These data underscore the basic fact that low-income Americans have been participating in what Orshansky termed “America’s parade of progress.” Orshansky had worried that the poor in modern America might be watching that parade and “wait[ing] for their turn — a turn that does not come”; fortunately, her apprehension has proved to be unfounded.

To state this much is not to assert that material progress for America’s poverty population has been satisfactory, much less optimal. Nor is it to deny the importance of relative as opposed to absolute deprivation in the phenomenon of poverty as the poor themselves experience it. Those are serious questions that merit serious discussion, but they are questions distinct and separate from the focus of this study — i.e. the reliability of the official poverty rate per se as an indicator of material deprivation.

As we have seen, the U.S. federal poverty measure is premised on the assumption that official poverty thresholds provide an absolute poverty standard — a fixed inter-temporal resource constraint. Such a standard should mean that general material conditions for the poverty population should remain more or less invariant over time. Yet quite clearly, the material condition of the poverty population in modern America has not been invariant over time — it has been steadily improving. The opr thus fails — one is tempted to say that it fails spectacularly — to measure what it purports to be tracking over time. As an indicator of a condition originally defined in 1965, the official poverty rate seems to have become an ever less faithful and reliable measure with each passing year.