About time! The new measure (the old one will remain; this is supplemental) will take into account the local cost of living:
Federal officials describe the supplemental measure as experimental and a work in progress. It establishes a poverty threshold that depends on the cost of food, shelter, clothing and utilities “plus a little more” for “a population that is not poor but is somewhat below the median.”
The original measure figured costs for two adults and two children. The new one covers one adult and two children, a family structure more prevalent these days among lower-income households, and would be adjusted to reflect living costs in different metropolitan areas.
The threshold would be adjusted to calculate the value of in-kind benefits, like food stamps, and whether homeowners have a mortgage. Tax credits would be added to the total income and benefits; taxes, work expenses (including commuting and child care), and out-of-pocket medical costs would be deducted.
It sounds to me as if someone has been reading the Self-Sufficiency Standard Studies, which take into account local costs for rent, commuting, health care, child care, and a (usually) national figure for 100% home-cooked meals.The new figures will not be published until Fall, 2011 (August is the time of year the annual poverty data currently is published). I look forward to seeing the methodology, and how it differs from or matches the Self-Sufficiency Standard study assumptions, which are based on the Fair Market Rent for a suitably sized apartment in each county. That's generally the 40th percentile of the local market (occasionally the 50th). Will this new poverty "threshold" use the 40th, or something lower? How will it be calculated? Does HUD make available the, say, 20th percentile? 25th?
There is a parallel study to the Self-Sufficiency Standard studies, which are generally oriented to working-age individuals and families, which relate to the cost of living for seniors. I've read the one for Pennsylvania. It works with both rented and owned housing, county by county, in that state, for a single senior and a married couple.
Under the new poverty measure, poverty rates will likely rise significantly in America's cities, particularly on the coasts. (Look for the legislators from the heartland states to question the new measure: a lower share of poverty will be in their districts and states.)
My calculations, from the Overlooked and Undercounted studies, suggest that 35% to 45% of our children are in families with insufficient income to meet the family's most modestly defined needs. (Click on the link for Self-Sufficiency Standard studies in the cloud at left, for more details.)
I expect that, when we see how many people simply have little discretionary income, it will become clearer to us what it will take to make our economy work better: insure that more people have spendable income.
Those who have spent some time exploring this blog will know that the ways I'd propose to achieve that are different from what is usually proposed.
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