Good News, Everybody!

Politicians are celebrating a decline in the poverty rate. There's just one problem: it doesn't really measure poverty.

School breakfast in Silver Spring, MD. US Department of Agriculture / Flickr

The New York Times ran a feature story on it. President Barack Obama is touting it at Clinton rallies. It’s being shouted from the mountaintops: the poverty rate is down! And it fell by a statistically significant amount.

Setting aside the fact that such statistically significant shifts happen all the time and are often meaningless, we should still welcome this news. The 1.2 percent drop signifies 3.5 million fewer Americans living under the federal poverty line. Food insecurity rates fell along with the poverty rate. Median wages also rose at every income decile.

So some moderate degree of joy is certainly warranted. But once we’ve scratched that particular itch, let’s consider what these statistics actually represent.

The media describes people “climbing” out of poverty, as if they have at last crested Everest and can finally breathe that crisp, middle-class air. But all they’ve really done is crossed an arbitrary threshold used to determine social-program eligibility.

Still, Republicans and Democrats alike frame their social programs, no matter how different, in terms of fighting poverty. And the metric of their success is often based on the poverty rate.

Yet for all its mystique, the poverty rate is nothing more than an outdated administrative marker, set far below any remotely sensible definition of a decent life. The consequences for poor people in need of the social services that are distributed based on that marker are often devastating.

The Meaning of Poverty

Developed in 1963, the poverty line uses the cost of a “thrifty meal plan” as its base. The census bureau does update it each year, but only to keep up with inflation. The poverty line’s primary purpose is to determine eligibility for public benefit programs. For instance, to qualify for the Supplemental Nutrition Assistance Program (SNAP), a household’s gross income must generally fall below 1.3 times the poverty level.

But even if a family does qualify — even if, say, a family of four earns less than $35,000 gross — they still might not qualify for food benefits. To do that, their net income must fall below 100 percent of the poverty line.

Determining net income involves a set of arcane deductions that take into account earned income percentages, medical expenses (only for household members older than sixty-five), child support payments, and any housing costs (rent, electricity, and so on) that exceed half of the monthly gross income.

Other programs have similar, but fortunately less complex, thresholds: free school meals are provided to children from households with incomes below 1.3 times the poverty line. Expanded Medicaid is ever-so-slightly more inclusive: income must be no higher than 1.38 times the federal poverty level. Reduced-price school meals and the Women, Infants, and Children food assistance are available to households that earn below 1.85 times the poverty line, or just under $45,000 for a family of four.

The thrifty meal plan, upon which the poverty guidelines are based, does double duty: the US Department of Agriculture’s (USDA) Food and Nutrition Service also uses it to calculate SNAP allotments. It is well-named; the plan provides about the same nutrition as the diet of a nineteenth-century Irish tenant farmer, with perhaps some Taco Bell sprinkled in for variety.

All of this is to say that the federal poverty level is a political fiction, a mutually agreed-upon but arbitrary point around which changes to the American welfare state must be negotiated. Fights over eligibility expansions take shape as fights over multipliers or income deductions.

But they all treat the soundness of the federal poverty level as a given. And they necessarily treat the poverty rate as a metric of success or failure, despite its deep flaws.

Cuts to programs, on the other hand, usually focus on revising funding schemes, as when Aid to Families with Dependent Children (AFDC), an entitlement, was replaced by the discretionary, block-granted Temporary Assistance to Needy Families (TANF) through the Personal Responsibility and Work Reconciliation Act of 1996, Clinton’s “end of welfare as we know it.” Give both parties credit: when it comes to screwing the poor, their innovations rival Silicon Valley’s.

But as anyone who has ever lived in poverty can attest, the poverty line bears little relation to real-world budgets.

Cost of living plays no role in determining it; except for Hawaii and Alaska, the threshold does not vary based on locality. The same poverty line — and thus the same income guidelines for public benefits — applies to residents of New York City, Miami, Joplin, and Grand Forks, despite vastly different costs of living and wages. (To make up for this, some states and localities do have waivers for higher income limits).

Further, the threshold is obscenely low: for fiscal year 2016, a single person making $11,880 didn’t count as poor in the strictly administrative sense. A four-person family — a single mother with three kids, a two-worker household with two kids — must earn less than $24,300 to qualify as in poverty.

The New York Times story demonstrates unwittingly the poverty of the poverty line:

Christine Magee, a mother of four, joined an intensive self-sufficiency program administered by the Chicago Housing Authority and the Heartland Alliance after she fell into bankruptcy from racking up $22,000 in debt on a credit card. As a recipient of a federal housing voucher, Ms. Magee was eligible to enroll . . .

Ms. Magee’s husband has found only sporadic work. But she has moved from a health-technician job that paid $23,000 a year and left her family on Medicaid to one at a veterans hospital that pays more than $35,000 and provides health and educational benefits. The extra earnings automatically went into an escrow account.

She makes more money now — enough to put her household well over the federal poverty line, and her employer provides benefits. That’s very good. But living in Chicago isn’t cheap, and though she has risen above the official poverty line, Magee has hardly escaped poverty.

Better Measures

Other government measures of privation are slightly more in tune with the realities of material deprivation than the federal poverty guidelines. For example, the Census Bureau’s Supplemental Measure of Poverty (SPM) includes more expenses, such as out‑of‑pocket medical costs, to determine something closer to a living standard. It also changes based on locality: SPM estimates, for example, that it costs $45,670 for a family like the Magees to live in Chicago. While an undoubtedly better measure, the SPM is still derived from the poverty level and thus cannot wholly escape its original flaws.

The government does have a measure that accurately reflects deeper privation, however, in the USDA’s measure of very low food security. This might be better named the hunger rate; it describes people who skipped meals or cut the size of their meals. In 2015, 5 percent of American households experienced deep food insecurity. This is a raw reflection of income inequality’s effects in a country of unmatched plenty. About one in twenty American households fail to eat every day. Hardly heartening, even if it was better than the year before.

For a true picture of American poverty rates, we should look at the Basic Economic Security Tables (BEST) index. Devised by sociologists at Washington University, BEST determines what net income level (after tax credits) a family must earn to achieve economic security.

It considers a household’s location, the number of workers, and the number and age of any children. When it says economically secure, it doesn’t mean merely surviving day‑to‑day, but having all the trappings of a middle-class life, including no consumer debt and retirement savings.

The BEST index for a family like the Magees sits at around $92,000 per year. So, to be economically secure in the long term, her household would need to more than double its income.

The federal poverty line for the Magee family, on the other hand, is $28,440. The SNAP gross income threshold therefore rests under $37,000, which disqualifies her household from benefits.

This highlights one of the poverty guidelines’ central problems: while the available benefits provide a base level of subsistence for many Americans, people have to be increasingly poor — relative to that middle-class dream — in order to qualify.

That said, the Magee family does qualify for some federal and local programs. The WIC threshold is much higher than SNAP’s — about $52,600. Further, her family’s housing voucher makes up some — but certainly not all — of the difference in costs.

Thankfully, her children — assuming they are enrolled in Chicago Public Schools — will receive free school meals no matter their income under the Community Eligibility Provision. With four children, this could save a family like Magee’s up to forty-one dollars a week on lunch alone. (A school lunch normally costs $2.05 if a family’s income is too high to qualify for free or reduced price meals.) With breakfast included, the savings are even greater.

But even factoring in these benefits, the Magee family’s $35,000 yearly gross income falls far short of the BEST index’s estimate for cost of living in Chicago. Where does this pervasive economic insecurity come from?

The New York Times article answers this question, albeit obliquely: it mentions in passing that Magee’s husband only works sporadically. Americans like him — who remains unnamed in the rush to celebrate Magee’s $11,000 raise — deserve our attention.

They make up what Marx called the relative surplus population, those workers who are “partially . . . or wholly unemployed.” More and more Americans (and particularly black and brown Americans) can only find low-wage, precarious jobs. As automation rises, so that more and more stuff is made by fewer and fewer people, the situation only gets worse.

Consumer debt increasingly serves as a bridge between what households earn and what they need. The amount of debt held by households has expanded both absolutely and as a percentage of GDP since the 1950s.

This tendency has two effects. It exacerbates the financial insecurity of poor households while encouraging the very banking practices that produced the Great Recession. (Which, in turn, exacerbated financial insecurity: capitalism’s vicious circle.)

From Deficiency to Sufficiency

And here the poverty line proves its deficiency. Merely raising nominal incomes above this mystical threshold makes little difference in this deep and abiding crisis of the working class.

The Left recognizes this calamity, but has yet to respond effectively in kind. Our short-term demand must be expansion of program eligibility by raising the percentages of the federal poverty line at which benefits kick in.

But these technical fixes are just palliatives. We have to push for a radical reinterpretation of poverty and privation, of exploitation and economic security. We must demand that our political debates about social programs no longer revolve around an ancient, deficient measure but rather one that represents the real income Americans need to live.

Such a change would no doubt would require a massive expansion of the actually existing welfare state, and ultimately a reckoning with global capitalism itself. So be it.