By FRANK STRICKER
In the poverty report for 2021, released on September 13, there was some good news. The official poverty rate stood at 11.6% of the population. That was essentially the same as the rate (11.5%) in 2020. Amazingly, it was just a little higher than in 2019, the last pre-pandemic year. So poverty rates for the last three years–10.5%, 11.5%, and 11.6%–have been pretty low, especially in view of the fact that two of those were pandemic years.
The Usual Downsides
One downside is that for some demographic groups, poverty rates were, as always, very high:
Female-headed households: 25.3%
A second downer comes when we recall that the low rates in the last three years were matched way back in 1972-1979. The nation as a whole is much richer than it was 50 years ago, but the American people are not, on average, less poor. There are many explanations, but extreme income inequalities and lousy wages are certainly key.
One more joy-deflator, and it is a familiar one. The poverty lines are wildly unrealistic. People are considered poor if their household income falls below the official poverty line for their household type. Except for the effects of inflation, the lines have not changed in 60 years. They reflect the same purchasing power they had when they were created in the 1960s. And the original lines were developed around emergency food budgets that were stringent even back then. Make sense?
Here are some of the lines used in the 2021 tally. If your household income is at or above the line, you are not considered poor.
Two-person household in which $16,379
the householder is 65 or older
Family of four with two kids under 18 $27,479
Individual under 65 $14,097
It is hard to write calmly about these pathetically low lines. So if a family of four has $28,000 in annual income, they are not poor? Face it: we have a very low bar when it comes to measuring the poverty population, and that makes hard to take the 11.6% poverty rate seriously.
The Government Has a Different–I Didn’t Say Perfect–Way to Count
In the poverty report, there was positive evidence about what we, as a society are doing through our government to relieve poverty caused by capitalism, prejudice, and other factors. First, a little background. The standard poverty calculations do not include as income much that really is income, so with traditional methods, the poverty rate seems higher than it really is. For example, the traditional report does not count as income food stamps, subsidized health benefits, subsidized housing, and the Earned Income Tax Credit for working-poor households. It does count Social Security benefits–a most effective poverty killer–and also unemployment compensation, workers’ comp, and Supplemental Security Income. But it does not include pandemic benefits such as stimulus checks and expanded Child Tax Credits and Earned Income Tax Credits.
But we have something that includes more income, and it is called the Supplementary Poverty Measure–SPM for short. It’s been in use for a decade, and this year it graduated and was published as part of the general poverty report. Some of its components seem extraordinarily complex to me, but here are some highlights:
1. The SPM includes a geographical cost-of-living adjuster. If you live in rural Alabama, you are thought to need less money than if you live in Los Angeles. Makes sense.
2. New poverty lines that are slightly higher than the old ones, in particular for renters and people with mortgages. But no wholesale reformulation of the lines and that is a missed opportunity.
3. The new count subtracts from people’s useable income federal, state, local, and Social Security taxes, work-related expenses, child-care costs, and medical expenses. The income left after these subtractions, called “family resources,” is used to judge whether a household can afford the basics. I do not understand why this approach was taken. Why not count everything–all adds and subtractions–and raise the poverty line?
4. Another change makes fewer people appear to be poor. But it turns out to be useful because it includes more government benefits as income and allows us to get a better handle on how much government benefits relieve poverty. The SPM includes as income food stamps, housing subsidies, the Earned Income Tax Credit, pandemic stimulus checks, and more.
Using traditional methods, the poverty rate for 2021 was 11.6%. Using SPM methods the poverty rate in 2021 was just 7.8%. Against the conservative claim that government is ineffective against poverty or even positively harmful, the benefits-fueled war on poverty reaches many millions of people. Government benefits do not end the evils of a business system which thrives on low wages for millions of people. Nor do they reform our systems of social stratification, which relegates disproportionate numbers of people from some social groups to the bottom. But government benefits and programs make life better for many people.
Of course, there is much to be done: raise poverty lines to a realistic level; get the federal minimum wage up from $7.25 to $20 an hour in, say, five years; rein in greedy capitalists; and support unionization in order to lift compensation and humanize the workplace.
Just a couple of little things to take care of.
* This black rate is an average of three different reporting methods.
Frank Stricker is a member of Democratic Socialists of America and is on the board of The National Jobs for All Network. He is the author of American Unemployment: Past, Present, and Future, a history and commentary, published in 2020.
In case you missed it: August 2022 National Jobs for All Network Newsletter featuring: NJFAN and a 21st Century Bill of Economic Rights; Raising Interest Rates is the Wrong Medicine for Today’s Inflation; and Analysis of the New American Labor Movement