New “poverty” numbers measure income inequality, not purchasing power

posted at 6:05 pm on November 7, 2011 by Tina Korbe

Economists on both the left and the right have long had concerns and criticisms about the accuracy of the poverty rate — so, at the instruction of the federal government, the Census Bureau developed a new measure to determine the number of poor in America. The Bureau today released the nation’s poverty numbers under the new gauge.

Called “The Supplemental Poverty Measure,” the new indicator suggests 49.1 million Americans face poor economic conditions, compared with just 46.6 million under the standard measure. That sounds “grim,” as an MSNBC headline put it — but, just as the standard measure is misleading in many ways, so, too, is this new indicator.

“The new measure places income thresholds for poverty on a built-in escalator that rises automatically in direct proportion to any improvement in the living standards of the average American,” Heritage Foundation expert Robert Rector said in a statement. “So even if the real income of every single American were to double, the new measure would show no drop in poverty because the income thresholds would also double. The result is that, over the long term, poverty can be reduced only if the incomes of the ‘poor’ are rising faster than the incomes of everyone else.”

In other words, the new tool measures income inequality not purchasing power. Or, as Rector put it, “The old measure told us how much one household can purchase; the new measure tells us how much one person can buy relative to others.”

That’s convenient for a government that wants to pursue a redistributive agenda. Call those who are less well off “poor” and people will be far more supportive of programs to aid them. In general, folks agree that poverty is a problem. But, the prevalence of Occupy Wall Street protesters aside, not everyone assumes income inequality is. If everyone in the U.S. was a millionaire or billionaire, income disparity would still exist — but poverty wouldn’t.

What is, perhaps, saddest about these figures is that it obscures the picture of true poverty — both in the U.S. and in the world. Like so much of this administration’s rhetoric, it encourages class envy and tends to inspire dissatisfaction with what actually amounts to a pretty decent standard of living among some who qualify as “poor” by the government’s measures.

News reports about the new poverty measure emphasize that it takes government aid and unavoidable expenses — like health care, child care and commuting costs — into account as it calculates the poverty rate. The standard measure, on the other hand, doesn’t incorporate these factors. Poverty numbers should take these factors into account – but their inclusion need not necessitate a new income threshold linked to the improvement in living standards of all Americans. Try again, please, Census Bureau.


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Poverty is awful these days.
Millions of people only have the iPhone 4 instead of the 4S and only get 75 cable channels instead of 400 channels

The HORROR!!!

angryed on November 7, 2011 at 6:07 PM

Don’t forget the reverse… if everybody is poor, the poverty level goes down… WAY down.

How do you think the communists made everything look good in their bad economies?

Skywise on November 7, 2011 at 6:11 PM

Oh dear Lord … 2012 can’t come fast enough.

darwin on November 7, 2011 at 6:13 PM

This is the wheelhouse of the Left–EQUALITY is EVERYTHING. As Prager points out, its what gets Cuba and the USA into the same ranking in terms of heathcare–as long as things suck equally for everyone, paradise has been attained!

ParisParamus on November 7, 2011 at 6:13 PM

Yeah. We used to get asked by Indonesians if there were any poor people in the U.S.

Our housekeeper lost her first two children to dysentery. One of them died less than 24 hours after getting sick, the other not much more. (Before we knew her–her family lived and ate well with us.)

It’s hard to seriously entertain the idea that we have poor people in our country when you’d have to make a concerted effort to starve to death here. There are huge populations in this world that live on such slim margins that they’re one bad case of diarrhea away from death.

TexasDan on November 7, 2011 at 6:15 PM

HEY, YOU! THE AZZHAT IN THE PHOTO!

If you really needed food, you wouldn’t be sitting on the steps of the Capitol with a sign that says so!

RedNewEnglander on November 7, 2011 at 6:17 PM

Why does the Census bureau have anything to do with poverty measurements?

Our Constitution is nearly dead.

BierManVA on November 7, 2011 at 6:17 PM


What is, perhaps, saddest about these figures is that it obscures the picture of true poverty — both in the U.S. and in the world. Like so much of this administration’s rhetoric, it encourages class envy and tends to inspire dissatisfaction with what actually amounts to a pretty decent standard of living among some who qualify as “poor” by the government’s measures.


I’ve seen poor. I have lived among those who are the poorest of the poor. I have witnessed entire populations where the national per capita income was less than $300 annually, and that takes into account the elite and the upper class in a good number of nations.

Yes, we do have pockets of real, extreme, poverty in this country.

But, by the conventional measures we have seen put out there by “gubmint” what we now call poor is nothing but having less.

Access to emergency medical care? Check. Access to clean water? Check. Access to all sorts of things truly impoverished people can’t even imagine…big screen televisions, access to clean markets where clean and safe food products are not only sold, but monitored for freshness daily…and on and on. What we consider poverty here is middle class in over half the world’s population.

Having less does not amount to being poor.

Some of the poorest of the poor in this nation are wards of the federal government. Visit an Indian Reservation sometime. The few I have visited are just a hair above Chad, or Nepal in many respects.

It’d be nice if government got out of the way. Government can never eliminate poverty. But people can, if they are allowed to and have the drive to do so.

coldwarrior on November 7, 2011 at 6:17 PM

New “poverty” numbers measure income inequality, not purchasing power

Wal-Mart has done more to increase the standard of living of poor (and middle income) people than the War of Poverty et al. ever did.

petefrt on November 7, 2011 at 6:20 PM

Can anyone give an estimate on the number of poor in America using this metric, when considered against the world as a whole? Does anyone know how to do the calculation and get an actual number?
I’d love to see it, and then discuss that as the poverty rate in America.

dcman98 on November 7, 2011 at 6:23 PM

Come on… as any good socialist knows, inequality is everything. There is only limited wealth, and those who hoard it did so by taking it from those who dont have it. This is a good measurement of those who have too much and those who are oppressed. /s

AverageJoe on November 7, 2011 at 6:24 PM

The Capitalist system has successfully de-linked poverty from destitution.

Progressives are desperately hoping that nobody notices that inconvenient truth.

ss396 on November 7, 2011 at 6:26 PM

That’s convenient for a government that wants to pursue a redistributive agenda.

Funny how that works. Maybe Barry will consider giving away his millions, along with Mikey Moore, to the “poor”.

Yeah. That will happen. When pigs fly.

GarandFan on November 7, 2011 at 6:27 PM

Poverty is awful these days.
Millions of people only have the iPhone 4 instead of the 4S and only get 75 cable channels instead of 400 channels

The HORROR!!!

angryed on November 7, 2011 at 6:07 PM

some of us only have a plain old cellphone, not a smartphone of any type.

Government must not rest until everyone is above average.

rbj on November 7, 2011 at 6:29 PM

My family does a “Loaves and Fishes” every now and then, and it can be simultaneously sad and anger inducing. There will be an old woman who is so grateful for fresh fruit that she starts crying, while at the next table is some pudgy ahole spewing crumbs from her mouth as she gabs into her Android smartphone.

I wanted to grab that blimp by her neck, rip that phone away, and make her peel grapes for the old woman.

Bishop on November 7, 2011 at 6:30 PM

There are no poor in the US anymore. I have known for quite some time that the metric for measuring poverty was an absolute joke. The poorest 10% today would be in the richest 0.1% 100 years ago. Yet we insist on maintaining this farce in order to empower government so they can control our lives.

Perhaps we need a constitutional amendment to require all young adults to live without anything for one year so they can truly come to understand real poverty.

NotCoach on November 7, 2011 at 6:30 PM

I must be desparately poor. We only get 51 channels on our 5 televisions, and my laptop is at least a year and a half old.

sigh

( I guess I better shut up before somebody decides to redistribute that.)

hillbillyjim on November 7, 2011 at 6:32 PM

Interestingly, the OWS money remains under the control of a few….while the needs of the mob are ignored, and their encampments devolve into cesspools of filth and disease!!

landlines on November 7, 2011 at 6:33 PM

Can anyone give an estimate on the number of poor in America using this metric, when considered against the world as a whole? Does anyone know how to do the calculation and get an actual number?
I’d love to see it, and then discuss that as the poverty rate in America.

dcman98 on November 7, 2011 at 6:23 PM

No one in the US would qualify as poor if the entire world population was used and if it was limited to the bottom 15% being poor. Otherwise if we used the purchasing power of the most well off poor person in the US, then the number of poor in the world would measure over 6 billion.

NotCoach on November 7, 2011 at 6:34 PM

landlines on November 7, 2011 at 6:33 PM

You easily described nearly all of the socialist Third World countries I have ever visited.

coldwarrior on November 7, 2011 at 6:34 PM

Poor my ass ….when the poor in this country live in a 3 bedroom house in the burbs …with heat ….hot water ….a car ….AC ….2 T.V. ‘s ….cell phones I’m thinking they don’t know what the hell the word poor means

Aggie95 on November 7, 2011 at 6:41 PM

and disease!!

landlines on November 7, 2011 at 6:33 PM

Lice anyway.

CW on November 7, 2011 at 6:42 PM

some of us only have a plain old cellphone, not a smartphone of any type.

Your poor soul. :(

lorien1973 on November 7, 2011 at 6:42 PM

The new standard measures “The Gap” as the Iron Lady so eloquently destroys!

“So long as the gap is smaller they rather have the poor poorer”

Opposite Day on November 7, 2011 at 6:46 PM

Wal-Mart has done more to increase the standard of living of poor (and middle income) people than the War of Poverty et al. ever did.

petefrt on November 7, 2011 at 6:20 PM

That’s a bumper sticker waiting to be made…

visions on November 7, 2011 at 6:48 PM

Can anyone give an estimate on the number of poor in America using this metric, when considered against the world as a whole? Does anyone know how to do the calculation and get an actual number?
I’d love to see it, and then discuss that as the poverty rate in America.

dcman98 on November 7, 2011 at 6:23 PM

Just read about this last week – something to the effect that the so called “99%” ARE the 1% when compared to global conditions.

Here it is.

scituate_tgr on November 7, 2011 at 6:49 PM

Quote from my link above:

In America, the top 1% earn more than $380,000 per year. We are, however, among the richest nations on Earth. How much do you need to earn to be among the top 1% of the world?

$34,000.

That was the finding World Bank economist Branko Milanovic presented in his 2010 book The Haves and the Have-Nots. Going down the distribution ladder may be just as surprising. To be in the top half of the globe, you need to earn just $1,225 a year. For the top 20%, it’s $5,000 per year. Enter the top 10% with $12,000 a year. To be included in the top 0.1% requires an annual income of $70,000.

scituate_tgr on November 7, 2011 at 6:52 PM

My DVD of Atlas Shrugged arrived in today’s mail. Putting it into the DVD player now, and hitting the start button in 5…4… 3…

Night, all. See ya in the AM. :)

petefrt on November 7, 2011 at 7:03 PM

The poverty that we have now is much greater than ever in our history.
I don’t mean poverty in terms of wealth but in self sufficiency, determination and all of the basic skills that men and women once had like sewing, farming, hunting, fishing, canning, meat processing.

Our nation is a nation of people that are so unskilled at daily life that they are absolutely dependent on a collapsing society which can not afford them any longer..

The only folks that have a chance are country folk.

esnap on November 7, 2011 at 7:19 PM

So….. After spending trillions of our tax dollars to fix the poverty problem in the US it has only gotten worse(using their measure). Time to get the government out of the poverty business as they only make it worse.

Corsair on November 7, 2011 at 7:22 PM

The other big dirty secret is the temporary nature of individual poverty. I’m sure there are some “poor” who are stuck in that state, but a very large number who would be considered “poor”, or living on poverty wages, are doing better years later. Many of the people in this category are new unskilled workers, and most people don’t stay that way for too long.

peski on November 7, 2011 at 7:28 PM

If Obamugabe doesn’t hurry up and create enough jobs for 5 million people with degrees in “Women’s Study”, it’s just gonna get worse.

By the way, how many cast members are in a typical Vagina Monologue?

I just might be on to something.

esnap on November 7, 2011 at 7:42 PM

The gall of this administration never ceases to amaze me. Now they’ve defined poverty as something other than poverty.

sadatoni on November 7, 2011 at 8:14 PM

So….. After spending trillions of our tax dollars to fix the poverty problem in the US it has only gotten worse(using their measure). Time to get the government out of the poverty business as they only make it worse.

Corsair on November 7, 2011 at 7:22 PM

True that!

However, as Will Rogers pointed out, the U.S. was the first country to go to a depression in an automobile… but it’s false logic to infer that there was therefore no Great Depression and that millions of Americans weren’t indeed decidedly poor by any reasonable standard.

Dr. ZhivBlago on November 7, 2011 at 8:32 PM

In 100 years, when the common man has the same degree of wealth that Bill Gates has today, they will still be considered poor.

Jimmy the Dhimmi on November 7, 2011 at 8:45 PM

My DVD of Atlas Shrugged arrived in today’s mail. Putting it into the DVD player now, and hitting the start button in 5…4… 3…
petefrt on November 7, 2011 at 7:03 PM

Awww MAN . . . . . . . . . . .(sheer jealousy)

Anyway, enjoy.

listens2glenn on November 7, 2011 at 8:49 PM

This is what marxism looks like.

KMC1 on November 7, 2011 at 11:39 PM

In other words, the new tool measures income inequality not purchasing power. Or, as Rector put it, “The old measure told us how much one household can purchase; the new measure tells us how much one person can buy relative to others.”

So the United States Government now defines poverty by a measure where poverty is literally ineradicable without socialism.

In essence, the current measure of poverty would now say there was less poverty in the Soviet Union, where everyone had more or less nothing, than in the United States today.

There’s a reason liberals have replaced the actual societal ill “poverty,” which provoked action from right-minded Christians, with the new buzzword/bogeyman of “inequality.”

It’s the same reason that the WHO ranks nations’ “health care” by how heavily subsidized the available health care is, rather than wholly by how good it is.

It’s fixing the argument. Under the Obama administration’s new statistics, the US will never, ever make progress against poverty “inequality”. The richer we get, the more some will have than others. Therefore, there will always be political “proof” or “facts” to recommend turning around and embracing the economic Ludditism of spreading the wealth around.

HitNRun on November 8, 2011 at 12:29 AM

Anybody willing to guess what the crosstabs look like by ethnicity and native born versus immigrant? Remember that the Census doesn’t track the legal status of immigrants. I recall somewhere seeing the perfect correlation between illegal immigration and poverty in the US over the past several decades. So, even with upward economic mobility among the lower deciles, the number of people who left poverty behind are merely replaced by an equal number (or more) of cross-border interlopers who replenish the poverty pool.

in_awe on November 8, 2011 at 12:55 AM

In most countries in the world today, poverty is measured in terms of caloric intake.

If When the federal government stops Socializing frivolous things like health care, and starts Socializing NECESSARY things like food production, America will finally have entered the “World Economy” liberals keep pining for.

logis on November 8, 2011 at 8:52 AM

Shoot, I remember when my typewriter only had capital letters, and I was happy to have them….

Larr on November 8, 2011 at 1:36 PM

You’ll know you’re below the poverty line when you stand somewhere, staring vacantly at nothing in particular and the flies crawl in and out of your mouth. And neither you nor the guys next to you care.

BobMbx on November 8, 2011 at 3:01 PM

In most countries in the world today, poverty is measured in terms of caloric intake.

logis on November 8, 2011 at 8:52 AM

If this applied here in the States, then poverty would sit around maybe 2-3% of total US population, max.

Michelle Obama has stated that the most important crisis to fix in America is obesity.

A few billion people across the globe would happily kill to have an obesity problem.

coldwarrior on November 8, 2011 at 3:55 PM