Do Official Poverty Data Overlook Too Many Struggling Californians?

Last month, we reported that California’s poverty rate jumped from 12.7 percent in 2007 to 14.6 percent in 2008. That means that 5.3 million Californians – nearly one of every seven – were officially considered to be living in poverty last year.

New data from the US Census Bureau suggest that many more Californians may be in poverty. Many experts believe the official poverty rate is deeply flawed, and the Census Bureau has designed several alternative poverty measures that may reflect families’ spending and resources more accurately than the official poverty numbers do now.

The official poverty rate is based on family spending patterns in the 1960s – specifically, on data showing that families at that time spent one-third of their income on food. The original poverty “threshold” – the line that separates poverty from non-poverty – was determined by multiplying the cost of a minimally adequate food plan by three. (Different thresholds were calculated for families of different sizes and ages.) That original threshold is updated for changes in the cost of living each year. Now, however, only about one-seventh of families’ income goes to buy food, so multiplying food costs by three may not be enough to cover families’ living expenses. The official measure also overlooks some essential spending – for health care costs and work-related expenses, for instance – while ignoring some important resources, including refundable tax credits such as the EITC and housing subsidies.

The Census Bureau’s alternative poverty measures adopt several recommendations from a National Academy of Sciences research panel. The alternative measures calculate a poverty threshold based on a minimum budget for families’ essential food, housing, and clothing costs, adding a bit more for miscellaneous essentials.

To illustrate the impact of these alternative measures on our picture of who lives in poverty, one of the alternative measures sets the poverty threshold for a family with two adults and two children at $24,755 in 2008 – nearly $3,000 higher than the official poverty threshold of $21,834 – while another assumes that this family would need an income of at least $29,654 – nearly $8,000 higher than the official poverty threshold. One definition leads to a poverty rate that’s 2.5 percentage points higher than the official national poverty rate of 13.2 percent, suggesting that 7.6 million more Americans lived in poverty in 2008 than the official poverty rate shows. Some of the other alternative rates are nearly the same as the official poverty rate.

The fact that it is hard to pin down a precise definition of poverty suggests that the official numbers may not measure all the Californians who are struggling to make ends meet.

— Vicky Lovell

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