Despite poverty's messiness, we've tended to measure progress against it by a single statistic, the federal poverty line. It was originally designed in the early 1960s by Mollie Orshansky, an analyst at the Social Security Administration, and became part of Lyndon Johnson's War on Poverty.
Talk about your Quagmire!
By this measure, we haven't made much progress. Except for recessions, when the poverty rate can rise to 15 percent, it has stayed in a narrow range for decades. But the apparent lack of progress is misleading for two reasons. First, it ignores immigration, which has increased reported poverty. Many immigrants are poor and low-skilled. From 1989 to 2007, about three-quarters of the increase in the poverty population occurred among Hispanics - mostly immigrants, their children and grandchildren. Poverty "experts" don't dwell on immigration, because it implies that more restrictive policies might reduce U.S. poverty.
The definition of poverty, you see, is one of the keys to the redistribution of income.
Second, the poor's material well-being has improved. The official poverty measure obscures this by counting only pre-tax cash income and ignoring other sources of support. These include the earned-income tax credit (a rebate to low-income workers), food stamps, health insurance (Medicaid), and housing and energy subsidies. Spending by poor households from all sources may be double their reported income, reports a study by Nicholas Eberstadt of the American Enterprise Institute.
The existing poverty line could be improved by adding some income sources and subtracting some expenses (example: child care). Unfortunately, the administration's proposal for a "supplemental poverty measure" in 2011 - to complement, not replace, the existing poverty line - goes beyond these changes. The new poverty number would compound public confusion. It also raises questions about whether the statistic is tailored to favor a political agenda.
hey! It's da Chicago Way!
The "supplemental measure" ties the poverty threshold to what the poorest third of Americans spend on food, housing, clothes and utilities. The actual threshold - not yet calculated - will almost certainly be higher than today's poverty line. Moreover, the new definition has strange consequences. Suppose that all Americans doubled their incomes tomorrow, and suppose that their spending on food, clothing, housing and utilities also doubled. That would seem to signify less poverty - but not by the new poverty measure. It wouldn't decline, because the poverty threshold would go up as spending went up. Many Americans would find this weird: People get richer but "poverty" stays stuck.
But the War on Poverty continues! The "War Without End"©
The new indicator is a "propaganda device" to promote income redistribution by showing that poverty is stubborn or increasing, says the Heritage Foundation's Robert Rector. He has a point. The Census Bureau has estimated statistics similar to the administration's proposal. In 2008, the traditional poverty rate was 13.2 percent; estimates of the new statistic range up to 17 percent. The new poverty statistic exceeds the old, and the gap grows larger over time.
To paraphrase the late Sen. Daniel Patrick Moynihan: The administration is defining poverty up. It's legitimate to debate how much we should aid the poor or try to reduce economic inequality. But the debate should not be skewed by misleading statistics that not one American in 100,000 could possibly understand. Government statistics should strive for political neutrality. This one fails.
When has 'government' ever been "politically neutral"?