A Better Measure of America’s Poverty Rate

Sen. Mike Lee is proposing legislation that, if instituted correctly, could more accurately reflect America’s poverty rate to better determine the impact of welfare assistance and whether it is doing the job it is supposed to do.

Lee’s proposal is called the Poverty Measurement Improvement Act. The point of it is just as the title explains: to more accurately measure household incomes to see if poverty is as bad as the data indicate.

As Lee, R-Utah, explains:

This bill would improve the data available to lawmakers by authorizing a new Census Bureau survey that would more accurately calculate income by including wages and federal means-tested benefits. This information would then be linked with individual records from the IRS and other federal agencies that administer means-tested benefit programs.

The Census Bureau calculates the official poverty rate, but the results are based on families’ pre-tax, cash income, and ignores assistance like Supplemental Nutrition Assistance Programs (SNAP) and tax credits for working families.  The result is that the Census counts the people who are being helped by these programs as still living in poverty when in fact they may be living in much better conditions.

Poverty has been a persistent and seemingly intractable problem for decades. President Lyndon Johnson launched the Great Society in 1964 with the goal of eradicating poverty. But in 1966, the poverty rate was 14.7 percent while in 2012, it was 15 percent. The lowest the poverty rate ever reached was during the Nixon administration, when it dove to 11.1 percent (1973).

In 2012, the amount spent on poverty programs was 20 times higher than when the anti-poverty programs were instituted in 1964, and during that time assistance has increased from $160 to more than $2,000 per person in real dollars.

As an aside, the number of children being raised by a single mother rose from 8 percent in 1964 to 23.7 percent in 2013 while the number of working-age men (25-54) participating in the labor force has dropped by shocking amounts.

As demographer Nick Eberstadt tells it, 7 million working-age men are currently not seeking work:

In fact, if work rates for men were only as high today as in 1965—a time when we enjoyed true “full employment”—nearly 10 million more men would have paying jobs today. Think of the difference that would make to our country.

In other words, what used to be a “nuclear household” has seemingly been nuked.  Lee noted the impact of government programs that discourage one of the most important relationships individuals have and society benefits from: families.

The core problem with our welfare system today isn’t just its bloated annual budget, but its tendency to undermine the two most dependable routes out of poverty: marriage and work.

But we can’t improve these programs until we have better data on how they are affecting working families. The Poverty Measurement Improvement Act will do just that.

Poverty researchers on both sides of the political aisle agree that government assistance helps pull people out of poverty. Accurately measuring the role of public assistance will help determine where opportunities lie to increase workforce participation, encourage stronger households, and inform the role of programs like the Earned Income Tax Credit that are used to get people into the workforce. That’s a goal to encourage, and measuring the data correctly seems like an easy starting point.