The Public Policy / Poverty by the Numbers
Levy, Frank
"The Public Policy / Poverty by the Numbers" by Frank Levy Collecting poverty statistics is a tricky business. For a decade and a half the government seemed to be keeping an accurate count of the country's poor. But in the...
...New programs are currently being considered by Congress in its debate over welfare reform...
...Professor Leben wishes to push the date back even further...
...The same can be said for Trotskyism, which was founded by a Jew but may or may not be modern...
...Published as a guide to homemakers, these plans contained menus which varied with both the composition of the family and its desired level of food expenditure, and were designed to meet minimum nutritional requirements...
...Initially, the Council of Economic Advisors defined a poverty line at $3,000...
...A poverty count of 25 million people means that one out of every eight Americans is poor...
...The substantial past reduction of poverty can • Fluctuations of this type were first explored systematically twenty years ago by Professor Milton Friedman in his theory of permanent income...
...Traces of this can be seen in the subsequent development of country music...
...It is this controversial hypothesis which must now be tested...
...It should be noted that both studies worked from the CPS which contains incomplete information about the types and amounts of in-kind benefits received...
...In the early 1960s, almost two-thirds of the poor lived in households headed by an able-bodied, working-age male...
...He then translated these figures into menus, using cheap, commonly available foods, and used the menus to construct minimum-cost estimates of a family's diet...
...so if it 'was correct for a family of four, it surely was wrong for a family of seven or for one person living alone...
...To construct annual poverty counts, the Orshansky lines are applied to the March edition of the Current Population Survey (CPS), a monthly survey of 47,000 households (100,000 individuals) which the Census conducts for the Bureau of Labor Statistics...
...Rowntree had been able to survey housing and clothing prices in York, but Orshansky, confronting the United States, had no such option...
...It is on this question of valuation that the Sales taxes are typically included in the price of goods and so are subsumed in any purchasing-power measure like the Orshansky lines...
...t But the third criticism was the strongest: By defining income as money income alone, the Census ignored the substantial and increasing amounts of in-kind income received through programs like Food Stamps, public housing, Medicaid, free school lunches, and so on...
...While this figure was close to that of the Council of Economic Advisors, the Orshansky lines varied by family composition and had at least a partial rationale...
...Box 877, Bloomington, Indiana 47401 PLEASE PRINT ^ New subscription Name ^ Renewal Address City ^ One year (ten issues) $10 ^ Two years $18 ^ Three years $25 State Zip X71 ^ Payment enclosed ^ Please bill me The American Spectator May 1978 25 housing benefits (valued at cost), the poverty count drops from 25 million to 18.2 million people—eight percent of the population...
...The press seized on the most dramatic findings: "Only one in five people considered poor in 1975 were poor in every one of the [previous eight] years The differences between the CBO's 12.8 million figure and Paglin's 6.4 million figure are still being explored...
...For a discussion of these issues see Mollie Orshansky, "Counting the Poor: Another Look at the Poverty Profile," Social Security Bulletin, 28 (1965), pp...
...For if this could happen in Kansas City, why not elsewhere...
...The first was undertaken by the Congressional Budget Office (CBO) in response to a request from then Senator Walter Mondale...
...CBO and Professor Paglin part company...
...Widely publicized work by the University of Michigan's Institute for Social Research portrayed the official poverty population as a kind of pool with people constantly flowing in and out...
...Over the six years, the number of poor people in male-headed families declined by about 12 million while the number of poor people in female-headed families remained relatively constant at about 11 million...
...For example, one might say that a program which cost the government $100 per recipient should be treated as if it conferred $100 of income...
...While more than a few traces of Hebraic chant can be found in the tradi26 The American Spectator May 1978...
...Rowntree classified a family as poor if its Frank Levy is a Senior Research Associate at the Urban Institute...
...so it was the CBO paper that got all the headlines...
...24 The American Spectator May 1978 applied in 1963, the poverty population stood at 36 million people, about 20 percent of the population...
...Professor Paglin argues that the valuation problem is nonexistent: If we arbitrarily define a poverty standard, then we can arbitrarily define the cost of all programs as equal to income...
...Unfortunately, being poor nine years in a row is a rather strict test of hardship, one that most individuals are unlikely to pass...
...Having settled on a cost for food, Orshansky faced the problem of estimating costs for other necessities...
...The most ambitious of these—President Carter's Program for Better Jobs and Income—would reduce the poverty population by as much as one-third, but it suffers from poor political prospects...
...By contrast, two-thirds of the 1976 Census poverty population are white, three-fifths live outside central cities, two-fifths live in the South, and slightly over half of all poor families are headed by a male...
...He argues like a man who knew where he wanted to come out before he began—in this case to produce as low an estimate of the poverty population as possible...
...But these numbers are one-quarter to one-half less than the poverty estimates of the U.S...
...To construct a poverty definition, she drew on her earlier experience with Food Plans in the Department of Agriculture...
...the room rent alone does the trick...
...But before the CBO numbers could sink in, they were implicitly challenged by other research which suggested that individual poverty was only a transitory experience...
...If, for example, one examines the Michigan data for 1967-1973, one finds an annual average poverty population (under the Census definition) of about 19 million people...
...When the CBO defines income as the sum of after-tax money (corrected for underreporting) and all food and A revised version was issued in June 1977...
...He argues in "Micah, Monotheism, and Memphis," (Monumentica Judaica Tennesseeica, Volume LXII, No...
...Correspondingly, both papers had to "simulate" in some fashion the assignment of a portion of in-kind benefits to recipients.they were interviewed," noted the New York Times...
...American poverty is not yet extinct: Between 11 and 18 million people—five to eight percent of the population—are still poor now and without help will stay poor for the foreseeable future...
...Orshansky joined the Social Security Administration where she too was assigned to investigate the poor...
...It appears that even by using the best of numbers the poor will be with us for some time...
...For a family of four, the Orshansky line equaled $3,130...
...The press reaction was unfortunate because, while both reports attacked the Census estimates, the CBO still implied that a moderately large poverty population still exists...
...But in the past year the numbers have been subjected to a series of well-publicized critiques, all of which point to the same conclusion: Official statistics exaggerate the extent of American poverty...
...The debate has been brought to the new world, and not merely because this is a nation of immigrants...
...The CBO' s informal logo contains the motto, "On the one hand...on the other hand...," and true to this slogan the CBO raises the problem of valuation, presents a number of poverty calculations based on different treatments of in-kind income, and lets the reader take his pick...
...But unlike Rowntree's, the $3,000 figure had no particular underpinning...
...Placing a cash value on the benefits is much harder...
...Professor Paglin, using after-tax cash, all food and housing programs, and Medicaid, arrives at a poverty count of 6.4 million people, or three percent of the population...
...Few observers expect the economy to enter a sustained 1960s-like expansion...
...But should one occur, it will have a more limited impact on the poverty population because that population itself has changed...
...Poverty by the Numbers income fell below the appropriate standard...
...Beginning about 1960, the department began to supplement its standard list of plans with an "Economy Food Plan," a set of menus specifically aimed at persons on welfare or in other "emergency situations...
...Today, both may have run their course...
...so they were soon adopted as the official measure of American poverty...
...As it happened, the CBO first issued its report in January 1977* while Professor Paglin presented his at a conference in September 1977...
...When the Orshansky lines were first • Poverty standards for one- and two-person households involve multiplication of the appropriate Economy Food Plan by somewhat larger factors...
...By ignoring this underreporting, the Census underestimated income and overestimated the poor...
...If one discounts Medicaid (as I am inclined to do), the CBO report suggests that the poverty population is at least one-quarter less than the Census estimate but still a fairly large number, perhaps one out of every 13 or 14 people...
...This problem of valuation is particularly severe in the case of Medicaid where the evidence suggests that people ask for "excessive" treatment because it costs them very little...
...Accordingly, she constructed a family poverty standard by multiplying the cost of the appropriate Economy Food Plan by three...
...To these diet costs he added estimates of housing costs (based on his own surveys of York), clothing costs, and so on...
...If the matter were to end there, the proportion would be a legitimate topic for national concern...
...Every month the CPS includes questions on individuals' labor market status that form the basis for monthly unemployment statistics...
...We know, for example, that total payments made for unemployment insurance, workers compensation, veterans benefits, and so on are half again as large as the receipt of those payments reported in the CPS...
...Today Medicaid costs about $400 per individual per year...
...In 1901, the English sociologist B. Seebohm Rowntree published Poverty, A Study in Town Life, an examination of the poor in the city of York...
...First, they argued that the Census overstated poverty because it failed to adjust for underreporting of income in the Current Population Survey...
...The result was a set of fixed income standards which varied by family size and composition...
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...Census, and the reasons for this discrepancy provide a revealing glimpse into the wonderful world of government numbers...
...The Jewish Historical Society of Kansas, having unearthed, authenticated, translated, annotated, and adumbrated the definitive Kansas City Kabala—thereby establishing the presence of kabalistic inquiry in the Great Plains at least a generation prior to the earliest theorized date, hit an especially painful raw nerve...
...The menus entailed a cost of about $4.60 per person per week (for all meals), and comprised a plausible poverty-level diet...
...To identify the poor, Rowntree first solicited medical opinion on the minimal caloric intake required for males and females of various ages...
...But as the 1976 poverty counts were being made, the Census methodology was questioned by two independent analyses...
...In keeping with their relatively objective construction, the Orshansky lines were adjusted over time for changes in the cost of living, but otherwise were unchanged...
...The poverty standard is also reduced if a family lives on a farm...
...Even if we were to make a back-of-theenvelope calculation and apply the Michigan three-quarters ratio to the CBO numbers, we would still be left with about 13 million people who are poor now and will remain so for much of the near term...
...Yet few suppose that a poor family of four, given $1,600, would run out and spend it on a Medicaid-like health insurance policy...
...About 60 percent of the poor work at least sometime during the year...
...John Nollson Did Moses Part the Mississippi...
...The American Spectator...one of the nation's most energetic and sprightly journals of opinion...
...Leben's provocative thesis cannot stand up to a single simple question: Why has there not been even one great Jewish country-and-western singer...
...At this point, a technical aside is in order...
...Rather, she surveyed a series of household budget studies, conducted by the Bureau of Labor Statistics, and determined that lower-income and lower-middle-income families typically spent about one-third oftheir income on food...
...Nonetheless, the two studies have more in common than not as both claim the Census has seriously overestimated poverty, a fact duly noted by the press...
...But in many cities welfare payments are relatively high, and when combined with minimal earnings are enough to bump a family over the Orshansky line...
...Existing programs can be expected to keep pace with inflation (and hence with the poverty standard) but not much more...
...A temporary turn at a well-paying job may push them above the poverty line for a while, but they are not to be confused with Horatio Alger...
...Enter Mollie Orshansky...
...But taken to its limit, the proposition is absurd...
...The views expressed in this article do not necessarily reflect those of the Urban Institute...
...See A Theory of the Consumption Function, Princeton University Press, 1957.be attributed to two factors: the rapid expansion of private employment in the 1960s, and the rapid expansion of government benefit programs in the late 1960s and early 1970s...
...But each March the labor market questions are supplemented by questions on the sources and amounts of a household's income over the previous calendar year, and these income questions are analyzed by the Census to yield an estimate of the poverty population...
...3-29...
...But the figure did not vary with family size...
...This definition, like Rowntree's, was operational—one could actually apply it to the Census and count the poor...
...While performing a census of beggars is an old and rather straightforward procedure, taking a census of the poor is more complex, for it requires a formal definition of poverty...
...The proposals of Representative Al Ullman, Senators Henry Bellmon and Howard Baker, and others have better political prospects but would make a significantly smaller dent in the poverty problem...
...The Orshansky lines measure purchasing power and so are most appropriately compared to a family'snet (after-tax) income, since the poor, like everyone else, pay Social Security and a variety of other non-sales taxes...
...so today nearly two-thirds of the poverty population (by any definition) are in households headed by a woman, by someone who is aged, or by someone who is disabled—i.e., households that are less likely to participate in an economic recovery...
...THE PUBLIC POLICY by Frank Levy Collecting poverty statistics is a tricky business...
...Time Join the thousands of thoughtful people who read The American Spectator...
...It implies that a poor family put up by the government in a fancy hotel for several weeks is out of poverty even if it has no clothing or food...
...In the early 1960s, Ms...
...The topical intellectual debate—wheth- er modernism was invented by the Jews or vice versa—rages, and quite properly, in the pages of the better journals...
...Similarly, it is unclear whether we will see any new expansion in government benefit programs...
...Today the people who appear in these poverty tabulations are in a sense poorer than poor...
...When the United States rediscovered poverty six decades later, it adopted a similar approach...
...As the economy expanded, these were the first families to cross the poverty line...
...Only 3.2 million—one-fifth of this average—were poor in every year...
...The reduction was due in large measure to good economic conditions and was concentrated among families who could most easily take advantage of the tight labor markets...
...Between 1970 and 1976, increased unemployment and rapid inflation eroded real incomes, and the Census count of the poverty population increased slightly to 25 million, again about 12 percent of the population...
...For example, between 1963 and 1976 the purchasing power of the median family income increased by about one-third, but the purchasing power of the Orshansky lines—now $5,700 for a family of four—remained constant...
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...Translating research into headlines is also a tricky business, so it is not surprising that the critiques themselves have been exaggerated...
...Failure to count these benefits caused serious understatement of income and serious overstatement of poverty...
...That theory conceived of a family's current income as the sum of an underlying long-run income and a temporary, positive or negative, variation...
...When a national newsmagazine does a poverty story, it usually focuses on a black, inner-city mother on welfare...
...4, April 1977) that modernism came to Tennessee in the form of three dentistswho deserted General Grant's army during the siege of Vicksburg...
...Despite a continuous reduction in pov- erty over the last 13 years, the outlook for these 13 million long-term poor (or the CBO's 18.2 million) is fair at best...
...Weinstein, writing in his monumental tome Hebraic Chant and Hoedown Calls: An Inquiry Into Whether the Ten Lost Tribes May Have Migrated to Arkansas, admits as much...
...The outcome is of no little interest to traditionalists and modernists alike, for it will answer once and for all the most significant question of recent cultural history: Was cubism by its nature anti-Semitic, or just occasionally...
...Similarly, total public-assistance payments exceed reported receipt of public assistance by one-third...
...For a typical family it was plausible enough, being equal to about one-half of median family income...
...As the decade progressed the poverty population fell, until by 1969 it had reached 24 million people, or 12 percent of the population...
...Pointing to the problem of in-kind benefits is easy...
...But 14.2 million—three-quarters of the average—were poor four years or more, i.e., at least half the time...
...The number, about half of the Census estimate, represents one out of every 16 people in the country...
...The institute's study, based on a cohort of individuals followed over time, cast doubt on simple cultures of poverty in which being poor now means having been poor always...
...When Medicaid is included as well, the CBO count drops further to 12.8 million, or six percent of the population...
...Surprisingly, considering their diverse origins, the two papers made the same general criticisms...
...This conclusion was partially offset by the second criticism: The Census understated the poverty population because it compared the Orshansky lines to families' gross (pre-tax) income...
...The second was prepared by Professor Morton Paglin of Portland State University under a fellowship from the Hoover Institution...
...Predictably enough, the headlines focused on the fact, rather than the extent, of the Census overestimate, leaving the impression that all the poor were rich...
Vol. 11 • May 1978 • No. 7
