Poverty

...Its living standard was more closely represented by the BLS's "intermediate" budget, which, after deducting payroll and income taxes, was priced at $12,400 in 1975...

...the relative position of these people will likely be much worse after than before income in kind has been added to cash income...

...Molly Orshansky, "How Poverty is Measured," Monthly Labor Review, February 1969, pp...

...Emphasis on the official poverty threshold obscures the fact that most poor people subsist on incomes well below that threshold...

...q Reference Notes John L. Palmer and Joseph J. Minarik, "Income Security Policy," Setting National Priorities, Henry Owen and Charles L. Schultze, eds...

...Recent research work conducted at the Brookings Institution and by the Congressional Budget Office (CBO) has cast doubt on these figures...

...more than 3 million were men and women 65 and over...

...By this measure, the number of people in poverty dwindles to near insignificance-5-6 percent of the total popuation, less than half the proportion under the current Census definition...

...WILY DOES POVERTY PERSIST...

...There prevails, as perhaps the fundamental source of persistent poverty, a substantial low-wage component of the wage system, and a pervasive insecurity of job tenure in 130 most industries...

...of families without children under 18 (probably mostly aged persons), $1,888...

...It is unlikely that the problem of poverty will be resolved without a massive redistribution of public resources...

...they averaged $2,756 in 1975...

...6, "Assets on the Threshold of Retirement...

...A substantial proportion of these resources is currently expended on subsidies to the middle class (examples have been cited...

...q 131...

...Unemployment benefits, similarly, should replace lost earnings in full...

...505-82...

...Congress (Washington, D.C.: G.P.O., April 10, 1972), especially pp...

...I believe social security should replace all private and civil service pension systems, and pay benefits equivalent to the after-tax value of the last few years of preretirement earnings...

...NO ECONOMIC DEFINITION of poverty can be meaningful unless it relates to prevailing social norms of consumption and community participation...

...Lola M. Irelan, et al., Almost 65: Base Line Data from the Retirement History Study, U.S...

...U.S...

...The mean (average) income of all low-income families (including those with incomes 25 percent above the poverty line) was $2,749 in 1974...

...Poverty therefore will persist...

...Department of Health, Education, and Welfare, The Measure of Poverty: A Report to Congress as Mandated by the Education Amendments of 1974 (Washington, D.C.: G.P.O., April 1976), 162 pp...

...So what remains of in-kind income is mostly Food Stamps and school luncheons...

...See especially Chap...

...The BLS's "lower" budget for a retired couple was priced at $4,500 in autumn 1975...

...Any such comparison turns out to be most unfavorable to the poor and other lowincome recipients...

...federal housing assistance to lowincome families amounts to $3 billion...

...13, 1977), 37 pp...

...12-20...

...Peter Henle, "Trends in Retirement Benefits Related to Earnings," Monthly Labor Review, June 1972, pp...

...The population in poverty would then have totaled 30 million persons, spelling virtually no improvement in the poverty count since the middle '60s...

...When payroll and personal income taxes were deducted from the budget, it still stood 50 percent above the poverty threshold (assuming families in poverty pay no such taxes...

...But various adjustments must be made, and the value of the in-kind income is reduced to an extra 31 percent...

...U.S...

...More than one fourth of all black families and close to 13 percent of all white families lived in or near poverty as officially defined...

...Department of Health, Education, and Welfare, Social Security Administration, Research Report No...

...The standard set by the static subsistence budget, whose cost defined the official poverty threshold, results in the statistical fiction that the number of persons in poverty is declining...

...In 1975, the lowest BLS budget totaled $9,600, representing a very austere living standard...

...Furthermore, the tax deductibility of mortgage interest on homes spells a subsidy of $5.4 billion in the current fiscal year...

...In 1975, the average (or median) income of a four-person family was $15,848...

...roughly the same amount was paid by the federal government in income security benefits to mothers and children...

...The buying power of a poor family's or person's presumed subsistence budget thus remains static...

...Fewer than half of all retired workers also draw private pensions, and these are usually very modest...

...The food plan constitutes one third of the budget total, which is the ratio of food expenditures to total family expenditures found by various surveys...

...This concept is characterized, first of all, by excluding any changes in the norms of adequacy, as indicated by prevailing average family incomes or the family budgets formulated by the Bureau of Labor Statistics...

...Background Paper No...

...on the contrary, it worsens...

...The basic issue here is the concept of poverty used in determining the cutoff above which people are no longer considered "poor...

...the reduction of poverty"(Brookings), and that "the incidence of poverty among families has fallen by approximately 60 percent since 1965" (CBO...

...These claims, however, are thoroughly misleading, and because of their likely impact on 128 legislation and public attitudes, they are damaging to the interests of the poor...

...John J. Korbel, Poverty Status of Families under Alternative Definitions of Income...

...Other, similar comparisons could be drawn, all pointing to the same conclusion: the relative position of the poor does not improve when in-kind income is added to their cash income...

...U.S...

...They have added the cash value of income in kind—e.g., Food Stamps, Medicaid, rent subsidies—to the money income received by the poor...

...retirement benefits rose nearly sevenfold...

...Robert D. Plotnick and Felicity Skidmore, Progress Against Poverty: A Review of the 1964-1974 Decade (New York: Academic Press, 1975), 247 pp...

...Assuming that the relation between cash and noncash income in 1972 still obtained in 1975, noncash benefits added $1,700 to the poverty threshold cash income of a four-person family, raising its total (cash and noncash) income to $7,200...

...Adam Smith wrote that "by necessaries I understand not only the commodities which are indispensably necessary for the support of life, but whatever the custom of the century renders it indecent for creditable people, even of the lowest order, to be without...

...then, after figuring in the "understatement," its "corrected" income, at $3,783, would still have fallen well below the official poverty level...

...these resources should be used to alleviate poverty, although resistance may be too strong for this to be realized...

...Department of Commerce, Bureau of the Census, Money Income and Poverty Status of Families and Persons in the United States: 1975, and 1974 Revisions (Washington, D.C.: G.P.O., September 1976...

...This 1975 ratio marks a steady deterioration in the relation of the official subsistence cutoff to average family income: in 1960, the ratio had been 49 percent, and 40 percent in the mid-60s...

...The researchers have asked: why in the face of enormous increases in federal outlays for income supports should the reported incidence of poverty still be so high...

...Yet this sum stood 74 percent above the 1975 poverty cutoff for a four-person family...

...In 1975 the Census Bureau reported that nearly 26 million persons had incomes, or were living in households having incomes, that fell below the so-called poverty threshold ($5,500 for a family of four that year...

...The poverty threshold for a comparable family represented 35 percent of that average...

...These benefits, moreover, have been heavily subsidized, and cost the federal government well over $8 billion in fiscal 1976 in employer taxes foregone...

...This dictum was implicitly accepted by Marx and informs his conception of wages as the price of labor power...

...In attempting to answer the question, the researchers have defined new standards for measuring poverty...

...The official poverty cutoff, moreover, compares very unfavorably with the lowest of the three budgets priced by the BLS annually for fourperson families, which roughly indicate different levels of living...

...Health benefits paid under private and public (civil service) plans rose nearly sixfold between 1960 and 1973...

...Public assistance payments to families with dependent children are even more stingy...

...Washington, D.C.: Brookings Institution, 1976), pp...

...The study includes the rental value of public housing, but most of the poor do not live in public housing, nor are they eligible for it...

...17, Congress of the U.S...

...The immediate reasons lie mainly in the parsimony of public assistance grants and social security benefits...

...The only allowances made in setting the poverty threshold is price change over time...

...of families with one or more children, $3,026...

...In asserting that poverty has greatly declined, the researchers at Brookings and the CBO have unquestioningly accepted the official poverty line, although its inadequacies are patent and have been widely discussed...

...It does, however, further emphasize the fictitiousness of the official poverty threshold, derived as it is from an obviously inadequate and generally unusable food plan...

...Their approach permits these researchers to claim that "substantial progress has been made during the past two decades toward...

...The official poverty cutoff for a four-person family amounted to little more than one third of this budget in 1975...

...In assessing income in kind given to the poor, the income in kind of higher income groups must be taken into account, if social norms are to set the terms of adequacy...

...Had the poverty cutoff for a fourperson family in 1975 been the same as in 1960, it would have amounted to $7,600...

...Heads of families on welfare should be offered the services enabling them, if they are able-bodied, to work, with public-assistance grants making up the difference between their wages and an adequate income, i.e., one that corresponds to the cost of the BLS's "intermediate" budget...

...Yet the number of persons "in poverty" declined by only about one third...

...Some of these families undoubtedly owned assets such as a home or savings from which they could supplement their income...

...37-41...

...James R. Storey, Public Income Transfer Programs: The Incidence of Multiple Benefits and the Issues Raised b t Their Receipt...

...Adding the cash equivalent of income in kind to the poverty cutoff does nothing to reduce poverty in terms of the prevailing social norms of need...

...But government surveys have time and again shown the meagreness of these assets, including owned homes, which for lack of funds often cannot be maintained or even properly heated, and whose imputed rental value therefore declines...

...Today, as in 1965 when it was first defined, the cutoff is equivalent to an income fitting a stylized household budget: it is based on the Department of Agriculture's "economy" food plan, designed for "emergency or temporary use when funds are low"—a plan that by the Department's own estimate would preclude the vast majority of persons who use it to obtain a nutritionally adequate diet...

...The larger reasons fall outside the purview of this article...

...Generally, compensation other than pay for time worked, including also increasingly liberal paid leave provisions, has been rising—from I5 percent of the total compensation of factory workers in 1959 to 23 percent in 1974...

...Washington, D.C.: Congressional Budget Office, Jan...

...This decline is then cited to justify a reduction in the resources needed for alleviating poverty...

...And vast sums are spent on military items that have no rationally conceivable purpose, but it is unlikely, in the present context of political forces, that they will be reduced and in part reallocated to human purposes...

...Department of Commerce, Bureau of the Census, Characteristics of the Population below the Poverty Level, 1974 (Washington, D.C.: Government Printing Office—hereafter G.P.O., January 1976...

...Correction of such understatement would, in the aggregate, add II percent to respondents' social security income, 25 percent to public assistance income, and 42 percent to income from unemployment insurance, workers' compensation, and veterans' payments...

...It is also implicit in relating increases in wages and fringe benefits to increases in national productivity...

...An additional Ii million persons had incomes just above the poverty level, i.e., at most $6,900...

...But this was still considerably less than the income this family would have received, had the above-mentioned 1960 ratio of the poverty cutoff to the median income of all four-person families still prevailed...

...One half of all the heads of families in poverty reported that they had been employed the previous year, and nearly one third of these had worked at year-round, full-time jobs...

...The problem is thus being defined away...

...The steep rise in government transfer payments (only about half of it has benefited the poor) must be viewed against the equally steep rise in private and public employment benefits...

...49 (Washington, D.C.: G.P.O., 1976...

...E.g., the study (like the CBO study of recent date) assesses medical benefits at cost to the state, which is much higher than the more normal value of medical outlays (mainly insurance payments) associated with the "lower" BLS budget 129 for a four-person family...

...But I do not believe that any of these ideas will soon be accepted...

...Let us say that the average low-income family with one or more children understated its income by 25 percent...

...and it underlies the "wage replacement rate," which is a key determinant of benefits under unemployment insurance (although that rate averages less than 60 percent of wages earned prior to job loss in one half of all states...

...Well over 8 million of these persons were children under 14...

...14-I5...

...Total income security transfers rose nearly eightfold between 1960 and 1977 (fiscal years)—from $23 billion to $182 billion...

...These factors contribute to depressed retirement benefits, severe losses in income, and often the disintegration of families...

...There also is known to be substantial understatement of income by respondents to Census inquiries...

...a study prepared for the Subcommittee on Fiscal Policy of the Joint Economic Committee, U.S...

...According to a study by the Joint Economic Committee's Subcommittee on Fiscal Policy in April 1972, the cash equivalent of income in kind received by an unemployed mother of three children, "theoretically" lifted her total income (including public assistance grants) by 41 percent...

...However, the average American family does not subsist on so stringent a sum as the lowest BLS budget costs...

...Two illustrations must suffice: in 1975, the average benefit of a retired worker and his wife was about $3,750 per year...