The Level of Poverty Not as Grim as the Numbers Show

By Sreya Sarkar

The U.S. Census Bureau on September 19th, 2012 released findings from the 2011 American Community Survey. The American Community Survey includes 2011 statistics for states, cities and smaller areas and provides a wide range of important statistics about our nation’s people, housing and economy for all communities in the country.

The 2011 American Community Survey found:

• In Illinois 148,254 more people were in poverty in 2011 compared to 2010 for a total of more than 1.87 million
• In Chicago the total number of people in poverty increased by 15,000 from 2010 to 2011, for a total of more than 261,000.
• The median household income in Chicago was $43,628 in 2011, compared with the national figure of $50,502.
• 20.4 percent of people in Chicago did not have health insurance coverage, compared with 15.1 percent nationally.

Going by the numbers, there is enough to be depressed about. But do the numbers alone capture the actual situation?

Numbers some times are good indicators but they never tell you the complete story. To understand why, we should look at what the numbers don’t show.

Census poverty figures are based on a narrow measure of income that often doesn’t accurately reflect an individual’s true economic circumstances.

The Census Bureau doesn’t count safety-net benefits, including food stamps, housing aid, school lunches and other noncash transfers. Adding the cash value of food stamps alone would lower the poverty population by 3.9 million in America. The figures don’t even factor in Medicare and Medicaid benefits.

Tax Credits are also overlooked. Counting Earned Income Tax Credit and Child Tax Credit would further decrease the number of people in poverty.

The Census Bureau defines a family of four with income less than $23,021 as impoverished. But a better portrait of poverty in America would count all government benefits and tax credits, raising many households’ income considerably.

An even truer picture of deprivation would measure consumption (how much a household spends on rent, autos, food and other items) rather than income (how much a household admits to bringing home in earnings).

According to economists Bruce D. Meyer at the University of Chicago and James X. Sullivan of the University of Notre Dame, a better way to determine who is suffering from poverty is to look at people’s spending, which includes things like housing, food, and other goods they are able to enjoy. When adjusted for these flaws, the level of poverty is much lower. Instead of being higher than it was in 1980, poverty has actually declined.

So, before we declare that the War on Poverty can never be won and decide to shift to “alarm” mode, let us re-examine the context of the Census Bureau report and take pride in the fact that some anti-poverty programs have reduced dependency and encouraged work . There is thus hope that they can be further fashioned to work even better.