Measures of poverty from our neighbours to the south

Until very recently, the United States Government has been using measures developed in the 1960s to determine the number of people living in poverty. Developed under President Johnson in 1963 and 64, these concepts may be a little outdated, to say the least!

The measures were developed by taking dollar costs of the 1962 Economy Food Plan from the Department of Agriculture and multiplying the number by 3, since costs of food were presumed to be one third of a family’s expenses. Since then, the numbers have been adjusted based on the consumer price index, but the overall measure remains the same. This measure is very arbitrary, especially since food is the only factor considered, and even the assumption that food makes up one third of expenses is simply speculation.

But two weeks ago, according to the New York Times, President Obama decided to look into new measures of poverty to potentially replace those developed under President Johnson.

The idea came from an experiment conducted in New York City last year. New poverty measures, taking into account housing, medical and childcare costs, were included. These factors are not considered under the current federal calculations for measuring poverty, which focus on income levels.

The results: the current federal measures show poverty decreasing in NYC from 19.1 to 17.6 percent from 2005 to 2008. But this is a sharp contrast to the new measures which show poverty increasing from 20.6 to 22 percent, an increase of 300,000 people, over the same period. With the impacts of the recession still looming, the numbers for 2009 and 2010 are expected to be even higher.

The current federal measures help determine people who qualifies for government assistance. Federal poverty measures can also serve as a red flag calling on local and federal levels of government to address issues like poverty. If poverty was on the decline in cities like New York, as the federal measures indicate, then no or little action is warranted.

But these extra indicators that take into account relevant costs of living reveal specific areas that require attention. For example, housing is a significant concern in the US, and in NYC in particular. Housing commissioner Rafael Cestero told the NY Times that effective affordable housing strategies are key to keeping people out of poverty.

Housing and other costs of living are so critical when measuring poverty. Income levels are important, but if the income is insufficient to cover costs of living in specific circumstances, such as NYC, then people are living in poverty regardless of their income levels.

In light of the contrast between the experimental poverty measures and federal measures, the Obama Administration has agreed to start applying measures used in NYC to the rest of the country. This is a step toward recognizing the various facets of poverty and beginning efforts to tackle these issues. Like NYC Mayor Michael Bloomberg and Deputy Mayor for health and human services, Linda Gibbs, say “If you can’t measure it [poverty], you can’t manage it.”

Canada does not have an official measure of poverty, or a poverty line. There are, however, several measures and studies conducted by Statistics Canada, Human Resources and other federal agencies that take into account costs of living and specific circumstances. Let us hope our government also pays attention to these measures in order to tackle the multiple facets of poverty in Canada.