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Census official urges change in the way poverty is measured


Creating a fair system to measure poverty is complicated, and government officials and researchers can't agree on a formula. It's important to improve these measures so program benefits reach the right people, said Daniel Weinberg, chief of the U.S. Census Bureau's Housing and Household Economic Statistics Division.

Daniel Weinberg of the U.S. Census Bureau says if poverty statistics aren't measured properly, the aid does not get to the right people. (Photo by Paul Jaronski, U-M Photo Services)

"If the statistics aren't measured right, the aid doesn't go to the right people," said Weinberg, who discussed the latest national poverty and income statistics Oct. 7 in Schorling Auditorium at the School of Education.

In late September, the Census Bureau released the findings, which didn't surprise many researchers and analysts. Simply stated, the numbers show poverty is on the rise.

Last year 34.6 million people lived in poverty, 1.7 million higher than in 2001, according to the bureau. Michigan was among five states that had a decrease in income and increase in poverty, Weinberg said. The other states: Florida, Hawaii, Illinois and Mississippi.

As defined by the Office of Management and Budget and updated for inflation using the Consumer Price Index, the average poverty threshold for a family of four last year was $18,392 in annual income, compared with $14,348 for a family of three, $11,756 for a family of two and $9,183 for unrelated individuals.

The poverty rate climbed to 12.1 percent last year from 11.7 percent in 2001. Median household money income in 2002 was $42,400, a 1.1 percent decline—or $500—from a year earlier. Weinberg said the figures reflect the recession from March 2001-November 2001.

Sheldon Danziger, professor of public policy, said that poverty rates always increase during a recession. This is the first time, however, that poverty has increased two years in a row since the recession of the early 1990s. "We focus too much, however, on year-to-year changes in poverty and not enough on long-term trends," said Danziger, co-director of the University's National Poverty Center (NPC), which is part of the Gerald R. Ford School of Public Policy. "Note that the official poverty rate in 2002 is not much different than it was 30 years ago, despite the fact that Americans on average have higher incomes today than in the early 1970s."

Alternative measures of income and poverty, which consider taxes and value of non-cash benefits, present a more mixed picture of the nation's economic situation, Weinberg said. The alternative estimates deduct taxes from money income and add the value of non-cash benefits (food stamps, health programs and return on home equity) and are intended to provide a more complete measure of economic well-being than the official income and poverty concepts. The official concepts are based solely on the amount of money people or households receive during the year, he said.

Rebecca Blank, NPC co-director and dean of the Ford School, said changing the poverty measure will create some political response from groups that see their poverty rates go up or down. In addition, she noted that many programs have eligibility rules that are indexed to the current poverty rate. Any administration will question what will be gained relative to the political costs of making changes to the poverty formulas, she said.

Weinberg said although there isn't a consensus by government officials, researchers and other interested parties on what changes must be made for the poverty formulas to be fair and accurate, the figures still are important to politicians in their decision-making.

Weinberg's visit was part of the NPC seminar series on poverty research. For upcoming events, visit http://www.npc.umich.edu/news/events/.

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