Measuring American Poverty Act

Media 07.30,08

Recipient: Chairman James McDermott, Subcommittee on Income Security and Family Support

Chairman James McDermott
Subcommittee on Income Security and Family Support
House Committee on Ways and Means
U.S. House of Representatives
Washington, DC 20515

Dear Chairman McDermott:

On behalf of the Leadership Conference on Civil Rights (LCCR), the nation’s oldest, largest, and most diverse civil and human rights coalition with nearly 200 member organizations, we are writing in support of the Measuring American Poverty Act of 2008, a significant effort to create a more accurate measure of poverty in America.

The current measure, which was devised in the mid 1960s and based on data from the mid 1950s, is flawed in several ways. Notably, it fails to count public benefits such as refundable tax credits, housing assistance, and food stamps as income. In addition, the current measure’s assessment of a poor family’s necessary expenses is extremely outdated. Only food costs are included in the antiquated measure now in use; the increasing costs of housing, heat, transportation, child care and out of pocket medical expenses are left out.

The Measuring American Poverty Act of 2008 includes elements that are in our view essential to modernizing the assessment of poverty. They include:

  • Counting expenditures more accurately

  • Including certain public benefits as income

  • Adjusting the calculation of poverty thresholds for regional differences in costs

  • A means of showing the anti-poverty effects of benefits programs by comparing pre- and post-tax and transfer income

  • A clear statement that the proposed changes are not to modify eligibility or amount of assistance for public benefits

  • A provision to periodically re-assess the validity of the revised poverty measure

There are a number of important reasons to improve the measure of poverty. It will be critical to be able to accurately gauge whether the steps the nation takes to reduce it are working. A more accurate poverty measure will also give us greater understanding of the needs of population subgroups. The current standard may understate the hardships of the elderly in making ends meet by failing to take into account their high out-of-pocket medical costs. A new standard may help us to learn if poverty is more prevalent, or deeper, among certain demographic groups (race/ethnicity, age, rural/urban residence) because they are less likely to receive benefits.

LCCR is committed to setting a national goal to cut poverty in half in ten years. We are a founding partner of Half in Ten: From Poverty to Prosperity, a new campaign run jointly by ACORN, the Center for American Progress, the Coalition on Human Needs and LCCR. Among the initiatives sought by the campaign are substantial improvements in the Child Tax Credit and Earned Income Tax Credit. Under the current poverty measure, success in achieving these important improvements will not result in any reduction in the official poverty rate because refundable tax credits are not counted as income. Similarly, LCCR supports increases in Food Stamp benefits, but when those occur, the poverty rate will not change because food stamps are not counted as income. The change proposed in your legislation will allow a more accurate assessment of whether benefit increases have the desired effect, and further, whether certain population groups are helped more or less than others.

We note that whatever its imperfections, the current poverty measure has been very important in allowing us to see trends over time. We urge great care in making the transition from the old to the new standard, so that researchers remain able to evaluate trends. We also urge the Census Bureau to include, as part of its mission, the education of advocates and service providers in the proper use of the old and new statistics.

We look forward to working with you to modernize the assessment of poverty, and in using a more accurate measure to develop effective anti-poverty legislation. If you have any questions, please contact Nancy Zirkin at (202) 263-2880 or Corrine Yu, LCCR Senior Counsel, (202) 466- 5670, regarding this or any issue.

Wade Henderson, President & CEO
Nancy Zirkin, Executive Vice President / VP of Public Policy