Federal Poverty Measure

Driven by our mandate from Deuteronomy 15:4, “There Shall Be No Needy Among You,” the Jewish Council for Public Affairs has mobilized dozens of communities nationwide to build the political will to reduce poverty in America.

To that end, the JCPA strongly supports reform of the way poverty is measured in the United States. Such reform is critical because the current measure is deeply flawed and because the stakes are so high. Child poverty alone costs our nation roughly $500 billion a year in reduced productivity and economic output, and increased health expenditures and costs of crime (Source: http://www.urban.org/publications/901032.html).

We therefore have an economic as well as a moral imperative to create policies that address this national crisis, but we have no chance to do so if we cannot adequately measure the problem.  

According to the current guidelines, which are used to determine eligibility for benefit programs, the national poverty level is $21,200 for a family of four.  This measure, established in the 1960s, is narrow and outdated. While the figures have been adjusted for inflation, they otherwise have remained unchanged to allow for the shift in family expenditures. For instance, the cost of food has dropped over the years in relation to the cost of housing, child care, health care and transportation. Yet the original measure was determined at three times the cost of food and adjusted for family size. The current measure also does not take into account the dramatic variation in the cost of living between regions and between urban and rural settings.

What does the failure to update the federal poverty level for changes in the cost of living mean?  It means that many people and households not considered poor today by the official measure actually are suffering more hardship relative to when the measure was established.   Across the country, families typically need an income of at least twice the official poverty level to meet basic needs. In high-cost cities such as New York, the figure is higher. In rural areas, the figure is lower.

Finally, the current method of measuring poverty does not accurately count family resources. Family income is assessed, for instance, before subtracting taxes that are paid, thereby overstating income. At the same time, the federal Earned Income Tax Credit along with in-kind government benefits, such as The Supplemental Nutrition Assistance Program (formerly known as Food Stamps) and Medicaid, are not counted, so there is no way to analyze the impact of these programs.

Therefore, the JCPA calls upon the federal government to:

• Reform the federal poverty measure to: more accurately reflect family expenditures, adjusted for taxes paid and public benefits received as income,” adjust the calculation for regional differences in cost, and provide for a periodic re-assessment of the validity of the revised measure.
• Develop a “decent living standard” – one showing the income necessary to maintain true self-sufficiency without public or private subsidy. This will help assess not only whether families are subsisting just above the poverty line, but whether they are able to achieve economic security.

The community relations field should:

• Educate the Jewish community and the general public on the need to reform the federal poverty measure;
• Urge Congress to support legislation to reform the federal poverty measure and develop a decent living standard; and
• Participate in coalitions that support the passage of such legislation.