Ignore this line: Looking beyond the Official Poverty Rate

How do we measure family economic security?

In 1964, a government economist named Mollie Orshansky multiplied the estimated cost of a household’s most basic food budget (per USDA estimates) by 3 (having noticed that most households were spending about three times the cost of food on their overall expenses) and the Federal Poverty Threshold was created. Despite the many changes that have shifted the economic landscape in the past 58 or so years, this is still how we calculate the Official Poverty Rate.  It’s a longstanding approach, with good data continuity, but with very little basis in reality anymore.  

Nor does it make for a very exciting graph.

Since the mid 60’s, an average family’s usual expenses have changed a great deal, particularly as families began to rely on others to provide childcare (as more women moved into the workplace), and as varying policy approaches across state and federal legislatures resulted in different levels of access to other resources (Vermont’s “Safety Net” is better than most). Many factors tend to differ geographically, such as tax programs that impact kids and the cost of housing (which is notably high in Vermont), and each shape families’ financial burden in different ways. Furthermore, different age groups have also been lifted out of poverty more than others by virtue of the programs that support them (such as Social Security, which we know works because it is accounted for in the Official Poverty Measure, and because the benefit levels have been high enough to make a difference).  

There is pretty widespread recognition that we should be talking all of this into account when we talk about “poverty,” but, it’s not simple. The Census Bureau has been working to fine-tune a Supplemental Poverty Measure for years. In some states, researchers have gone further, developing state-specific measures, allowing them to understand if their safety net policies are doing what’s intended, which is to eliminate the experience of poverty, and therefore the negative impacts. (see Oregon, California)

This would be a worthwhile effort in Vermont. We already have an important tool, updated every two years by our Legislative Joint Fiscal Office, that gives us some different, more accurate thresholds to consider. Here’s what the new Basic Needs Budget and Livable Wage Report says a family needs to be economically secure in Vermont:

Most families’ incomes don’t meet the thresholds in the Basic Needs Budget. Many times, our safety net makes up the difference. It’s a necessary piece of the puzzle with broad utilization. The Supplemental Poverty Measure accounts for many of these additional resources, and yet still estimates a child poverty rate of 11% in Vermont.

What’s going on? When it comes to ensuring all children have their needs met, what we’d really want to see is a Supplemental Poverty Rate that was much lower than the Official Poverty Rate. If the Supplemental Poverty Rate in Vermont was currently at 0%, that would mean that despite a lack of sufficient cash income, no child was experiencing poverty level deprivation. The fact that it isn’t tells us that in Vermont today, either our resource levels aren’t high enough for those with the lowest incomes (eg TANF) or our expenses aren’t being mitigated enough (eg housing) or both. In addressing these disparities, the net impact of everything we do and don’t provide, all the pluses and minuses, need to be looked at together—because right now we’re not reaching enough children.

A step beyond, but equally worth our time, would be to reflect on this: if we simply provided adequate cash to families, that cash would be counted in the Official Poverty Measure—the one we’ve been tracking all these years—and the Official Poverty Rate would immediately change. Reflecting on why we have settled on the need for an array of often confusing and administratively cumbersome programs rather than this efficient and effective response (see earlier comment about Social Security) is also worth some introspection.

For families in Vermont today, life is more expensive than ever. If our goal is to ensure that every child has the resources they need to thrive in this state, we need to start by thoroughly and accurately assessing the impact of everything we’re doing to mitigate child poverty- because right now, we’re still missing the mark.