Melissa Boteach on the new federal poverty measure

What is the federal poverty measure?

The federal poverty measure is essentially the way we gauge who is poor in the United States. Currently for a family of four, it's about $22,000 a year. The way that works is, back in the 1960s, when the war on poverty was going on, Molly Orshansky, an analyst at the Social Security Administration, constructed the federal poverty measure by taking one third, the emergency food basket and multiplying it by three because at that time, food cost one third of the average family's budget. Since that time, we've indexed it to inflation and that number today, about $22,000 for a family of four, is our federal poverty measure.

What's wrong with how we measure poverty?

Well the current measure is deeply flawed for a few reasons. Number one: it's much too low. Back in the 1960s, food was a third of the average family's budget. But today, food is about one seventh of the average family's budget even as things such as child care, housing, transportation, etc. have all risen disproportionately. And so what happened is, back in the 1960s, a family at the poverty level was earning about 50 percent of the median income. Today, they're earning about 28 percent of the median income. So what that means is that families who are poor are more and more out of the mainstream. That's one thing. The second thing is that there's no geographic adjustment. A family is considered poor at the same amount of money if they're living in Manhattan or if they're living in rural Mississippi. It doesn't matter. And the third thing that's wrong with our federal poverty measure is that it doesn't really incorporate the assets that families have in an appropriate way. So for example, if a family is getting the earned income tax credit or SNAP, formerly known as food stamps, or other really effective anti-poverty programs, none of that registers on the federal poverty measure. If Congress takes steps and passes legislation that really invest in anti-poverty measures, really funds a lot of the programs we care about, it doesn't register on the statistic. And so families that are benefitting from these programs are not seen any differently than families who aren't, which is a big problem.

How can we fix it?

Well thankfully, the Obama administration has decided to take a leadership role in this, and they recently announced that there will be an alternative federal poverty measure to exist alongside the traditional one. And what this new measure will do, it will address a lot of the concerns that I raised earlier. It's going to incorporate some of the public benefits including food stamps, and the earned income tax credit, school lunch programs, etc. so that we can actually see the poverty reduction impact of those very effective programs. I think one of the greatest myths is that poverty is intractable, the poor will always be among us, we can't solve this problem, but in reality if we can see the impact of those programs, we can see where they make a difference. The second thing it will do is it will have some geographic variability. So depending on where you live, the cost of living will be more accurate. And finally, as I mentioned earlier, things like child care, housing expenses, transportation, work-related expenses, out-of-pocket medical costs, things that are really causing families to have trouble making ends meat, those will be incorporated into the budget that is being considered as part of the federal poverty measure.