New statistics on poverty in the United States were released a couple of days ago. Like most news about the economy for the past few years, it’s not good:
. 46-million Americans, roughly one in six, live in poverty
. 49.9-million Americans lack health insurance, up 13.3 million since 2000.
. The U.S. can boast the highest overall poverty rate of any major industrialized nation; not surprisingly, it also has the highest childhood poverty rate.
. 21.6 percent of American children (that’s more than one-in-five) live in poverty. Compare that to Denmark, where the number is 3.7 percent.
Depressing. A crucial point about how the Census Bureau calculates poverty statistics, however, is that a lot of anti-poverty programs aren’t taken into account. Only pure cash transfers, like the Earned Income Tax Credit, can affect the official poverty rate statistics. Programs like Medicaid and food stamps are ignored.
This is a problem because poverty rate statistics are used to inform policy debates about anti-poverty programs. But if the effects of many anti-poverty programs are ignored when these statistics are calculated, it significantly limits their usefulness. The numbers quoted above are not directly from the press release about the new poverty statistics. Rather, they were gleaned from a report by Sen. Bernie Sanders. Unsurprisingly, Bernie argues in the report that we are failing the nation’s poor and that we need to protect and improve anti-poverty programs. From the report’s conclusion:
As we look for solutions to reduce our nation’s debt, we must be cognizant of the effects of cutting social safety net programs. Choosing a path that impoverishes hundreds of thousands of people will result in unexpected yet largely predictable expenses in other parts of the budget. Knowing the potential impact of budgetary choices on the lives of individual Americans should help guide us to make not only the morally correct decisions, but also the financially responsible ones.
It would be much easier to be “cognizent of the effects of cutting social safety net programs” and know “the potential impact of budgetary choices on the lives of individual Americans” if these concerns were reflected in the official poverty statistics. But they’re not. We could double the food stamps program between now and the next time poverty statistics are released, and it would change nothing.
Given the state of the economy (especially high unemployment), you don’t really need statistics to tell you that people are struggling and that anti-poverty programs are needed even more now than they were a few years ago. But sound decision making relies on sound information, and in that respect, official poverty statistics as they are currently calculated fall short.