In 1989, I moved to the suburbs to be near my parents. I worked as a substitute teacher with poverty level wages (yes, hard to believe) and at one point I was offered a job as a teaching assistant. When I said I could not support my family on the $8/hour salary I was offered, the principal asked how much I would need. I calculated the least I could get by with and it came to $15/hour. This was in 1989! Needless to say, the school district realized they could hire two people instead of me, so they did. I was fortunate to get a full-time sub position in January of that year and full-time employment the following fall. In the years between 2000 and 2006, poverty increased dramatically in the suburbs. (1) Like me, many of the poor had jobs, but lived paycheck to paycheck.
As a special education teacher during the 1990s, my students changed from mostly white, middle class families to diverse cultures (at one point I had seven different languages spoken in the homes of 20 students) with a much higher percentage of families in poverty. My last few years, over half of my students qualified for school breakfast and lunches. Often both parents would be working one or two jobs. Students came from homes where they might have shared a room with a grandparent or aunt, wore inexpensive clothing, and may not have had access to books, paper and pencils, let alone computers.
How did we get so far off course in helping the poor? It helps to understand where we come from. The 1960s saw the first serious look at poverty in our country, with the rise of the Civil Rights Movement and the counterculture anti-establishment values. It was the idealsim of Head Start and Sesame Street, the War on Poverty and the first demarcation of poverty. (2) Here is how the poverty threshold was computed:
The poverty thresholds were originally developed in 1963-1964 by Mollie Orshansky of the Social Security Administration. She published an analysis of the poverty population using these thresholds in a January 1965 Social Security Bulletin article. Orshansky based her poverty thresholds on the economy food plan — the cheapest of four food plans developed by the Department of Agriculture. The actual combinations of foods in the food plans, devised by Agriculture Department dietitians using complex procedures, constituted nutritionally adequate diets; the Agriculture Department described the economy food plan as being "designed for temporary or emergency use when funds are low." (Orshansky also developed a second set of poverty thresholds based on the Agriculture Department's somewhat less stringent low-cost food plan, but relatively little use was ever made of these higher thresholds.)
Orshansky knew from the Department of Agriculture's 1955 Household Food Consumption Survey (the latest available such survey at the time) that families of three or more persons spent about one third of their after-tax money income on food in 1955. Accordingly, she calculated poverty thresholds for families of three or more persons by taking the dollar costs of the economy food plan for families of those sizes and multiplying the costs by a factor of three — the "multiplier." In effect, she took a hypothetical average family spending one third of its income on food, and assumed that it had to cut back on its expenditures sharply. She assumed that expenditures for food and non-food would be cut back at the same rate. When the food expenditures of the hypothetical family reached the cost of the economy food plan, she assumed that the amount the family would then be spending on non-food items would also be minimal but adequate. (Her procedure did not assume specific dollar amounts for any budget category besides food.) She derived poverty thresholds for two-person families by multiplying the dollar cost of the food plan for that family size by a somewhat higher multiplier (3.7) also derived from the 1955 survey. She derived poverty thresholds for one-person units directly from the thresholds for two-person units, without using a multiplier. The base year for the original thresholds was calendar year 1963.
Orshansky differentiated her thresholds not only by family size but also by farm/nonfarm status, by the sex of the family head, by the number of family members who were children, and (for one- and two-person units only) by aged/non-aged status. The result was a detailed matrix of 124 poverty thresholds, although the figures generally cited were weighted average thresholds for each family size.
In her January 1965 article, Orshansky presented the poverty thresholds as a measure of income inadequacy, not of income adequacy — "if it is not possible to state unequivocally 'how much is enough,' it should be possible to assert with confidence how much, on an average, is too little."
While the poverty thresholds had been calculated on the basis of after-tax money income, they were applied to income data — the Census Bureau's Current Population Survey — that used a before-tax definition of money income; this was done because when the thresholds were being developed, the Current Population Survey was the only good source of nationally representative income data. Orshansky was aware of the inconsistency involved, but there was no other alternative; she reasoned that the result would yield "a conservative underestimate" of poverty. (3)
Although government analysts expressed concern over updating these standards in 1965, action was delayed until 1981. A measure that decreased the number of homes below poverty was passed. Not until 1995 were recommendations made to revise the standards again. NRC's Committee on National Statistics’s Panel on Poverty and Family Assistance presented their findings in a report. (4) The results of this study?
Our major conclusion is that the current measure needs to be revised: it no longer provides an accurate picture of the differences in the extent of economic poverty among population groups or geographic areas of the country, nor an accurate picture of trends over time. The current measure has remained virtually unchanged over the past 30 years. Yet during that time, there have been marked changes in the nation's economy and society and in public policies that have affected families' economic well-being, which are not reflected in the measure. Improved data, methods, and research knowledge make it possible to improve the current poverty measure. (5)
The recommendations follow in the report (please access the link below for more information on it).
In a book review by Richard L. Kaplan (6), he summarizes Wealth and Democracy: A Political History of the American Rich, written in 2002. One of the book’s great themes is “that concentration of economic power inevitably corrupts the political process. (7)” A fascinating glimpse into the role the laws have played into the accumulation of wealth by the upper class, while the middle and lower classes suffer. Sending two family members to work in order to maintain middle class status, former securities like pensions and health insurance are becoming a thing of the past. “Concentrated wealth is able to distort democratic processes for private enrichment…(8)"
Sadly, the trend that was noticed in the early 2000s has only increased. Our newest elected official is in the one percent and his appointees are as well. One can only hope for a revolution.
1 Krone, Emily, Poverty in the Suburbs, Daily Herald, April 16, 2008
2 Fischer, Jocelyn and Hayes, Jeffrey, Ph.D., A Clearer View of Poverty: How the Supplemental Poverty Measure Changes Our Perceptions of Who Is Living in Poverty. An Examination of Poverty by Gender, Race/Ethnicity, Age, and Marital Status. http://www.iwpr.org/publications/pubs/a-clearer-view-of-poverty-how-the-supplemental-poverty-measure-changes-our-perceptions-of-who-is-living-in-poverty-1,
3 ibid, accessed at https://aspe.hhs.gov/history-poverty-thresholds.
4 Measuring Poverty: A New Approach, Washington, D.C., National Academy Press, 1995
5 Summary and Recommendations. https://www.nap.edu/read/4759/chapter/2.
6 Kaplan, Richard L., Economic Inequality and the Role of Law. Michigan Law Review, Vol. 101, No. 6, May 2003. Available at SSRN: https://ssrn.com/abstract=499743 accessed 12/12/16.
7 ibid, p.1987
8 ibid, p. 1992.