Today I woke up to a radio segment on plans by the Obama Administration to revisit the poverty measure. Over morning coffee, I read more details of the effort, led by Becky Blank of the Commerce Department, in a Washington Post article.
This was notable because for most policymakers and newspaper editors, it is never a good time to talk about poverty. When times are flush, their constituents are doing well. When recession hits, everyone is hurting. But as economic hardship continues to impact a greater number of families and communities, this may be the time to redouble our search for innovative and potentially effective ways to break the cycle of poverty. I wrote about this phenomenon and opportunity in a recent article for the Spotlight on Poverty website (an excellent website and resources on a wide array of policy issues, by the way).
Upon closer inspection, it turns out that the poverty measure itself is part of the problem. Its limitations have been pointed out for years. Not only is the poverty line is out-of-date with contemporary living standards (including current costs of housing, transportation, and child care), but it does not account for regionall cost of living differences or the value of government transfers like the EITC. An overhaul is long overdue.
That's why I am very pleased to learn of the new efforts, which will continue to calculate the poverty threshold under the old measure but add other alternative measures that can provide a more complete picture of economic insecurity. As they pursue this task, I strongly recommend that they include consideration to a key component of economic security: access to assets.
Yes, an alternative measure is required, but it would be most constructive if that revised measure was able to capture a household’s access to resources over time. Families need income to support their daily sustenance, but they often draw upon a stock of resources in the form of savings, investments, or homeownership to achieve economic stability. An improved measure should include a consideration of assets.
You can read my article on the Spotlight on Poverty website for a fuller description of this argument.
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