The Trump administration is considering tweaking the way federal agencies measure poverty, sparking protests that millions of needy Americans will lose their welfare benefits. But poverty-fighting experts from conservative and Christian groups say the change will have little effect on the system and that the poverty line actually needs a much more comprehensive overhaul.
On May 7, the Office of Management and Budget requested public comment on the effects of using six different consumer price indexes to calculate the Official Poverty Measure (OPM), or the “poverty line” used by federal agencies to assess people’s need for welfare benefits. The change could help beleaguered welfare programs save money and provide a more accurate picture of poverty in the United States.
Some people panicked at the idea. “This policy would, over time, cut or take away entirely food assistance, health, and other forms of basic assistance from millions of people who struggle to put food on the table, keep a roof over their heads and see a doctor when they need to,” Sharon Parrott, a senior fellow at the Center on Budget and Policy Priorities, told The New York Times.
The center analyzed the possible effect of the change over the next 10 years but didn’t clarify how many people would see their benefits cut entirely and how many would receive reduced assistance. Some who would get less help from one benefit program might get more assistance from another. People who no longer qualified for Medicaid, the government’s health insurance for low-income families, could get subsidized health insurance through the marketplaces established by the Affordable Care Act.
The Official Poverty Measure (OPM) compares a person’s or family’s income before tax with three times the cost of a basic food budget in the 1960s. A staff economist at the Social Security Administration developed the measurement by observing that people typically spent a third of their income on food. Since then, the government has used the same number, adjusting it annually to changes in the consumer price index, which moves with inflation. In 2019, the federal poverty line is at $25,750 for a family of four.
Today, most people spend a smaller percentage of their income on food than in the 1960s, and the government does not count benefits such as food stamps or Medicaid when measuring a family’s income. The administrations of George W. Bush and Barack Obama both considered ways to more accurately measure inflation, and in 2011 the Census Bureau began publishing the Supplemental Poverty Measure, taking into account things like child care, medical bills, and the varying costs of housing across the country. Still, the OPM has remained the standard across government agencies.
Economists Bruce Meyer and James Sullivan wrote last year in The Wall Street Journal that instead of income, the government should measure poverty by how much people spend to better account for the non-cash benefits they receive. This approach “demonstrates clearly that there is much less material deprivation than there was decades ago,” they wrote.
Ismael Hernandez, director of the Freedom and Virtue Institute, agreed: “Because of how we measure poverty—creating an impression that poverty is worse than it is—progress goes unreported, even if families are doing better.”
Studies that take into account all income sources, including non-cash government benefits, report a decline in poverty across the United States. Hernandez pointed to a 2006 study in the Journal of Economic Perspectives that showed if in-kind benefits are counted, poverty rates in 2003 would have declined from 12.7 percent to 9.9 percent. He also predicted changing the inflation measure in the OPM would have little effect on communities if the government can better incentivize work for welfare recipients. He said some people would still need help, with churches and local charities providing better assistance than a large government system.
James Whitford, director of the True Charity Initiative, also said he thinks adjusting the OPM’s inflation measure would “do little to solve any real issues or cause real problems.”
“I’ve learned that identifying poverty through an income level alone is only a measure of relative wealth in America in conjunction with a combination of envy and misdirected pity,” he said. He pointed out that in the New Testament, the Greek word for poor “indicates abject poverty, utter helplessness, complete destitution. Alms are required in these situations to sustain life. This is necessary relief. From a Biblical perspective, that is the poverty line.”