Critics slam federal poverty formula

As the economy continues to misfire, the ranks of the poor have swelled. But many experts say the full extent of the problem isn't reflected in the federal government's official poverty estimates -- especially in high-cost-of-living areas like Long Island.

Critics take aim at the formula used to set the nation's poverty line, calling it outdated and flawed.

The formula -- adopted in 1965 and adjusted since only for inflation -- is based on surveys from the 1950s, when families spent a third of their income on food. To set the poverty line, estimated food costs are tripled.

That method of calculating poverty hasn't changed, but household expenses have. Today, a typical household spends just 14 percent on food, with housing costs the biggest budget drain, studies show.

The federal formula "doesn't reflect family needs today," said Elizabeth Lower-Basch, senior policy analyst for the Center for Law and Social Policy in Washington, a liberal advocacy group for the poor.

Most experts support a formula similar to one recommended by the federally chartered nonpartisan National Academy of Sciences in 1995. That model took regional cost differences into account and weighed noncash government assistance, such as food stamps, against expenses like housing, transportation and utilities.

Aiming to eliminate undercounting of the poor, a bill proposing a new poverty measure based on the academy model was introduced in Congress in 2009. There were no ties in the proposed legislation to eligibility for assistance, but it never made it out of committee.

Updating the poverty threshold would significantly increase the number of people considered poor, experts agree. In deficit-minded Washington, there are concerns on both sides of the aisle that a new definition would potentially trigger a huge expansion of taxpayer-supported anti-poverty programs.

The Obama administration has taken a different approach to the problem, authorizing the Census Bureau to develop a supplemental poverty measure, strictly for accuracy's sake.

New tool to help accuracy

Census Bureau economist Kathleen Short said the new tool, due to be released later this month, is the work of an interagency research group. The old formula, however, will remain in effect.

Using the existing poverty line, the bureau recently estimated that 15.1 percent -- 46.2 million people -- were impoverished in 2010. That's the highest level of poverty since 1993.

On Long Island, 6.1 percent, or 168,000, were labeled poor, up from 5.3 percent in 2009.

Local government officials, experts and advocates said the numbers significantly understated the extent of poverty in Suffolk and Nassau counties.

"It's an inadequate measure of poverty in a high-cost area like Long Island," said Pearl Kamer, chief economist for the Long Island Association, the region's largest business group.

If the region's higher costs were factored in, the poverty line for a family of four in 2010 would have risen from $22,113 to about $30,800 a year, affecting roughly 60,000 more Long Islanders, according to an analysis by Seth Forman, chief planner for the Long Island Regional Planning Council, an advisory group to both Long Island counties that is not connected with the business-driven Long Island Association.

To make his calculations, Forman took into account that local household expenses are about 40 percent higher than the national average.

New York City officials adopted their own alternative poverty measure in 2008, said Mark Levitan, director of the city's Center for Economic Opportunity, created by Mayor Michael Bloomberg nearly five years ago to coordinate various city programs to fight poverty. For a family of four, the city's poverty line was set 36 percent higher than the federal standard.

The alternative measure has no impact on who qualifies for government assistance, since that is set by federal and state policy, but Levitan calls the results "more realistic" than what the census provides.

With no poverty line reforms on the horizon, anti-poverty advocates are increasingly relying on government programs that allow people earning more than the poverty line to receive assistance.

The food stamp program, for instance, allows income eligibility up to 130 percent of poverty -- higher if a disabled person or elderly person is in the household. New York's Child Health Plus insurance program has income eligibility from 160 percent to 400 percent of poverty.

"Policymakers have in some ways already moved well beyond the poverty line," said Arloc Sherman, senior researcher at the Center on Budget and Policy Priorities, a center-left Washington group that tries to shape state and federal poverty initiatives.