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There’s some bad intel on our ongoing war on poverty

There’s some bad intel on our ongoing war on poverty

Dennis Wyatt

POSTED March 7, 2018 9:55 a.m.
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How bad is poverty today in California?

Based on federal guidelines in 2016 some 14.7 percent of the state is living below the poverty line.

But then why do much of the poor have smartphones, healthcare, and a roof over their heads? If $24,600 is the threshold of poverty for a family of four then how can they afford rent that is easily $1,000 a month in many places in California for even the smallest and most basic shelter, have healthcare, and can feed and clothe themselves?

The answer is simple. It's because they are not below the consumption poverty line.

Nationally in excess of 45 million people live below the poverty line. The numbers have been fairly consistent for years. But here's the rub: Official poverty rates are measured by income. It excludes counting food stamps, subsidized healthcare, subsidized housing, free smartphones as well as benefits derived from the tax code such as the earned income tax credit and childcare credits.

When measured by consumption, the poverty line changes drastically. Eleven percent of Americans fell below the consumption poverty line 30 years ago as compared to 3 percent today.

Consumption means just that - what people are consuming. If they have a roof over their head and it's partially subsidized, they are being housed. If they are using food stamps they are consuming food. If they have access to healthcare they have healthcare. If they have a free smartphone with subsidized service they have a smartphone with service.

Just because they lack the income to pay for basic needs doesn't mean they are going without if they are accessing the safety net. Yet the official poverty rate doesn't take that into consideration as they aren't earning the money to pay for such things. However they are consuming basic needs even if they aren't paying for them 100 percent.

It is why there are economists who argue the most accurate and honest way to measure poverty is not by income but by consumption levels.

At first glance you might think what's the big deal?

If you don't have an accurate picture it can lead you to erroneous conclusions that in turn can skew decision-making processes when we are divvying up finite government resources.

It matters that people have food, shelter, clothing, and healthcare. But those are best measured by consumption and not a person's income if they are securing government help via subsidies.

It is important that people have running water, bathrooms, food, shelter, medical care, and clothing. If the government is covering the tab for all or part of such basin needs then the family of four doesn't need to earn the money to pay for them.

This is not splitting hairs.

The federal government determined a family of four needs $24,600 a year to cover basic needs. That is how they measure poverty.

If the family of four earns $16,000 a year, benefits from an annual housing subsidy equivalent to $6,000, receives $2,200 in food stamps, and gets $2,000 in earned income tax credits not to mention a free smartphone they are still considered to be below the official poverty level even if between income and cash value of subsidized services they are consuming $26,200 a year.

Granted being $1,600 above the poverty level doesn't exactly put you on easy street but it is a more accurate snapshot of reality.

We've been told the war on poverty launched under President Lyndon B. Johnson has been ineffective because the needle of the poverty rate defined by household income has barely moved in a half century plus.

But if that's true, then why is the picture of poverty much improved since 1960? The number of poor households with running water, flush toilets, TVs, air conditioning, telephones and such has increased astronomically. Yet the naysayers tell you we are no better off as a nation. It's simply not true. Before the safety net became so extensive, measuring poverty exclusively by household income made sense. But that was before food stamps, housing subsidies, Medi-Cal, the earned income tax credit and more.

The official poverty rate today is a highly inaccurate and a distorted picture of reality.

Some might argue that switching the measurement is only a ruse and a way to justify spending less on entitlements.

Actually it is a way to let facts and not emotion govern how we spend our resources.

In 2002 a "statistic" was tossed about that 797,500 people under the age of 18 went missing in a given year as reported to the federal National Criminal Information Center data base. The number was real but the interpretation wasn't. Most viewed that number as kidnapped victims by strangers or slight acquaintances with the intent to do the child harm. The majority were family "abductions" with most simply being a custodial parent keeping a child several hours longer than they we're entitled. It definitely is a violation of the law but it isn't a stereotypical kidnapping.

Most people erroneously believed 797,500 kids were spirited away.

There's a difference between a kid being overdue for several hours than one being taken by force.

And then there's someone going without and someone not having the income to pay for what they are receiving via an entitlement.

Eliminate the emotion and the hysteria and it allows you to concentrate on the real issues whether it is kids that go missing or how best to fight the war on poverty.

This column is the opinion of Dennis Wyatt and does not necessarily represent the opinion of Morris Newspaper Corp. of CA.


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