Critiques of the Official Poverty Measure

Over the years there have been a number of critiques of the way the government measures poverty. One on-going critique is of the types of income that are included in (or excluded from) the poverty measure. By failing to include income that many low-income people receive in the form of public assistance, some critics maintain that the extent of poverty is over-stated. If the value of food stamps, publicly provided health insurance benefits, and cash welfare payments were counted as income in the poverty calculation, many people would no longer be considered poor.


Another important critique of the official poverty measure is that it is seriously flawed in continuing to assume that families spend one-third of their income on food. This may have been true when the measure was devised 30 years ago, but it is not an accurate reflection of current realities. Families no longer spend one-third of their income on food and two-thirds on other basic needs. Food now accounts for something closer to one-sixth of the family budget. Housing, transportation and utilities are much larger components of family spending.


Furthermore, expenses most families now regard as crucial elements of their household budget are simply excluded from consideration in the poverty calculation. The cost of childcare is not figured in to the thresholds because the families in the 1955 USDA household survey Orshansky used had one wage earner and a stay-at-home parent. Commuting and other travel and work-related expenses that are a part of modern life have a huge impact on family budgets. Expenses associated with today's living have grown. Additional basic expenses mean that more money is required to maintain the same standard of living in today's world. By ignoring these factors, the poverty measure underestimates poverty.


A key issue that critiques of the poverty measure have run in to is cost. Most attempts to establish a new measure of poverty would result in higher numbers of people being counted as poor. There are some corrections that, by themselves, would lower the poverty count (e.g. including public assistance). Correcting all of the acknowledged problems in the poverty count, however, would significantly increase the total number of poor. If the government recognizes the true number of people in poverty, the cost of providing assistance programs would be considerably higher.