Mayor Bloomberg on Measuring Poverty

As anticipated, Mayor Bloomberg gave a speech on poverty day about his proposed conditional cash transfer initiative to provide bonuses to New York City’s poor, or as he put it: “a controversial pilot program that incentivizes personal decisions”.

He also proposed expanding the federal wage subsidy, the Earned Income Tax Credit, in particular providing more to single filers and eliminating the marriage penalty. Mayor Bloomberg's proposal to change the rules for fathers paying child support garnered much of the press coverage of his speech.

Overlooked by the press was the mayor’s remarks about changing the poverty measure – the subject of yesterday’s posts on this site:

“Now, before closing, let me note that so far I’ve refrained from saying how many people our expanded EITC would ‘lift out of poverty.’ There’s a reason for that—and it goes to a fundamental problem we’ve got to address if we’re serious about reducing poverty.

“The federal poverty measurement – as I’m sure everyone here knows – hasn’t been changed since it was first introduced in 1964. Since then, the federal government has launched a number of programs that are designed to supplement income: Food Stamps, Medicaid, subsidized housing, and of course the EITC.

“Yet none of these programs are counted towards a person’s income for purposes of defining poverty. Nor are income taxes and payroll taxes deducted out, even though they affect a families’ real income, as do regional differences in cost-of-living. Nor does the formula indicate that we’ve made any gains in fighting poverty.

“In 2005, the poverty rate was higher than it was throughout the 1970s, but by virtually any measure of material deprivation – including hunger – overcrowded living conditions – ownership of cars and household appliances – health and dental care – and life expectancy – we have made real progress in fighting poverty and raising living standards since the 70s. At the same time, the poverty line is now much further away from the middle-class than it was back in 1964.

“The poverty formula, you might say, is bankrupt. It obscures both the good results we’ve achieved, as well as the hard work that remains to be done. I come from a background where numbers matter, and data drive decisions. We all say ‘In God We Trust,’ and we do. But for all others, you have to bring data. I’m a big believer in the saying, ‘If you can’t measure it, you can’t manage it.’ So just as we need a more creative, more vigorous approach to fighting poverty – we need a more accurate method of assessing whether we’re making any progress.

“That’s why in New York, as we pilot many of our new strategies, we are also going to be developing new, more accurate, more informative poverty measures that both sides of the political aisle can support. I expect that in doing this over the course of the next year, we’ll be looking for help from some of the people in this room. And we’ll also be drawing on the work that has already been done in this area, both by the Census Bureau and by organizations like the National Academy of Sciences.

Although Mayor Bloomberg didn't mention it explicitly, his reference to the growing gap between the lowest incomes and middle income households suggests he would be interested in a relative measure – perhaps in addition to improvements in the outdated absolute measure of poverty utilized by our federal government.