The poverty line in San Francisco is the same as in rural Louisiana, scrambling the perception of rich states and poor states
to wage a successful war on poverty, he first needed to define it. The brainy work was done by Mollie Orshansky, a statistician for the Social Security Administration, who developed the first federal poverty line in 1963. Ms Orshansky’s method was plausible enough for the times. From a survey conducted in 1955, she calculated that families would typically spend a third of their household budgets on food.
Times have changed. Globalisation and advances in agriculture mean that modern households now spend only one-eighth of their incomes on food. Better data are available. They show that housing and child care—not food—are the biggest constraints on the household budgets of poor people. The majority of American renters who make less than $30,000 now spend more than half of their income on housing.
Another problem is that the poverty line is set far too low. Most developed countries do not use only measures of absolute poverty, as America does. They also employ relative poverty measures. In Britain, for instance, families with incomes below 60% of median income are classified as poor. In America the median income for a family of four in 2017 was $94,876—yet the poverty threshold was just $24,600, or 26% of median income.
A third issue is that there is no accounting for variation in the cost of living—the poverty line in San Francisco is the same as in rural Louisiana. That scrambles the perception of rich states and poor states. A favourite saying in poor states like Kentucky or Alabama is “Thank God for Mississippi”—the state that finishes last on poverty indices. Yet when measures that take the cost of living into account are used, like the, it turns out that California is at the bottom of the rankings.
This deficiency in the official poverty statistics is exploited by some right-wing politicians. Paul Ryan, a Republican former Speaker of the House, justified his proposal in 2016 for modifying safety-net programmes—largely by adding work requirements—by noting that “Americans are no better off today than they were before the war on poverty began in 1964.” That might be right by the official statistics but, when poverty is properly measured, it is plain wrong.
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