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Saturday, December 17, 2011

Whew! We're Not Quite as Poor As Some Thought

A couple of days ago, I woke up to a report on TV that the income of nearly half of Americans had dropped to a level at or near the poverty level. The economy may be bad, I thought, but not quite that bad. Here is what the Associated Press had reported:

Squeezed by rising living costs, a record number of Americans — nearly 1 in 2 — have fallen into poverty or are scraping by on earnings that classify them as low income.
The latest census data depict a middle class that's shrinking as unemployment stays high and the government's safety net frays. The new numbers follow years of stagnating wages for the middle class that have hurt millions of workers and families.
This story was even quoted in an Op-Ed piece by Charles Blow in today's New York Times. 
I spent a lot of time searching the Census Bureau website for data that would support this view, but couldn't find any. The most recent set of data showing trends in poverty and income over time are here, and you won't find corroboration of that "nearly 1 in 2" number anywhere in that report. Fortunately, the Census Bureau did come out yesterday and clarify the fact that the interpretation of the poverty and income data in the press had been wrong.
Officials at the U.S. Census Bureau moved Friday to clarify widely reported figures meant to estimate the number of Americans living in poverty.
Dueling Census reports – one based on official poverty estimates that was released just last week and another based on an experimental calculus used in November – differed from one another by 20 percent [note: this is 20 percent; not 20 percentage points] regarding the number of people viewed as living in poverty.
That’s because the experimental measure, a supplement to the official poverty figures meant to take into account such factors as whether a family is receiving food stamps and how much people pay in taxes, uses a poverty level of $24,343 for a family of four instead of the $21,113 used by the official measure.
However, Kathleen Short, the Census Bureau economist who spearheaded the supplemental report, said it would be wrong to extrapolate from those numbers that Americans are falling into poverty at greater rates.
In fact, she said, the experimental calculation indicated that poverty among children is actually lower than the official poverty rate shows.
On Thursday, reports in multiple news outlets suggested that people making roughly twice the poverty level under the experimental program were “scraping by” and should be considered low-income.
The Census Bureau does not support that interpretation of the data, Short said.

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