How Much Is Too Little?

Mark Greenberg testifies to House Ways and Means Subcommittee on Income and Family Support about how to measure poverty.

How should we measure poverty? Is the current standard accurate and adequate? The questions posed before the House Ways and Means Subcommittee on Income and Family Support in a hearing on Wednesday have far-reaching consequences for millions of Americans.

Mark Greenberg, Executive Director of the Center for American Progress’s Task Force on Poverty, testified before the subcommittee, along with four other invited witnesses, on whether the current formula for determining who is in poverty is adequate, and how the measure of poverty should be improved.

Greenberg emphasized that the current measure of poverty is deficient because it was set in the early 1960s, and has been adjusted only once for price inflation since that time. As a result, the measure of who is in poverty has fallen further and further below the amounts needed to meet basic needs and make ends meet. In 1959, the federal poverty level was at an amount representing 49 percent of median income for a family of four. By 2005, it had fallen to 28 percent of median income.

Greenberg explained that in addition to using outdated thresholds, the existing measures are flawed both because they don’t count some things as income that should be considered—for example, benefits from the Earned Income Tax Credit and Food Stamps—but they also count income that isn’t actually available to meet basic needs—for example, money that has to go to pay taxes or money that has to be paid to meet the cost of going to work.

Greenberg urged that the poverty measure be improved and updated so that it does a better job of reflecting the real costs of meeting basic needs and counting income. He spoke in favor of using a set of recommendations from a National Academy of Sciences panel as the starting point. He also urged that in addition to measuring income poverty, government should begin regularly tracking and reporting a set of additional measures: the number of people without enough income to “make ends meet,” the number below a specified percentage of median income (often used in other developed nations as a measure of “relative poverty,” and the number of people who are “asset poor.”

Greenberg explained that the Center for American Progress’s Task Force on Poverty had emphasized that while 37 million Americans were living in poverty, a far larger group faced the challenge of making ends meet, and the task force had developed its recommendations in ways that sought to help both groups.

Greenberg also noted that since the current measure only counts pre-tax money income and makes no adjustment for work expenses, it doesn’t show the effects of key policies that help low-income families or of the costs of going to work. For example, the measure doesn’t count benefits from the Earned Income Tax Credit or Food Stamps or consider the fact that child care subsidies reduce or eliminate the need to pay for child care. He urged that a new measure do a better job of reflecting the effects of government policies and the real costs of working.

Three other witnesses—Dr. Patricia Ruggles, Ph.D., of the National Academy of Sciences, John Iceland, Ph.D., an associate professor in the Sociology Department of the University of Maryland, College Park, and Nancy Cauthen, Ph.D., Deputy Director of the National Center for Children in Poverty at the Mailman School of Public Health at Columbia University—also spoke favorably of the he National Academy of Science’s poverty measure. The other witness, Douglas Besharov of the American Enterprise Institute, highlighted a number of issues and concerns as to how income is calculated for purposes of the poverty measurement, and suggested that the poverty rate would be considerably lower if a number of adjustments and corrections were made.

  • Read Mark Greenberg’s testimony here.

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