Poor Measurement for Poverty

Policymakers should modernize the poverty measure. The current guideline does not take into account key provisions in the stimulus package such as the creation of a Making Work Pay Tax Credit and the expansion of the Earned Income Tax Credit.

As we move deeper into the current recession, the number of poor Americans is rising. Poverty data arrives with a lag; we won’t know the 2008 poverty rate until August, 2009. But poverty and unemployment are closely linked, and unemployment has been rising rapidly. More than 11 million Americans currently report they are unemployed. That means the number of families with seriously reduced income is growing.

Unfortunately, even when the poverty data arrives, we will be missing key information needed to understand who’s poor and who isn’t. And, if the stimulus legislation under consideration in Congress is adopted, it could play a significant role in helping low-income families, but the official measure of poverty won’t do a very good job of reflecting the impacts of these policies.

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