For a family of three in 1963, the resulting threshold was an income of $2,442 a year. Today, it is $18,300.
From climate change to redistricting, New York City Mayor Michael Bloomberg and Gov. Arnold Schwarzenegger have teamed up on a number of issues. It's time to add another to the list -- updating the antiquated and misleading way we measure poverty.
It may seem like an odd concern for the Republican duo. But Bloomberg took the lead on the issue last year when conditions in New York City were similar to those California faces today: The economy was down; need was rising; and public resources were constrained.
A number-cruncher by trade, Bloomberg turned to statistics to shed light on those suffering in the economic gloom. "If you can't measure it, you can't manage it," he was quoted as saying. His questions were basic: What people and places in New York have the greatest need? How could the city best deploy its limited public dollars to meet them? And what impact were its current programs having?
But the federal poverty stats couldn't provide answers. The mayor found them useless. That's because the way we measure poverty hasn't been updated since 1964, when federal officials multiplied the cost of a bare-bones diet by three to establish the "poverty line." For a family of three in 1963, the resulting threshold was an income of $2,442 a year. Today, it is $18,300.
The dusty old formula takes no account of whether you live in Lodi or Los Angeles. It ignores the fact that food is no longer the biggest-ticket item for families who now increasingly struggle with housing, transportation and health care costs.
And crucially, it looks only at people's earnings while casting a blind eye to what they receive from assistance programs -- like tax credits and in-kind subsidies, such as food stamps. As a result, families receiving substantial aid can appear as needy to the government as families who receive nothing.
How can you target limited funds when you can't distinguish who needs them most?
Bloomberg didn't have to look hard for a better way. Nearly 15 years ago, the National Academy of Sciences created an alternative formula at the request of Congress. The academy's measure reflects regional cost-of-living variations and takes into account costs for child care and medicine. And it calculates the value of non-income resources such as subsidized housing.
Implemented in 2008 in New York, the new approach transformed the city's poverty numbers. Overall poverty went up five percentage points, but not every group saw its numbers rise.
The rate jumped 13 points for the elderly, driven largely by medical expenses. But it went down slightly for children, especially those in single-parent households -- thanks to the inclusion of nutrition programs and tax credits in the calculation. Poverty also went down in areas such as the South Bronx and Harlem, where a higher percentage of residents live in public housing. The result: Today, New York can better deploy its resources.
So, could this make a difference in California, when the state is slashing programs for the poor as demand for them is spiking?
The switch wouldn't change funding or eligibility levels. But, crucially, when you've got limited resources to help, you need to direct them to the places and people in the state that need them the most. The state would have a much more accurate picture of who's in need. And using the new measure would help state officials understand how they can get the biggest bang for their limited buck.
It wouldn't take much for our beleaguered state agencies to make the change. A bevy of Ph.D.s in New York City already did the heavy lifting. When New York state followed suit -- they announced they were doing so in July and will release a report in November -- it only took a few people a few months' work.
If California steps out on this issue, it would prod the Feds to do the same. The poverty line is the only federal formula that's sat unchanged for more than 40 years. Thousands of Californians who are turning to safety-net programs for the first time are finding they won't catch them.
Bloomberg's point person on poverty is addressing the county welfare directors conference in Sacramento on Wednesday to pitch his approach. Let's hope his boss -- and the Golden State's governor -- can partner up once again.