off the charts

Tomorrow’s Poverty Data: Some Timely Issues to Look For

The Census Bureau will release the official figures tomorrow on the number of Americans in poverty in 2012, as well as data on the impact of various safety net programs.  The figures will show:
  • Changes in the official poverty rate. If the rate falls, it will be a sign that the recovery—which officially began in June 2009 — finally started to reach the poor in 2012.  Poverty has not fallen by a statistically significant amount since before the recession (see chart). This has been a troubling pattern of recent business cycles.  Economic growth has been slow to reach the poor.  In the recovery from the 2001 recession, in fact, poverty rose further and never retreated to its 2001 recession level. The poverty rate, which was 15 percent in 2011, would need to fall to 12.5 percent to reach the 2007 level (before the Great Recession) and 11.3 percent to reach the 2000 level.
  • The impact of SNAP, which Congress is considering cutting heavily, in helping families make ends meet. The official poverty figures don’t show the impact of SNAP, because those figures only include cash income.  But the information that the Census Bureau is expected to release tomorrow will include data showing the impact of SNAP on poverty when SNAP benefits are counted as income, as most experts favor (and as various alternative poverty measures from the Census Bureau do).  In 2011, SNAP lifted 3.9 million people, including 1.7 million children, out of poverty, when SNAP benefits are counted. House leaders plan to bring for a vote this week a bill cutting SNAP by $40 billion over ten years and dropping at least 4 million low-income people from the program.  SNAP participants already face a sizeable benefit reduction on November 1, when the 2009 Recovery Act’s temporary benefit boost ends.  The $40 billion in cuts would be on top of that.
  • The impact of unemployment insurance, which is set to shrink at the end of the year. Census is also expected to release data showing the poverty-reducing effects of some programs that the official poverty measure does count, such as unemployment insurance (UI).  UI benefits kept 2.3 million people out of poverty in 2011. Congress has already allowed federal UI benefits for the long-term unemployed to weaken (in February 2012, for example, it cut the number of weeks of benefits available from the Emergency Unemployment Compensation program), and these benefits will expire altogether in December unless Congress extends them, which now looks questionable.  Long-term unemployment remains a serious problem:  nearly two-fifths of the 11.3 million people who are unemployed have been looking for work for 27 weeks or longer, more than in any previous downturn on record.
What tomorrow’s official poverty figures will not show is a meaningful comparison between poverty today and in the 1960s. Some observers compare the official poverty rates then and now and conclude that the nation has made little progress.  This is a deeply flawed — and essentially invalid — comparison, as a new Center report explains, because the official poverty measure captures so little of the poverty relief that today’s safety net provides (through non-cash benefits such as SNAP and tax measures such as the Earned Income Tax Credit). An apples-to-apples comparison shows that poverty today is much lower than it was throughout the 1960s, despite today’s weaker economy. (By the way, don’t confuse the estimates of anti-poverty effects that the Census Bureau will release tomorrow with estimates based on the federal government’s new Supplemental Poverty Measure.  Those estimates, which Census will update for 2012 later this year, differ in technical details.  Because they use a more comprehensive measure of poverty, they tend to show even larger poverty reductions from non-cash benefits.)