The administration of New York City Mayor Michael Bloomberg, frustrated by Washington's Great Society method of determining who is poor, is developing its own measure, which city officials say will offer a more modern and accurate picture of poverty.
Bloomberg wants to adopt the new measure in part so he can better assess whether the tens of millions of dollars the city plans to spend on new anti-poverty programs will have an effect on the standard of living of poor people.
But officials also hope the new measure will set off a nationwide re-examination of the current federal standard and prompt other cities and states to adopt the city's method.
The 42-year-old federal poverty standard, which is pegged to the annual cost of buying basic groceries, is widely viewed as crude and imprecise. The city's formula would take into account the money families must spend annually on necessities including rent, utilities and child care.
But it would also factor in the value of assistance received, like housing vouchers or food stamps.
The city's efforts are already attracting attention.
"There is widespread dissatisfaction with the current standard," said Jack Tweedie, director of the children and families program at the National Conference of State Legislators, which provides research to legislators and policymakers.
"Because it is New York City adopting it, it could be a big step forward," he said. "As it starts generating reports and data, others will be interested and you will get more momentum."
The politics surrounding the calculation of who is poor are intense because the number largely determines eligibility for numerous federal entitlement programs. And, perhaps as important, it is the measure used by people across the political spectrum as they debate how well this wealthy nation cares for its less fortunate.
City officials say the desire to adopt a new method is driven by Bloomberg's second-term pledge to reduce poverty.
At a press conference last week, Bloomberg announced that 31 programs to combat poverty were up and running, and that a dozen more would be started in the next months.
In developing the new programs, however, the city discovered an obstacle: The federal poverty standard was all but useless for assessing whether the efforts were having an effect. This was especially frustrating for the mayor, whose business background and a master's degree in business administration from Harvard have conditioned him to look for measurable results.
So, the city began drafting a measure based on research done a decade ago by the National Academy of Sciences. Dozens of the most renowned poverty researchers in the nation have been asked to weigh in as well.
Bloomberg is seeking a balanced approach in devising New York's formula, which will be rolled out this summer.
For example, the federal method of calculating the income of poor people does not take into account the value of the extensive benefits that governments give out, like housing vouchers. But the city method will, offering an in-depth look at the assistance provided by New York, which has perhaps the most generous safety net in the nation. Upwards of 600,000 families in the city are in public housing or receive substantial rental assistance.
Other aid that would be counted toward income includes food stamps, subsidized child care and cash that is returned to families through the earned income tax credit and other tax credits. These benefits can account for aid worth thousands of dollars a year for each family, and if that was the only change made in the formula, the number of poor in New York would drop drastically.
But New York is also looking to establish a more realistic picture of how much money is needed to live here.
The current federal poverty threshold was developed in the 1960s by Mollie Orshansky, an economist with the Social Security Administration, who based her number on a 1955 Department of Agriculture study that said low-income Americans spent about a third of their after-tax money on food. If a family had annual income equal to three times the annual cost of basic groceries, Orshansky reasoned, they were not poor.
Obviously, that formula was developed in a very different America. Yet Mollie's Measure, as it is known in poverty circles, is still pegged to an annual grocery bill, adjusted for little more than price increases over time. The current poverty threshold for a family of four (two adults and two children) is a little under US$21,000.
In its new formula, the city would set its poverty threshold at about 80 percent of the median amount spent by American families on essential goods, which would include food, rent, clothing, utilities and a little extra. Costs would be adjusted to reflect New York prices.
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