The Measurement of Poverty: Implications for Antipoverty

The Census Bureau released a report in April 1982 showing that if in-kind income from government programs--food stamps, subsidized school lunches, Public Housing, Medicare and Medicaid--is valued and added to money incomes, then poverty in 1979 was substantially less than the 11.1 percent of persons the Census had previously reported. This paper assesses the implications of that report for the measurement of poverty and for transfer policy. Then some evidence on the present level and recent trend in poverty is presented. This is followed by a discussion of how current antipoverty policy differs from that of the past fifteen years. Finally, some projections of poverty into the mid-1980s are offered. The Measurement of Poverty: Implications for Antipoverty Policy INTRODUCTION AND SUMMARY The Bureau of the Census (1982) has released a report showing that if in-kind income from government programs--food stamps, subsidized school lunches, public housing, Medicare and Medicaid--is valued and added to money incomes, then poverty in 1979 was substantially less than the 11.1 percent of persons the Census had previously reported. 1 The resulting estimates of the percentage of persons who are poor range from 6.4 to 9.8 percent, depending on which of the transfer benefits are included and how they are valued. 2 Many analysts concerned about the well-being of the poor have criticized the report, viewing it as an attempt to demonstrate that poverty is no longer a serious problem. Such skepticism is unwarranted for several reasons. First, it has long been recognized that programs like food stamps and subsidized housing increase the purchasing power of the poor even if they do not alter their cash incomes, and hence, the Census Bureau's official poverty statistics. Similar estimates for earlier years have been widely cited in the academic literature (Smeeding, 1975; Hoagland, 1982).3 Thus, the Census Bureau has merely responded to academic and Congressional criticism of the official statistics. Second, rationales for reducing social welfare expenditures are seriously challenged by the findings. The report's lowest estimate of poverty is derived by valuing all of the in-kind transfers listed above at their market cost and adding them to reported cash incomes. That 13.6 million people, 6.4 percent of the population, remain poor refutes the