Academic journal article Monthly Labor Review

What Does It Mean to Be Poor in America?

Academic journal article Monthly Labor Review

What Does It Mean to Be Poor in America?

Article excerpt

An examination of a variety of measures of material well-being shows those individuals living in poor families, in single-parent families, and in families receiving welfare to be significantly worse off than those living in nonpoor families

To understand the relationship between poverty and living conditions, a multifaceted understanding of what it means to be poor is required. In one sense, the answer to the question "What does it mean to be poor?" is straightforward--having cash income below the official poverty line for a given family size. In a broader sense, the living conditions of the poor are difficult to measure, both because annual cash income is only one factor related to living conditions, and because the poor are quite heterogeneous.

This article represents an effort to get closer to the answer by summarizing findings from nine national surveys that shed light on the living conditions of individuals living in poor and nonpoor families. It differs from earlier examinations of living conditions and the material well-being of American families in that it draws upon a broader set of household surveys and attempts to maximize uniformity in the definition of family types and poverty. This work represents a coordinated effort of representatives of various Federal agencies that produce and analyze data from nationally representative surveys.(1) The aim in this process has been to produce measurements of material well-being for an expanded set of dimensions, following a methodology that would promote comparability across surveys as much as possible.

Related research(2)

Although the official poverty measure in the United States is defined in terms of current before-tax cash income, some aspects of economic welfare can be more accurately gauged by measuring consumption or other dimensions of living conditions. Income measures ignore homeownership and other assets that can be important sources of consumption. Thus, some people, such as those who are retired or those whose incomes are only temporarily low, may be classified as poor based on income but do not have low consumption. Furthermore, the official poverty rate does not account for taxes or in-kind transfers such as food stamps or government provided medical insurance, which improve living conditions without affecting a family's official poverty status.(3)

To address some of the limitations of basing the measure of poverty solely on cash income, David M. Cutler and Lawrence F. Katz compare poverty rates constructed using consumption expenditure data from the Consumer Expenditure Survey with the official poverty rates based on income from the Current Population Survey.(4) They find that, while the poverty rate is lower when measured using expenditures, trends in poverty rates based on both income and expenditures are similar, and both rates rose during the 1980's, particularly for the nonelderly.

Daniel T. Slesnick also finds that consumption expenditurebased poverty rates are lower than income-based measures.(5) He notes that the reported postwar trend poverty is sensitive to the equivalence scale used and, for the late 1970's and the 1980's, to the price indexes used for the analysis.

Other researchers have analyzed measures of specific dimensions of material and economic well-being such as housing, neighborhood quality, consumer durables, income sources, spending patterns, and health to study the living conditions of low-income children and families. For example, Robert Rector analyzes the 1989 American Housing Survey and finds that nearly 40 percent of all households with incomes below the official poverty line own their own homes, but that only 18 percent of poor, single-parent families are homeowners.(6) The median value of homes owned by the poor is 58 percent of the median value of all homes owned in the United States. In addition, he reports that only 8 percent of poor households are overcrowded (defined as more than one person per room), and 53 percent of poor households have some type of air conditioning. …

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