Study Adjusts Poverty Rates

November 12, 2009 | Mobile Press-Register |  Link to article

Alabama's poverty rate is lower than the national average when regional differences in housing costs are taken into account, according to a recent study.

Both Alabama and Mississippi are among several Southeastern states whose poverty rates decrease under such a formula.

The study, written by Dorothy Smith at the Center for Law and Social Policy in Washington, D.C., aims to highlight the need to modernize how poverty is measured.

Kristina Scott, executive director of the Alabama Poverty Project, said a study of regional differences in poverty needs to take into account more than just housing costs. But overall, she agreed that officials need new ways to measure the problem.

"Having a more accurate poverty measure will allow us to better understand the nature of poverty in Alabama and better target proposed solutions," she said. "If we can't measure it, we can't solve it."

The federal government still uses a formula designed in the 1960s that sets a poverty threshold at three times a subsistence food budget. That formula was created at a time when American families spent a third of their budgets on food, Smith said.

Families now spend only one-seventh of their budget on food, but the only change to the poverty formula has been to update it for inflation, Smith said. It also doesn't account for resources the government has made available to poor families, such as the earned income tax credit or food stamps.

The poverty threshold is the same nationwide, which overlooks differences in the cost of living in different regions, Smith said.

"We really just wanted to provide this information to states to advance the dialogue on the need for a modern measure," she said.

Smith adjusted the poverty formula to include spending data on things including clothing, shelter, medical care and child care that were recommended by the Nation al Academy of Sciences.

 

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