Measuring poverty in America

MARY REICHARD, HOST: It’s Thursday, the 6th of June, 2019. Glad to have you along for today’s edition of The World and Everything in It. Good morning, I’m Mary Reichard.

MEGAN BASHAM, HOST: And I’m Megan Basham. First up: measuring poverty.

The Trump administration has proposed tweaking the Official Poverty Measure, or OPM. You probably hear it most often referred to as the poverty line. That’s the measure federal agencies use to evaluate whether families need government assistance.

Since the 1960s, the poverty line has been set at three times the cost of a basic food budget. And every year, the government adjusts that number to account for inflation. This year, the federal poverty line sits at just under $26,000 for a family of four.

REICHARD: But some say millions of Americans in need will lose their welfare benefits if the Trump administration makes that change. Yet poverty-fighting experts from conservative and Christian groups say the change will have little effect on the system. They say a much more comprehensive overhaul is needed than a formula adjustment.

Joining us now to explain why is Ismael Hernandez. He is originally from Puerto Rico. Hernandez now directs the Freedom and Virtue Institute. The organization is devoted to training in self-reliance, individual liberty, and human dignity, particularly in impoverished areas.

Good morning, Ismael!

ISMAEL HERNANDEZ, GUEST: Good morning.

REICHARD: Let’s start with family budgets. Most people spend a smaller percentage of their income on food than they did in the 1960s. And the poverty line calculation doesn’t take into account benefits like food stamps. Some say that means people aren’t as impoverished as we might think. Is that fair?

HERNANDEZ: I think so. The way that the government measures poverty seems to be mostly a political exercise. Basically we have a number of people who are decreed by the government to be under poverty and as things have changed in society, those numbers and those measurements do not reflect that reality. And I think it should reflect the reality one way or the other.

REICHARD: What effect does that have on the way we think about poverty in the U.S.? It seems like the narrative is that people in poverty aren’t getting out. Is that accurate?

HERNANDEZ: No. And the reality is that most people who are in poverty eventually get out of poverty. There are several efforts that show that it takes people 8-10 years to get out of poverty, for people to move out of it eventually. We still have a mobile society.

The problem is that with many studies, they are more punctiliar. They don’t follow people over time. But when we follow the same households over time, we do see that people eventually get out of poverty.

But the system is not—it doesn’t seem to be structured as a way of measuring that change. Again, it’s like taking a picture of a stadium. You see this mass movement and mass group of people and you don’t see the faces of the people and people don’t seem to be individuals. They are members of that group we call the poor.

REICHARD: That’s a good way to visualize this.

Well, some people say changing the way we calculate the poverty line will leave a lot of families without the help they really need.

Do you think the government could offset any negative effects by improving work incentives for welfare recipients? Explain how that would work.

HERNANDEZ: The first assumption is that we know that these people need these things. But, as you say very well, work is the best antidote against poverty. So, if we have people working, people will need less and less benefits from the state.

But if the idea behind the whole exercise is political, is a way to bring resources to these bureaucracies of compassion managed by the government, then you are not interested in having a true picture of what are the real needs of the poor. You are interested in the perpetuation of these systems which are, by themselves, not very effective.

We do know that of every $3 that go into the federal government for poverty alleviation, about $1 ever reaches the hands of the poor. So what are we talking about when we are trying to increase the budget of this bureaucracy.

REICHARD: Explain practically how that would work. What would the government have to do to offset those negative effects and improve work incentives?

HERNANDEZ: Incentivizing the economy. A stronger economy creates jobs. Most people have been hired by mid-size to small businesses. If we create incentives for those businesses to energize themselves and hire more people, more people will be hired.

And so the reality is that if we really want to help the poor, we need to create a stronger economy. And how can we create a stronger economy? By making it less costly for businesses to hire people.

REICHARD: What other changes would you like to see the government make?

HERNANDEZ: Another change I would love to see is to move the welfare state, the welfare programs to the states. Every time you go from the top down answers to poverty, you are going to generalize criteria. And when you generalize criteria, you’re missing the reality of people on the ground.

But by spreading decision making, you’re seeing 50 different welfare systems. You encourage experimentation with new ways of meeting human needs. And maybe one of those will prove to be the best way to do it. So, in other words, you move decision making and move resources to the people in their states when they have a better opportunity to find real answers to poverty.

REICHARD: Ismael Hernandez heads the Freedom & Virtue Institute. Thanks so much for joining us today!

HERNANDEZ: Thank you!

(Jeff Lewis/AP Images for AIDS Healthcare Foundation) A homeless individual adjusts his tent on Skid Row street in Downtown Los Angeles on Friday, May 31, 2019, five days before Los Angeles officials are set to release the region’s official 2019 homeless count on June 4th. 

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