November 15, 2012

New formula has poverty level rising above 49 million

The new measure provides a fuller picture that the government believes can assess safety-net programs.

The Associated Press

WASHINGTON — The ranks of America's poor edged up last year to a high of 49.7 million, based on a new census measure that takes into account medical costs and work-related expenses.

The numbers released Wednesday by the Census Bureau are part of a newly developed supplemental poverty measure. Devised a year ago, this measure provides a fuller picture of poverty that the government believes can be used to assess safety-net programs by factoring in living expenses and taxpayer-provided benefits that the official formula leaves out.

Based on the revised formula, the number of poor people exceeded the 49 million, or 16 percent of the population, who were living below the poverty line in 2010. That came as more people in the slowly improving economy picked up low-wage jobs last year but still struggled to pay living expenses. The revised poverty rate of 16.1 percent also is higher than the record 46.2 million, or 15 percent, that the government's official estimate reported in September.

Due to medical expenses, higher living costs and limited immigrant access to government programs, people 65 or older, Hispanics and urbanites were more likely to be struggling economically under the alternative formula. Also spiking higher in 2011 was poverty among full-time and part-time workers.

As a result, the portrait of poverty broken down by state notably changes. California tops the list, hurt by high housing costs, large numbers of immigrants as well as less generous tax credits and food stamp programs to buoy low-income families. It is followed by the District of Columbia, Arizona, Florida and Georgia.

In the official census tally, it was rural states that were more likely to be near the top of the list, led by Mississippi, New Mexico, Arizona and Louisiana.

"We're seeing a very slow recovery, with increases in poverty among workers due to more new jobs which are low-wage," said Timothy Smeeding, a University of Wisconsin-Madison economist who specializes in poverty.

Broken down by group, poverty was disproportionately affecting people 65 and older – about 15.1 percent, or nearly double the 8.7 percent rate calculated under the official formula. That's because they have higher medical expenses, such as Medicare premiums, deductibles and drug costs, that aren't factored into the official rate.

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