Re: wages/Federal Poverty

["JS M" <jbiggs50@hotmail.com>]

>If we look at meeting basic life-sustaining needs, it may help to look at
>Federal Poverty Thresholds compared with the Federal Minimum Wage.

I found this while surfing for some information on poverty.  It's from the 
Census Bureau.The Development and History of the U.S.

>"Poverty Thresholds--A Brief Overview
by Gordon M. Fisher, Department of Health and Human Services

In view of the recent major proposal to revise the way in which the United 
States measures poverty, it may be useful to review the development and 
subsequent history of the current official poverty thresholds.

The poverty thresholds were originally developed in 1963-1964 by Mollie 
Orshansky of the Social Security Administration. She published an analysis 
of the poverty population using these thresholds in a January 1965 Social 
Security Bulletin article. Orshansky based her poverty thresholds on the 
economy food plan--the cheapest of four food plans developed by the 
Department of Agriculture. The actual combinations of foods in the food 
plans, devised by Agriculture Department dietitians using complex 
procedures, constituted nutritionally adequate diets; the Agriculture 
Department described the economy food plan as being "designed for temporary 
or emergency use when funds are low." (Orshansky also developed a second set 
of poverty thresholds based on the Agriculture Department's somewhat less 
stringent low-cost food plan, but relatively little use was ever made of 
these higher thresholds.)

Orshansky knew from the Department of Agriculture's 1955 Household Food 
Consumption Survey (the latest available such survey at the time) that 
families of three or more persons spent about one third of their after-tax 
money income on food in 1955. Accordingly, she calculated poverty thresholds 
for families of three or more persons by taking the dollar costs of the 
economy food plan for families of those sizes and multiplying the costs by a 
factor of three--the "multiplier." In effect, she took a hypothetical 
average family spending one third of its income on food, and assumed that it 
had to cut back on its expenditures sharply. She assumed that expenditures 
for food and non-food would be cut back at the same rate. When the food 
expenditures of the hypothetical family reached the cost of the economy food 
plan, she assumed that the amount the family would then be spending on 
non-food items would also be minimal but adequate. (Her procedure did not 
assume specific dollar amounts for any budget category besides food.) She 
derived poverty thresholds for two-person families by multiplying the dollar 
cost of the food plan for that family size by a somewhat higher multiplier 
(3.7) also derived from the 1955 survey. She derived poverty thresholds for 
one-person units directly from the thresholds for two-person units, without 
using a multiplier. The base year for the original thresholds was calendar 
year 1963.

While the poverty thresholds had been calculated on the basis of after-tax 
money income, they were applied to income data--the Census Bureau's Current 
Population Survey--that used a before-tax definition of money income; this 
was done because when the thresholds were being developed, the Current 
Population Survey was the only good source of nationally representative 
income data. Orshansky was aware of the inconsistency involved, but there 
was no other alternative; she reasoned that the result would yield "a 
conservative underestimate" of poverty.

As early as November 1965, Social Security Administration policymakers and 
analysts began to express concern about how to adjust the poverty thresholds 
for increases in the general standard of living. In 1968, the Social 
Security Administration tried to take a very modest step towards raising the 
poverty thresholds to reflect increases in the general standard of living. 
The Bureau of the Budget (the predecessor of the Office of Management and 
Budget) prohibited the modest increase in the poverty thresholds, but 
initiated an interagency Poverty Level Review Committee to re-evaluate the 
poverty thresholds. This Committee decided to adjust the thresholds only for 
price changes, and not for changes in the general standard of living. In 
1969, the Committee decided that the thresholds would be indexed by the 
Consumer Price Index instead of by the per capita cost of the economy food 
plan.

During the 1980s, there were extensive debates about poverty 
measurement--particularly about proposals to count government noncash 
benefits as income for measuring poverty without making corresponding 
changes in the poverty thresholds. (For comments on these proposals, see pp. 
9, 65-66, 205, and 227-231 of the report cited in the next paragraph.) 
However, no changes were made in the official poverty definition during the 
1980s.

In 1990, a Congressional committee requested a study of the official U.S. 
poverty measure by the National Academy of Sciences/National Research 
Council to provide a basis for a possible revision of the poverty measure. 
In 1992, the NRC's Committee on National Statistics appointed a Panel on 
Poverty and Family Assistance to conduct this study. In May 1995, the Panel 
published its report of the study (Constance F. Citro and Robert T. Michael 
(editors), Measuring Poverty: A New Approach, Washington, D.C., National 
Academy Press, 1995). In the report, the Panel proposed a new approach for 
developing an official poverty measure for the U.S.--although it did not 
propose a specific set of dollar figures. The Panel's proposal has been 
summarized and discussed in a number of sources, including earlier issues of 
this newsletter."<

So, it seems to me that any discussion of poverty and wages should not use 
the federal threshold as a guideline because it obviously doesn't reflect 
current reality.  Take it from someone living paycheck-to-paycheck, you 
don't have to live in a tar paper shack and eat grits every meal to be poor.
jm



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