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Measure Highlights the Importance of Public Investments in Lifting Children Out of Poverty

Raleigh, N.C. –The U.S. Census Bureau will release new national data on poverty next week. These data come on the heels of the 17th annual Child Health Report Card which found clear gains in the well-being of children in North Carolina, and called for continued investments in programs that help to keep children healthy and safe.

“The downturn in the economy has created a number of challenges for vulnerable families in North Carolina,” said Laila Bell, Director of Research and Data at Action for Children North Carolina. “These new figures will offer an alternative picture of poverty, and highlight the importance of public investments in critical programs, particularly those targeting children, in helping to mitigate the effects of economic hardship.”

The Supplemental Poverty Measure was developed by the Census Bureau in collaboration with the Bureau of Labor Statistics and the National Academy of Sciences. While this new measure was not designed to replace the official poverty measure, it serves as a powerful tool to help policymakers evaluate the impact of policy interventions that support vulnerable families.

The Supplemental Poverty Measure sets the alternative poverty thresholds at levels that accommodate families’ basic needs including: housing, food and clothing. Income that is not available to meet these expenses, such as income that goes toward medical costs, taxes, work-related expenses and childcare, is discounted. The measure also incorporates regional differences in the cost of living, and the impact of social services and other benefits which help  to reduce poverty such as the Supplemental Nutrition Assistance Program-formerly Food Stamps-and tax credits like the Earned Income Tax Credit.

Last year the Earned Income Tax Credit kept 3 million children across the country from falling into poverty.

A Badly Outdated Measure

The current measure finds that more than one in six North Carolina residents now live in poverty. The proportion is even higher among children, with one in four children in North Carolina under the age of 18 living in households that earn less than $22,350 a year for a family of four.

The official poverty threshold was developed in the 1960s and is based on the cost of the U.S. Department of Agriculture’s “thrifty food plan” multiplied by three and indexed for inflation. Critics have long argued that the official poverty measure fails to acknowledge how families’ costs have changed over the past four decades. When the federal poverty thresholds were developed, the average American family spent one-third of their income on food; today, that proportion has fallen to just 17% as the costs of childcare, health care and housing have all grown disproportionately.

“This limitation of the official poverty measure holds important implications for the way we conceptualize poverty, “said Bell. “Since food now constitutes a smaller share of family budgets, the measure lags far behind the actual cost of what most families need to get by.”

In failing to keep up with the changing costs of making ends meet, the traditional measure does not capture how the poorest families living in poverty are pushed into an increasingly sparse standard of living. Just four decades ago, a person living at the federal poverty line earned about 50% of the average American’s income; today, that proportion has fallen to about 28%.

The measure also ignores income vulnerable families receive via the social safety net, and conceals how those programs help to bolster many families above the poverty line.

Use Action for Children North Carolina as a Resource

Action for Children is a statewide policy research and advocacy organization dedicated to improving outcomes for children in North Carolina. On November 7th, Action for Children will issue a general statement early in the day about the 2010 supplemental poverty estimate, and be available for interview to help provide context and interpretation of what this new information means for children in North Carolina.

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