BD 141 435°, uUD- 016 929 AUTHOR :.. || Brown, Lawrence lL. III; Miller, Renee * TITLE = Characteristics cf Low-Income Populations Under / : - Alternative Poverty Definitions. The Measure of yt mA Poverty, Technical Paper VI. ne . INSTITUTION. | Department of Health, Education, and Welfare, - ; et no Washington, D.c. Offige of the Assistant Secretary . ee ms for Planning and Evaluation. —— - PUB DATE ©. .1°Cct 76 © =. . : a NOTE 156p.3+:For related documents, see UD 016 918-929 and

Ot —s UD 017 087; Best copy available oe AVAILABLE FRCM Office of the Assistant Secretary for Planning and . Evaluation, »Department.of Health, Education and. welfare, 200 Independence Avenue, S.W., Room - * 443D-South Portal Building, Washington, D.C. 20201. : ry . . g ®y ‘.. EDRS PRICE ' ME-$0.83 HC-$8.69 Plus Postage. —_ . 3 DESCRIPTORS . Blacks; Children;. *Definitions; Demography; 7 DG Fatherless Family; *Individual Characteristics; *Low Income; *Low Income Groups;- Measurement Instruments; | =e *Measurement Techniques; Older Adults; Poverty ~

Programs; *Foverty Research . ABSTRACT 4. 9 a ; Re ke a ee, oo This technical paper examines how different poverty _ standards can change the statistical description of the low income | population. It supplements a chapter in a report submitted to the * 9.8. Congress in 1976 titled, "The Measure of Poverty". The poverty -»? _--geasure currently used in Title I of the ElemeAtary and Secondary § ° -Bducation Act (the Census Bureau definition of poverty) and alternative peverty definitions which weré.selected for analysis by. 4 - the Poverty Studies Task. Force are described in this paper. The characteristics of the poverty population in 1974, under the current * federal definition and under the various alternative poverty d@efintions are presented based on data from the March 1975 Current ' Population Survey. In addition, changes over time in the size and ' composition cf: poverty populations such.as the elderly, female headed families, schcol aged children, and. blacks under the alternative ‘1 measures are analyzed. A discussion of the impact of the alternative . @efinitions cn the geographic distribution of the, poor based on the €ne Percent Sample of the 1970 Census of Population is also included. the effect of the alternative pcverty definitions on the number and a charactéggstics of the poor varies the ngst with two basic changes in _,.the poverty definitions first, large increments in-the level of ‘thresholds, and second, elimination of the val jiations by family size. © _.' fhe subgroups. that deviated most from the general pattern noted for -, the total population of declining poverty rates under the fixed . measures and fairly constant poverty rates under the relative | - ‘measures betwéen 1967 and’ 1974 were the elderly and persons in : families with a female head. (Author/AM)— . pear 2 =

; bo

Documents acquired by ERIC include many informal unpublished materials: not available from other ‘sources. ERIC makes every effort to obtain the best copy available. Nevertheless, items of marginal reproducibility are often encountered and this affects the- quality of the microfiche and hardcopy reproductions ERIC makes available via the ERIC Document Reproduction Service (EDRS). ae is not responsible for the quality of the original document. Reproductions supplied by EDRS are the best that can be made from”

1 oe ar a | : |

ae ee Cae



ne Aw a

Technical | Paper XVII

' . haracteristics of Low-Income Populations ) Under: Alternative Poverty Definitions —_, NN? . a


fu \ i ;

By: Lawrence L. Brown, Hl

epartment of Health, ale on, and vee BEST COPY AVAABLE

with Renee, Miller, Bureau of he Census

ppo 169 29 oe



- October 1, 1976 _?



| Virginia Trptter | | Assistant Secretary for Education. . 2 é - Department/ of’ Health, Education, g. a8 '; (+ and Welfare OG “William A, Morrill ee eo Rs 4 , Assistant) Secretary for Planning - i a’ and Evaluation . eG oe 4 _ = Department of Health, Edycation | a a oe . and Wélfare : i a .

I.am pldased to issue Technical Paper XVIFI, "Characteristics of: ' Low-Inc Populations Under Alternative Abts > nner nate Tt _ contains supporting data for Chapter V of the €eport entitled . . The Measure of Poverty which was prepared. in’ compliarte with,section

| ° @ Education Amendments of 1974." The paper was prepared for ' the Poyerty Studies Task. Force by. Vawrénce L.-Brawn III, Dept. of

Health} Education, and Welfare, with Renee Miller, Bureau of the . + ~- Census... = _ 2

b 2 7 oy : . : ee : a |)

\". The analysis contained in this paper is based on a set of special tabulations prepared by the Bureau of Census. The paper examines .

the way in which different poverty standards affect the statistical description of the low+income population. . Changes over time in the

\ size and composition of the poverty population under the alterna- ‘.\ tive poverty definitions’ are also analyzed, along witif a discussion ®.

AS the impact of these definitions ‘on the geographic distribution

(Of the poor. ms : . ee he Mirah | ; , 64 aa Bette Mahoney a . o Chairman, ; f an Poverty Studies Task, Force


s* = 2" . ¥ . , 3 =: . 5 ; P a : : - . ¢


5 ‘FORWARDING LETTER «os .ssesceeseederenseesensscesesscrsesenceceseness BELT

PREFACE wc rccccrccccvessscccesessscovesecsessveescscssrerccreesscc eee vi

POVERTY STUDIES TASK FORCE senpecsecaeedeneececsseecaateecceserses ees, viii



TECHNICAL PAPERS seaeeseaeneersenesesssnenesneneenedensensneetes eet dy


fi \

INTRODUCTION ca leceenerseesessesnenenenenseneagecasnenenentaatenenges . dl

THE FEDERAL POVERTY’ DEFINITION serensccubureceeesnsenscereesnererees me CHARACTERISTICS OF THE POVERTY ‘pene, 1974, USING THE EDERAL ° DEFINITION OF POVERTY se teeeceeeecceseeeesaeeaeesceeeseeensee see ees 8


ee : aking the Measure sovesneesenagpacenengetecenconseneeteenegey. 11

Lifications of the Poverty Definition reer ed 14


s ngle=PoLtar Poverty Definitions nae ct pagecnaaay b


fe Median-Based Poverty Définitions aie eee 16

: - Summary seseeegeetigenennnnennnnssneensseaguatacessseeeteeeeseee) 18 _ - DIFFERENCES OVER TINE ne eee et eee 20, oo ee aes ie oe ed 21

_ Female-Headed Families | sCoesevemecasesbiglecerdnaeneeeterionsy 22 ,

Ge, soon

_ School iged Children ‘and Blacks ee rey en

: "Summary soipnnssensnsneesebaumeneeleperennegabiseseadgecessene! 23, GEOGRAPHIC DISTRIBUTION OF POVERTY seencesetecerecscsceseceaseceees | 24.0: Differences Between CPS and Decennial Census Statistics wcecccee 24 Changes in Shares of Poverty Population Codiikigeesecaienneseeeen 24


‘<) ERIC

. ings -tion Act was given the most detailed treatment, to

' exaniple of application of the concepts of poverty ,measurement to Federal - programs. The'findings of ,the study are published in a report entitled,

t Lad


& 6 ' >


Section 823 of the Edycagion Amendments ,of 1974-(PL 93-380) |. “+> requires a thorough ctodhot the manner in which the 7” | . relative measure ‘ef poverty.for use in the €inancial | , j _. assistance program, authorized by Title I of the Elementary.’ : and Secondary Education Act of 1965, may be more accurately and currently developed. -- ae

That financial assistance program is administered by the Commissioner . of Education, tfirough the Office of Education,’Department of Health, Edu- cation, and Welfare. An important featuré is the use of a formula pre- . ‘scribed by Section 103 o e Elementary and Secondary Education Act for, | the annual distribution, of Federal funds to school districts... A signifi- . cant’factor in the formula, is the number of schéol-age children 5 to 17 in

poor families within each school district.’ The’measure of poverty which oe

is used, and which is the subject of the study mandated by Section 823, - bs is the Federal government's-official statistical definition of poverty ~ nae (also known as the Orshansky, ‘OMB, Census Bureau, or Social ‘Security pov- ae ine erty lines). . a ce, “SE

Other work related to poverty measurement has been cal. ed for in re- z cent legislative acts. .In the Comprehensive Employment and Training yrctr ° the Secrétary of Labor. is directed to develop and maintain comprehensive

household budget data at different levels of living, including a “level - of adequacy." Any such review of the level of adequacy must necessarily

be closely related to measures of poverty. The Housing Community De- ~‘ e- velopment Act of 1974 gives the Secretary, of, HUD authority to adjust the

_ poverty measure to reflect local variations in the cost of living. The a - Conference. Report accompanying it directs the Secretary tO develop or ob- «sy .2° tain data with ‘respect to the "extent of poverty" by metropolitan areas oper? and to submit such data to the Congress as part of a Mar 31, .1977, ~.. : . 7 , .

report. Because of the broad scope of the subject matter, ¢ovérage of™“the tas

study of the measure of poverty mandated by Section 823/of the Education ‘: ue

paeg sabge of .1974 was extended to include implications of the study find- or the poverty-related programs of’ all affected Federal departments

and agencies. The Title I program of ‘the Elementary Secondary Educa-

t the legislatively-

mandated specifications for the study as well as to serve as a primary

"The Measure of Poverty.". An important jobjective of the study was full "I discussion and documentation of the major elements of currently, applied

and potentially usable poverty measures. Material containing essential ae:

supporting documegtation for the study/was assembled as techriical papers. -*, These have been written to stand along as complete technical treatments of specific subjects. 7 | . is

/ . % ¢ ‘o = ;



; a a : a SH - > , | 3 . . }


. , . “toe : . . e » The studg was.performed under the direct guidance'of a Powerty

Studies Task Force of the Subcommittee on the Education of the Disadvan> taged and Minorities, Federal Inter-Agency Committee on Education., Tech-

nical papers. were prepared at the request of, under the direction of, and

subject to review by the Task Force members. Some papers are primarily

~ the work of one or two persons; thesesare’attributed to their authors.

Others result ‘from-the collective -input of Task Force members or advisors and. no specific attribution is ‘given except to the Task Force, as a whole. |

The following listings show members,of the Poverty Studies Task -

‘Force by appropriate Federal departments ‘and agencies, and the titles and authars of the technical papers.” - ;

This report contains Technical Paper XVIII, Character istics of Low-

Income Populations Under Alternative Poverty*Definitions. It was prepared



wrence L. Brown III, Office of the Assistant Secretary for Planning

and’Evdluations, Department of Health, Education, and Welfare, with Renee Miller, Population Division, Bureau of.the Census. Special thanks are due .~ to Arno Winard, Richard Hornseth, and Roger Herriott, also of the Census Bureau; to Jane Lee, Office. of the Assistant Secretary for Planning and Eval~ uation, Department of ‘Health, Education, and Welfare; and to Jill. King,


Mathematica, Inc. a : \

At the request of the Poverty Studies Task Force, the

a sf . : a Bureau of the

“.Cénsus prepared the set” of tabulations showing selected characteristics of , the population by alternative measures of poverty. ‘The data from these tabulatiens underlie the analysis contained in this paper. The tabulations

_were run from the March Current’ Population. Survey (CPS). files for the income years 1967, 1969, 1971, 1973, and 1974.’ -They were also,run from the 1970 Census one-in-hundred samile for income year 1969, by States th ok

To obtain copies of the report, "The Measure of Poverty,” or any of __,.

the technical papers, please write to: : ~ oe


f 2 Office of the Assistant Secretary for Planning and Evaluation . Department of Health,*Edycation, and Welfare : 200 Independence Avenue, S.W._ - Room 443D -.South Portal Building - Washington, D. C. 20201 eB a2 >

. . . . et or) & a

v : 3 . .

. P e s B. . J . . = '


co ro) |

= . vii

. - _ 7 . “e ee i : oo : oer . th x te fs . . : é 7 : ; . ae re


. - = a s _o nq " Federal Interagency Committee on Babation : § Subcomnittee an Education, for the Gisacvantsged and Minorities | j oy a ~ ~ re : . POVERTY STUDIES TASK FORCE 1 . Chairman i oa . Bette:S. Labia : . Be Office of the Assis tc Secketaty’ : : a Z ek for Planning- and Evaluation t Department of Healthy, ial and Welfare, . Co-Chairman: fot Education ey . a x . Abdul Khan. nae . Office of the Assistant Secretary for Education soe Department of Health, Roeat ion and Welfare : David Arnaudo , Eva Jacobs . a Social and Rehabilitagion Services ' - Bureau of Labor Statistics - Department of Health, Education, and Welfare Department of Labor - Richard 84, Clemmer * Jane Lampmann) st = : * Office of the Assistant Secretary. , Office of the Assistant: Secretary ' for Policy Development and’Research for Human Development Department of Housing and Urban Development Department’ of Health, Edudat ion, and Welfare Genevieke O. Dane Daniel Levine 7 , Office of Education Bureau of the Census F Department of Health, Education, and Welfare Department of Commerce * William Dorfman Nelson icClung 7 National Center for Educational Statistics Office. Bf: Tax matey tment of Health, Education, and Welfare Department of the Treagury an L. Ginsburg ; an June O'Neil: . . Office of the Assistant Secretary Council of Economic Advisors . for Planning and Evaluation: Department of Health, Equcation, and Welfare Mollie Orshansky o Social Security Idministeatioh George E.,Hall Department of Health, Education, and yelfare, Social Statistics Branch. - Office of Management and Budget ‘Ysrael Putnam ‘e . . . Community Setwices Administratiop

* Paul T. Hill -National Institute for Education

re) ERIC

Stephen Hiemstra

Food and ‘Nutrition Saviano sa

Department of Agriculture ° wed

Department of Health, Edudation, and Welfare

7 . for

. Juhie Jetvey. Mitchell

Staff Directdr . George F. Grab. Office ‘f the Assistant oe Lanning and Ealuation -.

Robert!L. Rizek Agricultural Research Service Department of Agricylture


Gooloo Wunder lich id

Office of the Assistant Secretary for Health ©

Department of Health, Education, and Welfare

Research Assistant ‘: . Office of the Assistant-Secretary _ . for Planning and Eval uat ion: a =. 2 t +? o ha = * om ; . ‘» ; eS : . 2 7 . : 6 { * eee Le . v1il


oe | Administrative and Legislative Usage

‘Budgets Program


S Documentation of Background and Rationale for Curreht Povert

Infor. tion Matrix:


Income, 'T

the Terms "Poverty," " ‘Other Related Terms’

A iReaview of the Def inition and Mdasurement of Povert


Bureau of Labor Statistics Family

ba The Consumer Price Index .

, 4) = Wealth aria the Accounting period in the Measurement of Means-_ In-kind Income arid) the Measurement of Poverty, 7

H «

The 1972-73 Consumer Expenditure

‘Survey e

Inventory of Federal Data Bases Related

_ to the.Measurement of Poverty

Relative Poverty -

.- The Sensitivity of the Incidence of

(A) Non-Censug Data Bases. (B) Census Data Bases -

Effect of Using a Poverty Definition Based on-Housekold Income

Update of the. Ordhansky Index 2

Food Plans for’ Poverty Measurement ¢ 0 . ae oo

. N Relative Measure of Poverty

Analytic Support for Cost-of-Living Differentials .in the Poverty Thresholds »

Impdications of Alternative Measures of Poverty on Title I of the Elementary and Secondary Education Act

Poverty to Different Measures of Income: School-aged Children and Families aan lacs.

XVIII. Characteristics of Low-Income na Pofulations Under Alternative Poverty oo initions 3s ¢


. Mollie Orshansky

Soctal Security Administration

Poverty Studies Task Force with assistance from Ellen Kraus

: ,

Urban Systems Research and Engineering, Inc.°

Mark Sherwood i Bureau ‘of Labor Statistics,

. ill King ©

Mathematica, Inc.

Nelson McClung and Eugene Steuer le

- Department of the Treasury

Janice Peskin

Health, Education, and Welfare

S41) King * : Mathematica, Inc.

Connie Citro, Mathematica, Inc. Bureau of the Census © ha

Jack McNeil, Doug Sater, Arno Winard Bureau of the Census

Mollie Orshansky . Social Security Administration .

Betty Peterkin. . Department of Agriculture

Jack McNeil ° . Bureau of the Census Stanley Stephenson . Health, Education, and Welfare

Thomas Carlin Department of Agriculture

Abdul Khan and Herman Miller Health, Education, and Welfare


Survey Research Center

.., University of Michigan 7, 3 f

- °

Lawrente Brown |

Hiaithy Beoeation: and Welfare |


TABLE 1. >




TABLE -10.


" TABLE 12.

' Children Under 18 ‘Years Old, by Farm-Nonfarn

‘Families by Sex of Head, Presence of Related Childten ‘Under. 18 nearest -and Povetty Status in 1974 ee wee eceee



Income Thresholds at the ee in 1974 by. .*.- Sex: of Head, Size of Family, and Number of Related

RESIdENCE ...ee ee eeeeeeeceneces errr TTT tte wees

Equivalence Matrix Implicit in Current Poverty MEASULE wee pecce rece cree nc eeeseeccenees Poe ono a

Race, Spanish Origin and Family Status of Persons by . Poverty Status in 4974. shy serssio ones s pee cecesees eoccceee :

Poverty Status of Persons in 1974 by Family Status and Sex and Race of JHEAD were ence even vcnccceeneceeenvens

Persons 65 Years and Over ‘by Family Status and |

age | Status in 1974 st ee eee ee eee eeeeeaeesetareae eats

Work ‘Ekper ience of Fainily Heads by Poverty Status’

in 1974 and Sex of Head’ nnpneunae tans mere renner t

Distribution of Families and Unrelated Individuals

by Type of Income, Poverty Status and Sex of Head

in 1974 nogtannib en picee baagacinginng=ns Seenpeng eres HesPe tn 4

Selected Character istics. of the Popuiation Above and BeDOn the Current Poverty. Level in 1974 by Race ....seee.

Persons Below'the Current Poverty Level and 12 Alternative Poverty Levels in 1974 ...ssessseeeeeeeveens

_ Number and Poverty Rates Selected Characteristics of Persons Below the Current Poverty Level and Below

"Three re Scalings of the Current Poverty. Level fle

.in 1974. eeeee2 8282 8282882828888 8888 eenetevnve eeeees8 eeeeee eee

Percent Distributions Selected Characteristics of Persons Below the Current Poverty Level and- Below Three Upward Scalings of the Current Poverty Level

in 1994 ....ccnereccccees, sete e beeen teres eeeeen eens ee

Number ‘nd: Poverty Rates _ - Belectea Characteristics. of Families Below the Current Poverty Level and Below Three Upward Scalings of the Current *Poverty Level ©

in 1974 eeeee Pare eevee eee8 i a Sais












-? Percent Distributions -- Sele

_ »Families Below the Curfent Poverty Levei and Below/Thr

ted Characteristics .

of Families Below the Current’ Poverty Level and Below

Three Upward Scalings of the Current Poverty Level .

in i ee 43

Number and Poverty Rates -- Selected Character istics ®£ Persons Below the Current Poverty Level and Below Simplifications of the Current Poverty Level of 1974 .... 44

Percent Distributions Selected: Characteristics of Persons Below the Current Poverty Level, and Below ° 4 Simplifications of on Cutrent. Poverty Level in 1974 ...

ry > wn

Number and Poverty Rates -- Selected Characteristics 4 of Families. Below the Current Poverty Level and Below

Simplifications of the Current’ Poverty Level in 1974 .... .46

Percent Distributions -- Selected Charaeteristics of . Families Below the Current Poverty Level and Below

‘simplifications 9f the Current Poverty Level in 1974 ... 48

_ Numbér and Poverty tes —- Selected Characteristics of Persons Below the Gurrent Poverty Level and Below Two 5 ae Dollar Cuto fs in 1974 yececheceeeesperereeteres: ‘49

Persons Below the Current Poverty Level and Below Two ~

Fefens below the Goren Selected Characteristics of Ux, Single Dollar Cutoffs in 1974 cenccccccccccesececccceere 50

oN xr and Poverty, Rates Selected Characteristics of Families Below the Current Poverty Level and Below Two . Single Dollar Cutoffs in 1974 eareeeer eraser ee yess - 51

Percent Distributions Selected Characteristics of | « Families Below the Current Poverty Levél and Belaw Two Single Dollar Cutoffs in 1974... cccee eoeceesceseaeeeeesese?e $ 52

—_ ' Number and Poverty Rates -- Selected Characteristics of Persons Below the Current Poverty Level and Below Three -

Median Based Poverty Measures in 1974 sccacccccecccssees 93

Percent Distributions Selected Characteristics of: -

Median Based Payerty Measures in 1974 ..ccccceccedeceess 54° Number and Poverty Rates —~ Selected Characteristics of - Pamilies Below the Current Poverty Level and Below Three

bd Median Based Poverty Measures in 1974 eaceereveeaereeeeese : 55 .

., * rs a

- TABLE 36.



- Percent Distributions -—- Selected Characteristics of

‘Persons ‘65 Years and Over Below the Pove

. and’ 1974 Pere rrr rs) eevee eveveen eeeecccece ooccee eovvee eee

1973, and 1974

_Alternative’ Poverty Definitions:

Families Below the Current Povérty Level and Below Three Median Based Poverty Measures in 1974 ........ weve

_ Hersons Below the Poverty Level Using Alternative Poverty Definitions: 1967, 1969, 1971, 1973, and and 1974 osee eee ee aed cae, eeeeeee eseeeeveeseneted

Alternate Poverty Measures: 1967, 1969, 17], 1973, and 1974 eooee eeeveeeoveosteseeeen @eoeveeee cierou a eeeveehs oven Seecevvece

~ y Level. Using Alternative Poverty Def initions:. 1967, 1969, 1971," 197%, and 1974 oon eoeoee eee rocceees eeeveeveeeveeeseeeeeeeeee

Persons in Families with a Female Head Below the Poverty Level Using Alternative Poverty Definitions: 1967, 1969, 1971, 1973, and 1974 eeeoevoovoevevee eeeeeeveeee riers eevovoveeeeeee ;

Families with Public. Assistance Below the Poverty Level . Using Alternative Poverty: Definitions: 1967, 1969, 1971, a and 1974 ee

palated Children 5 to 17 Years Below the Poverty Level

Using Alternative Poverty Definitions: 1967, 1969,

1971, _ 1973, and 1974 vote cece rece eereteecneceeenseeetees .

" Blacks Below the Poverty Level Using pitecaatiee. Poverty Definitions: 1967, 1969, 1971, 1973,


Families with eariines Below the Poverty Level Using. Alternative. Poverty Definitions: 1967, 1969, 1971,


Unrelated individuals Below the Poverty. Level. Using 1967, 1969, 1971, 1973, and 1974 ..... cee weawne SEM scatiedessesennaees _ : ¢ ee : are? Families Below the Poverty Level Using Alternative Poverty Definitions: 1967, 1969, 1921, 1973, - * _and 1974

. Families With Social Security Income Below the Poverty . Level Using Alternative Poverty Den TTtOnse.

1967, 1969,

oot ese cece ccccces eeeoeeseeeeseseeeeee

1971, 1973, and 1974 Percent of Population in Poverty for Alternative Poverty

‘Definitions, by State, 1969 ........... eeesceee oecccccee ao


. xii a @ ze





60 °°








Percent of Related Chjldreh Aged 5-17 Years in Poverty for Fikernavlve Def ns by State, 1969 .....ceeeevees

sie ion of, Per xis by State for Alternative Poverty

Definitio J 19 9 Joccncccsccnccesdscsssessssoverssrerer®

Distribution of Related Children 5 to 17 Years by State

for Alternative Poverty Definitions, 1969 .cccgecccenece

State Shame af Poor Persons Under Alternative Poverty Definitions as a Ratio of State Share Under Current Poverty Definition, 1969 weer en ccc cence ces eseereseeseees,

State Share of Poor Children 5 to 17 Years Under Alternative Poverty Definitions as a Ratio of State Share Under Current Poverty Definition, 1969 ...cecevces


Selected Characteristics of Persons by Alternative

Measures of Poverty: .1974 vee ceenccceseeeeeseeeesener eee ee.

Selected Character istics of Families by Alternative |

fieasures of Poverty: 1974 ..ccccccccevaccceseccccncescsers Selected’ Characterstics of Unrelated Individuals 14 Years Old and Over by Alternative Measures of Poverty: 1974 ....

Persons by Alternative Poverty Definitions by State,

1969 ch uhbud decile nae wneeesnaienn Beee Sees Sseea ee wnewennes see oe S| . \ Related Children 5 to 17 Years by Alternat ive Poverty” Definitions by State, 1969 cps Negean oeueessaennes ese








Seg mes : * . : ae 0, Se ao,

1GURE ae School-age Children: :: poveceys Rates and Percent. of ' - * the Povetty Population Under Alternative. Poverty *

: : y . Definitions, 1974 once cceccccceccsescccugeccsseccesesess 92 Lae IGURE 2. :. | ely Persons: ~ Poverty Rates nd Percent of. the a : ~. * f.\ Povlrty Population Under Alternative Poverty -

be Definitions,: al sraeaeqaengeasestsegeqaeatenetstaeoge! 93 -

TGURE’ 3. “Hig: Brack: Persons: _Poverty Rates and Pexcent of the 0 rf - . * Poverty. Population Under Alternative. Poverty 7s

ee ‘Mefinitions, (1974 ca teeddeaeccesseceeeeceeesenseneseeses .- 94.

IGURE 4..0 Persons in, emale-Headed Families: Poverty Rates _ me a . and Percegifof the Poverty Ropulation Under ee - 8 a : Definitions, “1974 codeccccriacicorageconsons , 95 =

. ze IGURE 5... Numbet: 9 sons in Povert Under Alternative Poverty a ae : , Definitions; for: Selected ¥ aly 1967-1974 © cecensccdocce : 96 vot as ., & 3 sade TGURE 6: te : Percent. ‘of Persons in poverty Under mete Poverty he. Definitions, for Selected Years, 1967-1974 woccccescceee OT.

revi 7: "poverty Rates for Related Children 5 to 17 Years’and - ce -, ‘Person 65 Years and’ Gver., Under ‘Selected Alternative. Pxtag Wall Poverty Definitions: . 1967 and 1974) .ceseecceccccecceees “98 IGURE 8. ° Elderly as a Percent of All Poverty Persons Under; : E a ve = Selected Alternative Poverty Definitions: 1967-1974 eee 99. IGURE 9. | Persons in Families with a Female Head as a Percent: . a 7 ° of All Pover ty Persons Under; Selected Alternative pole

rover ty. Definitions: 1967-1974 geteiaiensapinwesedieges te" 100.

‘IGURE 10.. - Families Public Assistance: - Poverty Rates and. brake

os . Percent’ o Poverty Population Under Selected ue” ae ee =e Definitions 1967 and ‘1974S cceeeeeee 101.

IGURE 11. . Families ‘with Earnings asa Percentage of All Poverty .

- ek Families Under Selected scalciauay be Poverty Definitions: 1967-1974 wee cece cence eecetaccecacsccccccccscccasesesees 102

'IGURE 12: a Regional Share’ of Poor Persons Under Alternative. Poverty Definitions as a Ratio of Regional Share Under Current Poverty Definition, . 11969 seccccasescseesser 103 IGURE 13. Regional Share of Poor School-Age Children Under . Alternative Poverty Definitions as a Ratio of Regional - Share Under Current Poverty. Definition, 1969 st eeeseeeds 104, xiv \ |

130. ‘<) ERIC

i ee ee

. March 1975 Curren

e : ; , ee eee ie

is ee


dae This paper. examines how different poverty standards can’ change the stati- ‘"gtical description of-the low-income population. It supplements Chapter V --.

. J "Alternative Poverty: Coutits Based on Available Data" of The-Measure;of- Poverty © “(a report to; Congress’ as mandated’ by the Education Amendment s- pf . , U.S.

Department of Health, Education, and Welfare, April 1976).. The poverty measure.

* eukrently used in Title “t of.the Elementary and Secondary Education Act (Census

; Burgau definition of poverty): and alternative.poverty definitions which have ‘Keen selected for analysis by the Povérty Studies Task Force (which produced

te The “Measure “of Poverty) are described. , The characteristics of the poverty pop- ‘ulation in er the current Federal definition and under the.various

alternative abel: Beaune eae are then presented based on. data. from the ~ :

Population Survey (CPS). In addition, changes over time in the size and composition.of the poverty population under the alternative

measures are analyzedvs A discussion of the impact:of the alternative defini- - tions-on the geographic distr ibution of the. poér based on the One Percent .


sample of the 1970 Census of Population is also ae _ ‘One reason for. performing this analysi% is to enable those who administer social service programs to identify subgroups of the population which would be

a ‘reached ‘by .their’ programs if. a particular: poverty measure were. to be used as a '... program parametér -or in a funding formala. ' The characteristics of potentially

- eligible persons are of vital’ interest to administrators who must plan and bud-

get for programs that are intended to serve ‘target groups with specific. char-

acteristics. , Consequently,. the material in this. paper ‘should prove useful to at administrators and analysts ‘in many programs which are designed to help the ., poor. (needy, low-income, disadvantaged) and which make. us? of a poverty measure or income eligibility standard. 9 Se - e

Different programs use different measures, which is not surprising in view

\of the broad spectrum of objectives covered by such programs. Some examples ’- '. are: Title I of the Elementary and Secondary Education Act, which uses the official Federal measure aS part of an.allocative forma; ‘the College Work~

Study: program authorized by the Higher Education Act of 1965, which uses a

single dollar threshold (unchanged for family. °size); Title XX of the Sgcial Security Act, which adopted 80 to 115 percent of median, family income in each

- ‘state.as, its standard; the Comprehensive Employment and’ Training Act, which uses a. single-dollar ‘threshold with. the allocation.based partly on the number

_ | a INTRODUCTION . - ; a o: : : :

oS e


“Of families in an area with income below that. level; and the Community S@gvices -

Administration, which issues income eligibility standards ‘directly based on


variations. that remain smoothed. .

‘the official F eral measure, but without many of the distinctions, and with -

14. = /


Pie ‘THE FEDERAL POVERTY. DEFINITION oe The current: Federal definition of poverty is based gn a definition developed

by Maqllie Orshansky at the Social Security Administration (SSA) in.1964 and re- |. vised by a’Federal Interagency Committee in 19692 0 0 2 7) 2 tt, as

‘The ‘SSA: (Orshansky) index provided a range of income cutoffs adjusted by

such factors as family size, séx of head, number of children under 18 years old, ... -and farm-nonfarm residence. At the core of this definition of poverty was the -.* economy food plan, the least costly’ of four food plans that are nutritionally:

_.. sound, designed by the Department of Agriculture. It was determined from the

Department of Agriculture's 1955 survey of food consumption that families ri of three or more persons spend approximately one-third of their after tax |’ a income on food; the poverty level for ‘these families was, therefore, ‘set at- =’ " ‘three times the cost of the economy food plan. For smaller’ faitities and -. _. Ps

‘persons: living alone, the cost of the economy food plan was eee 8 ‘factors. that were slightly higher in order to compensate for the relativ ioe : larger fixed ‘expenses of these smaller households. - Annual revisions of the

‘poverty cutoffs were based on price changes of the items in the economy” budget. a _— es a fl

Re a result of deliberations of a Federal Interagency Committee in/A969,

' -. the fbllowing two modifications to the original SSA definition of poverty were

‘+ ‘recommended: (1) that the SSA thresholds for nonfarm families be retained for ‘the base year: 1963, but that annual adjustments in the levels be based on. changes" in the Consumer-Price Index (CPI). rather than on changes in.the cost of food in- Cluded*in the economy food plan; and (2) that. the farm thresholds be raised from: 70 to 85. percent of the corresponding nonfarm levels. The reasons for making ,

- these changes are discussed in Technical Paper I of The Measure of Poverty.

Currently, the cutoffs used by the Bureau of the’ Census to determine the

low-income status-of. families and unrelated individuals consist of a set of.

124. thresholds arranged in.a four-dimensional matrix. The matrix consists of

a family size dimension (from one person, ie., unrelated individuals, to sevens,

or more person families) cross-classified by presence and number of children ,

under 18 years old (from no children present to six or more children present),

sex of head, and farm-nonfarm residence. Unrelated individuals and two-person

families.are further differentiated by age of head (under 65 ‘years and 65: years

and over). The total income of each family and each unrelated individual’ in the

sample is tested against the appropriate dollar threshold to determine the low-—

- income status of that family or unrelated individual. If the family's total

incomé is ‘less than its corresponding cutoff, the family is classified-as below: . the low-income level. “Table 1 -reproduces the. poverty matrix for income year . . 1974. (See page. 28.) : :

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' Data.on- income collected in the CPS are limited to money income received - before payments. for personal income ‘taxes, Social Security, union dues, Medicare deductions,: etc. Money: income is the sum of the amounts received from earnings; Social Security and public assistance payments; dividends, interest, and rent; ~

. unemploymént and workmen's compensation; government and private employee pensions , _and other periodic income. See Chapter II of The Measure of Poverty and Techni-. ~ cal Papers VI, VII, and X for details on the limitations of the income concept. '


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: his section investigates the “effect ‘of some alternative poverty measures on the statistical description of poor ‘populations. It deals with the poverty \. -eutoffs, not with the definition of income. In Chapter IV of ‘The “Measure “of voi Rover ty report, it was shown that modifying the. income definition by Including +): Some: cash equivalent value of in-kind. benefits: or assets would lower the poverty. “. ‘eount if the poverty cutoffs were not simultaneously changed to be consistent with the new -income definition.*, Similarly, poverty counts would be reduced=

. “if underreporting of cash income were corrected in the ‘census. and CPS suftveyS, ©

+/or if irregular cash income were counteds: However, these commonly proposed

changes. to the definition of income carinot, be incorporated into the poverty —-

“measure'without modifying the census or CPS surveys or developing new surveys: a

- from which. to derive.a poverty count. Furthermore; the statistical effect. of

a these modifications is not .approximated by simple adjustments of the poverty . cutoffs, such as by lowering them, because. subgroups of. the poor population are affected differently by changes in the income definition. ‘For, example, |

_. -the income of the elderly would probably be raised: more, by’ the inclusion of .

- the value of assets than would the income of young: family heads. _: ot The change which is- most. commonly proposed in‘ connection with the poverty

cutoffs is: to raise them. This reflects a presumption that the standard of

living, however. defined, has risen in this country .since the official. poverty

level was originally established.’ ‘Also, it is not generally believed thate-.. 2...”

U.S. citizens need less now than they did in the past... These notions are im, { plicit in such proposals as: revising the Orshansky matrix on the basis of =: current food plans and consumption patterns; identifying the lowest quintile -"": of the income distribution as the poverty income level; setting the-poverty .

tevel at 50 percent of median income; using public opinion polls to determine’

a generally accepted level. of income adequacy; Or using the lower BLS family

- budget as a poverty budget. Similarly, most administrative adaptations of the, , poverty line in Federal programs have the effect of enlarging the population ae re... program beneficiaries beyond those, identified as poor by the official poverty “VC “PNBASUEC « : 7S ten



7 However, not all commonly proposed changes to the poverty cutoffs or in- “come definition can be linked simply to higher or lower poverty counts. For example, if the thrifty food plan.were used as a. basis for the poyerty cut—

_ offs, but without simultaneously raising ‘the ratio of income-to-food costs, the cutoffs for some families would be lowered and others. raised. Similarly, ~— if poverty cutoffs were: annually updated using d price index based on food ‘or on items in a special poor person's index, rather than on the Consumer Price Index, the poverty cutoffs could be higher ir\’some years and lower in others than the current. cutoffs. ‘Presumably, geographic adjustments to the poverty

. s eutoffs would ‘aise them in some places and lower them in others; removing

", . the current adjustments for farm residence would raise the poverty counts ‘only slightly. Simplifying the current poverty matrix by ‘removing distinc- tions: for sex of head .and presence of children would affect the poverty |, status of families according to: sex and age of family members. If Federal or state . and ‘local income taxeS, Social Security payroll deductions, or other taxes were excluded from the income definition (and the poverty cutoffs were not

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P a coe a .? - simultaneously. changed), the. poverty count would be increased, although this _ could’ be offset if the Federal ‘tax credit for earned income were counted as ‘income, . Changing the definition of family or using households rather than families as accounting units could raise or lower the count depending on the . , Change made. Applying a recently proposed index of employment. and earnings. ~ . inadéquiacy and a price index for the elderly might cause poverty ‘counts of , ‘these groups to differ from counts under a single national poverty méasure.

"It is not practical. to describe, here the statistical effects of adopt~ _ ing all of the variously proposed alternative measures. Of the many, possi- - ‘pilities, ‘the analysis here considers four groups of definitions totalling 13 4, “specific alternatives (the current poverty measure and: 12 others, Selected for ‘analysis by the. Poverty Studies Task Force). “These were ‘selected because:° . - | they. can be studied with readily accessible .data;. they are similar to, admin-_ | istrative poverty ‘measures or income ‘eligibility. criteria. currently used:in. - - Péderal programs; and they can be used. to approximate the effects: of” adopting


.. $0me concepts discussed in The Measure of Poverty. —. - ee : The four broad groups of alternatives ate’: ‘proportionate increases or . -., decreases of the.current poverty matrix (scaling), simplifications ‘of ‘the cur- °. xent poverty matrix, single-dollar thresholds, and relative measures based on . median income. a ey ae ee

ee group consists of four sets of cutoffs derived by multiplying ~ each of the tutoffs in the official poverty matrix for 1974 by 75. percent, 125 percent, 150 percent, .and 200: percents: As.noted earlier, many commonly ' proposed poverty measures have the effect oftraising the poverty income ‘levels. The statistical effect of such changes can be approximated by ref- erence to one of the higher sets‘of poverty cutoffs included here. Also, some Federal programs, such as those of the Department of Agriculture; define ~ eligibility qn the basis of simple proportional increases.in the of