Michael R Bloomberg, Mayor of New York City and future United States President was in the news today.

From the Times:

The Bloomberg administration, frustrated by the federal government’s Great Society method of determining who is poor, is developing its own measure, which city officials say will offer a more modern and accurate picture of poverty.

Amazingly, the federal poverty standard has been pretty much the same for over 40-years. It was set in the 1960s by a lady in the Social Security office, Mollie Orshansky, “who based her number on a 1955 Department of Agriculture study that said low-income Americans spent about a third of their after-tax money on food. If a family had an annual income equal to three times the annual cost of basic groceries, Ms. Orshansky reasoned, they were not poor. If they fell below that income threshold, they were.”

(It’s sometimes called “Mollie’s Measure”.)

Um, yeah. As good a measure as any, right? Of course, it completely ignores such things as rent and cost of other goods and services (gasoline, anyone?). Plus, what about differences based on geographical location (we spend money on home heating oil in Massachusetts, don’t you know?).

In its new formula, the city would set its poverty threshold at about 80 percent of the median amount spent by American families on essential goods, which would include food, rent, clothing, utilities, and a little extra. Costs would be adjusted to reflect New York prices.

One interesting point in the article I hadn’t thought of - the current poverty standard also fails to include in its calculations any aid the poor receive from the government - food stamps, subsidized health care, earned income tax credits, etc. Those amounts can be substantial.

Source: Bloomberg Seeks New Way to Decide Who Is Poor - By Leslie Kaufman, The New York Times

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