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New York City redefines poverty, taking cost of living into account

If you live in the city, you know how it is: the numbers on your paycheck sound reasonable enough, but then there’s the sky-high rent, expensive food, and subway, bus, or parking fees to pay. It always seemed to me as a teacher that some of my students’ families ought to have been solidly middle class based on the parents’ job descriptions, yet in New York City, they were struggling. Now, according to the Christian Science Monitor, the city’s department of health and human services is responding to the high cost-of-living with a new way of measuring poverty:

New York’s new poverty measurement takes into account rent, utility fees, food costs, clothing costs, and also includes other benefits for low-income families and individuals like Section 8 housing vouchers and food stamps. The change is expected to boost the city’s poverty rate from 19 percent to 23 percent. That would mean 30,000 more people would qualify for assistance programs.

In addition to increasing the overall poverty rate, the change increases the percentage of households at or near the poverty threshold, as seen in this graph. Under the city’s measure, about 44% of households are below 150% of the poverty threshold, as compared to about 28% using the official federal measure.

More households are below or near the poverty threshold under the city's new measure compared to the federal measure.
More households are below or near the poverty threshold under the city's new measure compared to the federal measure.

The effect of the change on poverty statistics varies by group.Thanks to benefits for families with children, including Earned Income Tax Credits and subsidized meals, the disposable income of some families with children is actually higher when calculated in the new way compared to the old. Hence, the poverty rate among children stays nearly the same (and slightly decreases for certain populations) with the new measure, while the poverty rate among the elderly increases with the new measure, in part because it takes into account out-of-pocket medical expenditures.

The rationale, statistical methods, and an analysis of the impact of the new measure can be found in a 142-page report by the city’s Center for Economic Opportunity (CEO). The analysis of how specific changes to the way poverty is measured increased or decreased the rate of poverty among particular groups highlights the ways our society has chosen to allocate incentives, resources, and benefits. As households in poverty increase their income towards or just above the poverty threshold, they become eligible for fewer benefits, meaning more of that income goes towards basic needs.

The CEO, created in 2006 by Mayor Bloomberg, previously made recommendations for addressing poverty in the city. A report on New York’s anti-poverty programs is available, summarizing these recommendations and the city’s response, which has mostly targeted children and families. I await data on the effectiveness of the city’s new programs, along with whatever changes in policy might accompany the new measure. As always, what matters most is how the numbers translate into action.

New York City residents can go to ACCESS NYC, anonymously enter information about their household, and get a list of benefits and programs they might be eligible for, along with information about how to apply. Families can also apply for school meals for their children through the site.

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