Voices of the Near Poor

When the Census Bureau this month released a new measure of poverty, meant to better count disposable income, it began altering the portrait of national need.

The new method, called the Supplemental Poverty Measure, was designed to add in many of the things the old measure ignored, like the hundreds of billions the needy receive in food stamps and tax credits. At the same time, it subtracted the similarly large sums lost to taxes, medical care and work expenses.

One surprising difference with the new measure, outlined in an article today, was the 51 million people with incomes less than 50 percent above the poverty line. That category, sometimes called “near poor,” was 76 percent higher than the official account, which was published in September. (The portion of people under the poverty line, meanwhile, increased by just 5 percent in the new measure.)

About a fifth of the people who appear near poor in the new measure are lifted out of poverty by benefits the old measure ignores, like food stamps and tax credits. But more than half were pulled down into near poverty from higher income levels by taxes, medical costs and work expenses like child care and gas. Taken together with people under the poverty line, a full third of Americans – or about 100 million people – live in poverty or in the economically vulnerable area just above it.

In Washington and its suburbs, the near poor are people with incomes between $31,693 and $47,539 for a family of four with a mortgage. Reporters talked to people in the Washington area this week with incomes in this category. They spoke of the knife-edge quality of their lives, in which one unexpected bill could knock them off balance. Many owned the usual trappings of middle-class life – cars, houses, cellphones and air-conditioners. But payments on those possessions were juggled, often unsuccessfully, depending on the unpredictable tides of their incomes. None saw themselves as poor. Most saw themselves as part of the middle class. But they focused on how hard they had to struggle to remain there.

Here are some of their stories:

Debra Jeje earned about $31,000 last year as a secretary in an emergency room in a hospital in Washington. She struggles to pay her bills, which come to about $2,300 a month, including groceries. She sells Mary Kay make-up for extra income. Gas, health insurance premiums and taxes put Ms. Jeje just above poverty line.

“What stresses me out most is payday,” said Ms. Jeje, who is 50 and has one son living with her. “I don’t have any extra money left over. My salary is less than my bills.”

Her job, she said, pays too little.

“We’re on the front lines,” she said. “There’s stress and headaches and ups and downs in the emergency room. You really feel that you’re worth more.”

Bille Allison, a health care worker with two children, earns $39,000 a year drawing blood at a doctor’s office in Maryland. She qualified for the earned income tax credit last year, bringing her income to $42,000. But work expenses dragged her down. She pays $500 a month for day care for her 4-year-old daughter, $100 a month for bus and train fare to get to work, and $200 a month for health insurance – bringing her income down to about $32,000. Some months she is able to save enough for game tokens and a meal at Chuck E. Cheese for her daughter. Other months she can only afford to pay half her bills. She was turned away from the food stamps office because her income was too high.

“I tried everything, and it’s like, nope, you make too much,” said Ms. Allison, who is 42 and divorced. “They tell you you have to work to get help, but then you work, and you still can’t get help.”

Jennifer Bangura works at Georgetown University Hospital as a cashier. Together with her husband, a driver for a catering company, their family income is just under $50,000, enough to pay a mortgage of $800 on a house she purchased in 1992. But after taxes, medical costs and the gas to get to work, they slip into the category of near poor. Their situation has been made worse by a second mortgage, taken out several years ago to raise money for their daughter’s college tuition. The monthly payment shot up to $2,200, an amount she says is now untenable.

“It’s killing me,” said Ms. Bangura, who is 50 and originally from Jamaica. She said she has been making payments for years and that “to lose it now would tear me apart.”

Jessie Adams, a floor refinisher and his wife, a secretary, together earn about $49,000 – too much to qualify for the earned income tax credit and food stamps, but too little to live without worrying about finances. Taxes and monthly subway commuting costs bring them down into the area of near poor. They own electronics – two flat-screen TVs and an Xbox game console for their 10-year-old – but cannot afford a car or a down payment on a house. Mr. Adams has not taken his family out on a weekend for five months.

“It shouldn’t be like this,” he said. “Two people working full time in the house, we should be able to save, to take a vacation. But it ain’t like that. It just ain’t like that.”

Reader Feedback: Why American Migration Might Be Falling

CATHERINE RAMPELL

Dollars to doughnuts.

In response to my post Tuesday on the record low level of migration in the United States last year, an astute reader referred me to a recent paper in The Journal of Economic Perspectives on this subject.

Dollars to doughnuts.

The study — by Raven Molloy, Christopher L. Smith and Abigail Wozniak — notes that the drop in mobility has been going on since the 1980s, and so should not be attributed to the recent downturn. Based on statistical analysis, it also argues that the trend seems to be unrelated to “demographics, income, employment, labor force participation, or homeownership.” Americans are, however, still more likely to move than Europeans, for unknown reasons.

The authors are unsure why migration rates have been falling so steadily in the United States. They suggest a few possible theories, including:

Any other theories, readers?

American Migration Reaches Record Low

CATHERINE RAMPELL

Dollars to doughnuts.

The share of Americans who move their homes in a year has reached a record low, the Census Bureau reported today.

Dollars to doughnuts.

From spring 2010 to spring 2011, just 11.6 percent of the people moved residences, the lowest rate since the government began keeping track of migration in 1948. The difference between that rate and the 2009 rate of 12.5 percent was not statistically significant, but it was a far cry from its heights in the mid-20th century. From 1951-52, for example, 20.3 percent of Americans moved.

The record low moving rate was primarily driven by a drop in the share of people moving from one home to another within the same county.

Many economists are much more concerned, however, by the low share of Americans who are moving between counties and between states. Declines in this type of migration have been partly blamed for continued high levels of unemployment: stuck in underwater homes they cannot sell, many unemployed workers are unable to move to areas where there are more job opportunities.

Among the people who moved within the same county, 18.6 percent did so for job-related reasons; among those who moved between counties, 35.8 percent followed job opportunities.

Of the 6.7 million people who moved between states, the most common migrations were:

Many Americans have stayed put for their whole lives, regardless of economic ups and downs. As of 2010, 59 percent of Americans lived in the state where they were born. The state with the highest percentage of residents who were born there is Louisiana, at 78.8 percent, followed by Michigan (76.6 percent), Ohio (75.1 percent) and Pennsylvania (74 percent).

Nevada, by contrast, had the most outsiders, with less than a quarter (24.3 percent) of its residents born in the Silver State.

Here’s a map, provided by the Census Bureau, showing states by their share of native-born residents:

More on Calculating Poverty

Poverty researchers have been debating alternatives to the traditional poverty rate for years. So it’s not surprising that some people wondered why we chose the particular method that we used for today’s article about poverty.

Under guidelines established by National Academy of Sciences, the Census Bureau publishes eight alternative methods of calculating poverty. They are broadly similar. All take a fuller accounting of economic well-being than the official poverty measure does. They include benefits the official measure ignores, like food stamps and tax credits. And they subtract taxes, work expenses and out-of-pocket medical costs, which the official measure does not.

They differ in part by the way they account for inflation, with four using the Consumer Price Index and four using the Consumer Expenditure Survey.

One of the questions we wanted to ask was whether an alternative measure — by including many billions in increased safety-net spending — gave a different view from the official count of how much poverty has risen since prerecession days.

That question cannot be answered with the measures in the Consumer Expenditure Survey because of a change in its methodology in 2007, contaminating comparisons with earlier years. Therefore, under guidance from the Census Bureau, we chose the Consumer Price Index measure that most closely approximates a new alternative the bureau will release on Monday — the Supplemental Poverty Measure.

Our analysis of that measure showed the number of poor people had risen by 4.6 million people since 2006 — not by 9.7 million people as the official Census count reported in September.

Shawn Fremstad of the Center for Economic and Policy Research notes that the Supplemental Poverty Measure, being released on Monday, uses the Consumer Expenditure Survey and therefore differs from the method we used. That is true. But the Consumer Expenditure Survey measures cannot be used for prerecession comparisons. We used the next best thing — a measure that, like the measure coming Monday, includes a fuller account of income and expenses and adjusts for differences in costs of living.

It’s worth noting that since the methodological change occurred, both sets of alternative measures show poverty rising more modestly than the official measure does. From 2007 to 2010, poverty rose 2.6 percentage points by official count; 0.8 points on average by the four Consumer Expenditure Survey measures, and 0.9 points by the four Consumer Price Index measures. That bolsters our finding that alternative measures show poverty rising less than the official numbers suggest. It’s also worth noting that our findings echo those by researchers in Wisconsin and New York City, who also found safety net programs doing more than the official numbers show to restrain poverty growth.

By official count, there are 46.2 million Americans in poverty. Many experts think the Supplemental Poverty Measure may produce a slightly higher count, as our article noted. That is a different question from whether safety net programs have done more than the official count shows in restraining its growth.

Calculating Poverty

To preview how the Census Bureau’s new Supplemental Poverty Measure may change the portrait of poverty, The New York Times consulted multiple alternate measures that researchers have quietly published in recent years.

They included a 2009 version of the Supplemental Poverty Measure, as well as four of eight alternate measures the Census has published, incorporating recommendations from the National Academy of Sciences.

They also included studies from the University of Wisconsin and from officials in New York City, along with three state analyses by Sheila Zedlewski and colleagues at the Urban Institute.

While there are differences in the calculations, all go beyond the official measure by counting benefits like food stamps, work expenses, taxes, and the cost of living.

In addition, The Times did an in-depth analysis of one experimental data set (known as MSI-GA-CPI). It is the Census measure that comes closest to the new Supplemental Measure, while also providing a methodologically consistent look back at prerecession years.

That produced a number of interesting figures that our article length could not accommodate.

Among children, it showed poverty rates falling to 15 percent, from 22 percent, in the official count. That removes about 5.2 million children from poverty. That drop is broadly consistent with what the Urban Institute researchers found in Massachusetts, Illinois and Georgia — an average decline in child poverty of about 24 percent.

It also falls sharply for women ages 25 to 39 — many of them mothers. Many safety net programs, particularly the Earned Income Tax Credit, focus on families with children.

Among elderly, The Times’s examination of the Census data showed poverty rates rising to 13.8 percent, from 9 percent, by the official count. The 2009 Supplemental Poverty Measure and the Urban Institute studies found broadly similar climbs.

Some experts found this possibly portentous — a complication in the generally accepted story that poverty among the elderly has been on a long-term decline. Irwin Garfinkel of Columbia University said his own studies of alternate poverty measures showed that the figure had been climbing for a decade. “We’ve been slipping backwards and we didn’t know that before,’’ he said.

But others, including Bruce Meyer of the University of Chicago, cautioned that it could be a statistical anomaly. Many elderly people use retirement savings but do not report that money as income. And measures of consumption among the elderly, these experts say, have not shown a rising level of hardship.

In The Times analysis, poverty rates in rural America drop sharply, to 10.9 percent from 16.4 percent in the official count, most likely reflecting the lower cost of living. But they rise in metropolitan areas, to 14.9 percent from 13.9 percent. While poverty rises in the Northeast and West, it falls in the South and Midwest, by a total of about six million people.

The Times study found poverty dropping sharply among blacks, falling by 6.7 percentage points to 20.6 percent. Most other studies have also showed significant declines among blacks, which could reflect either that they receive relatively more benefits or live in relatively low-cost locations.

The Times study found poverty growing among Asians, as did all the others. It found poverty declining among Latinos, though by a much smaller amount than it declined among blacks. Some other studies have found Latino poverty rates rising. One possibility is that Asian and Latino immigrants have a harder time getting access to benefits. Another is that differences between the official and alternate studies reflect where people happen to live, perhaps disproportionately in high-cost areas.

What elements of the new measure lift people from poverty? The Times examined the characteristics of those Americans considered poor by the official count, but not poor by the alternate. About 70 percent lived in households that received food stamps a year. A third lived in households with housing subsidies and 19 percent lived in households that received the earned income tax credit.

A caveat: this data is not the same as what the Census Bureau will release on Monday, which among other things uses a different cost-of-living adjustment. But while the numbers may vary, the general trends are likely to remain the same.

Behind a Surprising Income Trend

Anyone with detailed knowledge of the annual Census Bureau data on household income may be surprised by the new study Robert Pear describes in today’s Times. From the article:

In a grim sign of the enduring nature of the economic slump, household income declined more in the two years after the recession ended than it did during the recession itself, new research has found.

Between June 2009, when the recession officially ended, and June 2011, inflation-adjusted median household income fell 6.7 percent, to $49,909, according to a study by two former Census Bureau officials. During the recession — from December 2007 to June 2009 — household income fell 3.2 percent.

DAVID LEONHARDT

Thoughts on the economic scene.

The annual Census data, which is better known than the monthly data that forms the basis of the study, presents a somewhat different picture. It shows that inflation-adjusted median income fell 3.6 percent from 2007 to 2008, more sharply than in any year since. From 2008 to 2010 — a two-year period — income fell 2.9 percent.

Thoughts on the economic scene.

What explains the difference between the two surveys?

For one thing, the monthly data (which goes through June of this year) is more current than the annual data (which ends in 2010) and reflects the economy’s continued weakness.

But there is also a second, more surprising reason for the difference: The annual data may be less reliable in some ways than the monthly data.

The authors of the study, Gordon W. Green Jr. and John F. Coder, point out that people are asked about their prior year’s income a few months into the next year. If the economy has weakened during the window between the end of the year and the survey date, some respondents may incorrectly describe their income from their previous year. Their answers will be affected by the economy’s deterioration, and they will tell the surveyor that they made less the previous year than they actually did.

A similar dynamic happens in surveys about health insurance. When people are asked about their insurance status from the previous year, they sometimes misunderstand and instead describe the coverage they have at the time of the survey.

You can see how this would affect the Census income survey, given that the economy was weakening so much in 2009. When asked about their 2008 income, some instead may have described their 2009 income.

In an e-mail to Mr. Pear, the two researchers offered more detail:

In household surveys, respondents are often asked to report events retrospectively for some given time period. When a respondent forgets the exact dates for a sequence of events, this often results in a known survey bias called “telescoping” in which the reporting of the events is telescoped either forward or backward.

The reference periods between the Census Bureau’s annual estimates of income and our monthly estimates of income are quite different. The Census Bureau’s survey is conducted in February, March and April of a given year and respondents are asked to report their income during the previous calendar year. The reference period for the monthly estimates is the 12-month period immediately prior to when the question is asked. Thus, the Census Bureau’s approach requires people to recollect events over a longer reference period.

We think that a telescoping problem may explain the discrepancy between the Census Bureau’s reporting of annual changes in household income between 2007 and 2008 and our monthly estimates. The Census Bureau reports a sharp drop (3.6%) in the annual amount of median household income over this time period whereas the monthly estimates are relatively flat.

Between January 2007 and the Spring of 2009 (when the Census Bureau collected its annual income estimates for 2008), the unemployment rate (seasonally adjusted) increased dramatically. The unemployment rate was in Jan. ’07 was 4.6%, in Jan. ’08 was 5.0%, in Dec ’08 (the end of calendar year reference period) was 7.3%, and continued to rise into the Spring of 2009 when the Census Bureau conducted its survey: Feb ’09 (8.2%), Mar. ’09 (8.6%), and Apr. ’09 (8.9%)

Now, if some of the respondents to the Census Bureau’s survey in the Spring of 2009 erroneously “telescoped” their current unemployment experience back to the previous year’s calendar income, this could have resulted in a calendar year 2008 estimate for income that was too low, hence producing the 3.6% decline in household income between 2007 and 2008 in the Census Bureau’s estimates. The monthly estimates do not have this telescoping problem to the same degree because the reference period is the 12 months immediately prior to interview and the data are collected in real time. This could explain why the Census Bureau estimates are different than the monthly estimates over this time period.