Poverty among the U.S. elderly under "old" and "new poverty definitions.

For most of modern history, the rate of poverty among elderly Americans exceeded that of every other age-group to such an extent that poverty among the aged was a national disgrace and a principal motive for the War on Poverty of the 1960s. Even 30 years ago, private pension plans were relatively rare and ungenerous where they did exist. Further, large proportions of elderly retirees were not covered by Social Security, and many who were covered found that their monthly Social Security checks were insufficient. Impoverished older people living on fixed and inadequate incomes thus attracted a great deal of public policy attention during the War on Poverty and in the years since. A standard national definition of what constitutes poverty did not exist until 1964, when officials in the Johnson administration realized that it would be hard to fight a war against an enemy whose magnitude and dimensions were unknown. The story of how the "official" federal poverty line came to be defined is an often-told tale. Barbara Ehrenreich's widely read book on the working poor, Nickel and Dimed, points out that "the official poverty level is still calculated by the archaic method of taking the bare-bones cost of food for a family of a given size and multiplying this number by three." Taking each point up in turn: Back before the advent of technospeak, the "bare-bones" food budget to which Ehrenreich refers was called the "emergency, temporary low budget diet," defined as the "minimum nutrient intake required to sustain human life for short periods." This diet consists of so many daily calories, so many grams of protein and carbohydrates, so many vitamins and minerals, and so on. Why times three? Because studies done in the 1950s showed that the average low-income family spent about a third of its income on food. Thus, the original poverty line, first determined at the onset of the War on Poverty in 1964, was calculated by determining the cheapest possible way to purchase the least amount of food a person would need to eat to stay alive for a short period, then multiplying that dietary expenditure by three. The result was the "official" federal poverty line, which was calculated in the manner just indicated in 1964 and with annual corrections for inflation has been used ever since (this despite a long string of commissions and blue-ribbon panels that have recommended over the years that the standards be changed). PROBLEMS IN THE DEFINITION OF POVERTY Ehrenreich notes that the cost of food has been relatively inflationproof over the years, compared for instance to the cost of housing, which increases every year, or the out-of-pocket costs of medical care, which have also shot up. Food prices have been kept artifi- cially low by federal agricultural subsidies. (Recent studies show that poor people now spend about a sixth of their income on food, not a third. Should we then multiply the minimum food budget by six and thereby double the poverty standard?) In the meantime, the average cost of housing for low-income families has increased to 37% of monthly income (despite the admonition by the Department of Housing and Urban Development and mortgage lenders that families cannot afford to spend more than 30% of their income on housing). As many have argued over many years, that is exactly the problem with the official poverty standard. The entire basket of goods and services on which low-income people and families survive has changed dramatically since the poverty line was first calculated and so too the relative proportions of income spent on each item in the basket. And yet we continue to use the same poverty standard, one that is, indeed, "archaic." Unfortunately, if we based the poverty line on a more current basket of goods and services and let the price of minimally acceptable housing or minimally acceptable health care rather than the price of a minimally acceptable diet dictate the calculation, then the poverty standard for a family of four would not be just over $20,000 per year but quite a bit higher than that, and the poverty rate would, perforce, shoot up. …