President Trump’s first federal budget proposal, unveiled in March, was a direct assault on the lives of millions of Americans. By sharply cutting or eliminating essential social programs to help pay for a dramatic increase in military spending, it would likely push many people into poverty and have damaging effects on many others who usually manage to stay above the official poverty line. The ten-year budget proposal Trump made public in late May is far harsher and calls for cutting hundreds of billions of dollars from anti-poverty programs like Medicaid, food stamps, and child insurance programs.
The extent to which changes in the job market have already led to unstable earnings for low- and even middle-income families is not well understood, in part because measures of poverty are inadequate. Meanwhile, too little attention is being paid to new analyses showing that people of all racial and ethnic groups are losing confidence in the core American principle that hard work is a means to upward mobility. This will have long-term economic costs as low-income Americans increasingly see few benefits of education or hard work for themselves and their children.
The most widely followed indicator of poverty in the US is the official poverty measure (OPM), published by the Census Bureau once a year. In 2015, the last year for which data are available, 43.1 million people—13.5 percent of the population—were considered to be in poverty, defined as falling below an annual income threshold of $24,257 for a family of four. The poverty rate has been as low as 11.1 percent, in the 1970s; it rose under Ronald Reagan to approximately 15 percent and then fell to about 13 percent before rising again, then fell again under Bill Clinton to 11.3 percent before rising in the 2000s. But the OPM is a deficient measure in almost every way. It tells the public little about how materially deprived the poor are, how much income they actually have, how reduced their children’s chances are of developing skills for climbing into the middle class, or, most important, how many truly poor there are in America.
When the OPM was developed in the 1960s, the poverty threshold was set at slightly higher than a mere subsistence budget, but even then many, including its principal designer, a Social Security analyst named Mollie Orshansky, believed that this was too low. Today the OPM, though updated for inflation, still uses the same methods it did in the 1960s. It doesn’t take into…
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