That's according to an Oct. 16 report from the Census Bureau, which also finds that Mississippi – typically ranked among the poorest states – has a poverty rate below the national average.
The report out last week is not the official census poverty measure, which came out a month earlier. But after decades of criticism that the official measure is broken and outdated, federal officials in 2011 began quietly piloting an alternative approach to measuring poverty.
Called the Supplemental Poverty Measure (SPM), the report has no official bearing on policy. The latest SPM report puts the 2013 national poverty rate at 15.5 percent, one point higher than the official measure. But the regional differences are dramatic, upending some long-held notions about the distribution of poverty in the U.S.
Those notions are based largely on the official poverty measure, a formula that has changed little since the 1960s.
"It is antiquated," said Mark Levitan, the former director of poverty research for New York City, which in 2008 threw out the official federal measure and devised an alternative for city poverty reports.
But for the most part, nonprofit organizations, community groups and the private charity world continue to rely on the official statistics.
To understand the official measure's limitations — and how it can be used as a political weapon against anti-poverty programs — it's important to understand how the official measure works.
Simply put, the official measure sets a single national poverty threshold by multiplying the cost of a basic subsistence diet by three, adjusting for family size and updating annually for inflation.
Last year, for a family of two adults and two children, the official poverty threshold was roughly $23,600.
That is regardless of whether the family lived in Cheyenne, Wyoming or in San Francisco – where average housing costs run 225 percent higher than Cheyenne, according to a comparison tool from CNNMoney.
In addition to the lack of regional adjustments, experts point to two critical flaws with the official measure. The first is a simple anachronism in household economics. When the formula was created in the 1960s, roughly a third of the average family budget went toward food.
But advances in agricultural technology have made food relatively cheaper, while skyrocketing housing and health care costs have become bigger strains on many low-income household budgets.
Recent estimates from the Bureau of Labor and Statistics put the average household food spend at 16 percent of the family budget for the bottom quintile of wage earners. The same group spends 40 percent of their income on housing – a massive share of household budget, but not that much higher than the 33 percent average share that Americans in all income brackets devote to housing.
The second issue with the official measure is subtler. It defines income strictly as pre-tax wages. This means that assistance programs such as tax credits and food stamps have — by definition — no direct impact on official poverty levels.
A family benefiting from housing tax credits or subsidized health insurance looks as destitute on paper as another family with the same gross income and no access to the same programs.
The Supplemental Poverty Measure aims to bridge that gap by counting food stamps, tax refunds and other public assistance toward a family's income, illuminating the impact of such programs. The SPM report found, for example, that 23 percent of children would be living in poverty if refundable tax credits were eliminated, as opposed to the current supplemental rate of 16 percent.
The SPM also offers a dramatically different geographic picture of poverty. Mississippi, which has one of the highest poverty rates under official measures, drops below the national average in the SPM. By contrast, California's poverty rate jumps from 16 percent under the official measure to 23 percent — making the Golden State the poorest in the country under the new measure.
The differences at the state level are due mainly to regional variations in housing costs, according to Kathleen Short, the Census Bureau economist who authored the latest SPM report.
But even regional cost-of-living adjustments to the official measure face a seemingly impossible hurdle in Congress. Because billions in federal funding to the states are tied to state poverty levels, any change to the official formula would likely divert dollars from states like Mississippi to places like California.
New York City's revised poverty definition, for example, found that 46 percent of its residents were at or near poverty, versus 31 percent under the official measure, according to the most recent of the reports.
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