Planet Money
1:08 pm
Mon August 26, 2013

A College Kid, A Single Mom, And The Problem With The Poverty Line

Originally published on Tue August 27, 2013 4:02 am

The College Kid

Rico Saccoccio is a junior at Fordham University in the Bronx. He's from a middle-class family in Connecticut and he spent the summer living at home with his parents, who cover about $15,000 a year in his college costs.

According to the U.S. government, Saccoccio is living in poverty. The $8,000 he earns doing odd jobs puts him well below the $11,945 poverty threshold for an individual. In fact, the U.S. Census Bureau recently reported that more than half of all college students who are living off campus and not at home are poor.

Saccoccio has lots of student loans and lives off campus in a Bronx apartment where the elevator, heat and hot water don't always work. Sometimes, he microwaves water in Tupperware to wash his hair.

Still, he says, "I really don't think of the 'poor college' kid as actually somebody who is in poverty. ... It's a temporary investment, and you don't have to live like you do in college after you leave school."

The Single Mom

Marion Matthew, a home health aide and single mom, also lives in the Bronx. She relies on a local food pantry and government benefits like food stamps and housing assistance to support herself and her 17-year-old son.

But, according to the government, Matthew is not poor. She earns about $23,000 a year, which puts her well above the federal poverty line for a family of two — about $15,825 in 2012.

Matthew says she certainly feels poor, because the money doesn't go very far in a city like New York.

"It costs you at least $500 a month for a person to eat," she says. And that's not to mention what she has to pay for rent, clothes and transportation to and from work.

The Problem With The Poverty Line

There's broad agreement that the way the U.S. measures poverty has some fundamental flaws — a topic that's likely to come up next month, when the new poverty numbers are released. Here are three key problems, as explained to me by Christopher Wimer, a researcher at Columbia.

1. It doesn't account for geographic differences. The poverty line is the same, no matter where you live — whether it's in New York City or rural South Dakota.

2. It's based on a 50-year-old formula that assumes Americans spend about a third of their income on food. But, after adjusting for inflation, the price of food has fallen significantly in the past 50 years. Today, people spend only about a sixth of their income on food. But they spend a bigger chunk of their income on other items, like child care and medical expenses.

3. It doesn't consider the value of of government benefits, such as food stamps and tax credits.

Changing the formula would require overcoming lots of political obstacles, Wimer says. Government money for services such as housing aid and Medicaid is tied to the poverty line. "Any sort of official change to that means there's a lot of sort of winners and losers, and so it's hard to monkey with that too much," Wimer says.

And describing poverty can be complicated. Some low-income college students are supported by their families, but others aren't — and it's not easy to differentiate the two.

Still, in response to all the concerns, the government has started to issue something called a supplemental poverty measure. It considers the impact of regional cost-of-living differences, as well as expenses such as child care and the value of government benefits.

But the supplemental measure is still a work in progress, and it's released weeks after the official numbers come out and grab all the headlines.

Copyright 2014 NPR. To see more, visit http://www.npr.org/.

Transcript

DAVID GREENE, HOST:

New U.S. poverty numbers will be coming out in a few weeks, and the numbers will almost certainly fuel the debate over how the government spends money on the poor. The government's formula to define poverty has not evolved with the changing economy. And as Planet Money's Pam Fessler reports, it can be pretty surprising to learn who's considered, quote, "poor," and who's not.

PAM FESSLER, BYLINE: Meet Rico Saccoccio: 20 years old, a junior at Fordham University in the Bronx - pretty middle class.

RICO SACCOCCIO: We are from Cheshire, Connecticut, which was recently voted the 34th nicest place to live, or something like that.

FESSLER: He often goes home for a good meal and a break from the city. His parents cover about $15,000 a year in college costs. But according to the U.S. government, Saccoccio is living in poverty. The $8,000 he earns doing odd jobs puts him well below the $12,000 individual poverty line. That's the case for more than half of all college students who live off-campus and not at home. And Saccoccio would say he's certainly not rich. He's a struggling student with lots of loans, and he lives in an apartment that's kind of iffy.

SACCOCCIO: Like, hot water gets turned off and everything, and I have to microwave water in a Tupperware container and use that to wash my hair if it's, like, a day I'm giving a presentation in class or anything and I want to at least, like, look nice.

FESSLER: But Saccoccio says, for him, much of this is a choice.

SACCOCCIO: I really don't think of the quote, unquote "poor college kid" as actually somebody who is in poverty. It is temporary, and it is a temporary investment, and you don't have to live like you do in college after you leave school.

UNIDENTIFIED MAN: So, a box of cereal. You can get one of those.

UNIDENTIFIED WOMAN: You get a box of cereal, baby.

UNIDENTIFIED MAN: You get oatmeal.

FESSLER: Compare that with Marion Matthew, a regular client at a food pantry down the street. She's a home health aide trying to raise a 17-year-old son on her own. But according to the government, Matthew is not living in poverty. She earns as much as $23,000 a year, and that puts her well above the federal poverty line - about $16,000 for a family of two. Matthew says try living on that in an expensive city like New York.

MARION MATTHEW: On a regular basis, I work, like, 52 hours. But it's not enough.

FESSLER: Matthew says without the pantry and government benefits like food stamps and housing assistance, she couldn't survive.

MATTHEW: Because it costs you at least $500 a month for a person to eat, just say even just us two, because he's a boy.

FESSLER: And that's not to mention what she has to shell out for rent and clothes and transportation to and from work.

CHRISTOPHER WIMER: I think there's pretty much good consensus that there are some fundamental flaws with the way poverty is measured in the United States that we've known for a couple of decades now.

FESSLER: Christopher Wimer is a research scientist at Columbia University. Flaw number one, he says, the poverty line's the same, no matter where you live, whether it's in New York City or rural South Dakota. Flaw number two: It's based on a 50-year-old formula, created back when Americans spent a large chunk of their income on food. The government said the poverty line would be simple: the amount of money you need for a minimally nutritious diet, times three. And the formula's never changed.

WIMER: One of the key problems with that approach is that the cost of getting by and making ends meet in America sort of changes over time.

FESSLER: Wimer says today, Americans spend far less of their income on food.

WIMER: And other things have become more important. You know, more and more people have gone to work, so child care costs have become more important, commuting costs have become more important. Medical care's gotten more expensive.

FESSLER: But the poverty measure takes none of this into account. On the income side, it doesn't count benefits such as food stamps and tax credits. So, you might ask: Why hasn't the formula been changed? Wimer says politics: lots of government money for things like housing aid and Medicaid is tied to poverty.

WIMER: Any sort of official change to that means there's a lot of sort of winners and losers, and so it's hard to monkey with that too much.

FESSLER: Although the government has started issuing something called a supplemental poverty measure to try to address some of the problems. But it's still a work in progress and doesn't replace the official numbers. Also, poverty is complicated. Take college students: while some might not as poor as they seem, others are, and it's hard to differentiate the two. Pam Fessler, NPR News. Transcript provided by NPR, Copyright NPR.

Related program: