By Ranada Robinson, Project Associate. One of the long-term effects of successful economic development is decreased poverty rates. We know that poverty is the state of having insufficient means to attain necessities such as housing, nutrition, transportation, clothing, etc. Market Street uses data from the U.S. Census Bureau to compute poverty rates for our client communities. Poverty rates help us to ascertain how well a community is doing socioeconomically. They also help to inform new policy and programs. But just how accurate are these rates?

 

Currently, the U.S. Census Bureau uses thresholds based on before-tax income, not including capital gains or noncash benefits to determine who is in poverty, irrespective of geographic location. Lately, there has been a push to change the way we calculate poverty in the U.S. The term “working poor” comes up in many policy arguments, but what does that really mean? The Census Bureau does not use the term, but it offers suggestions on what it could mean: “people who worked, but who, nevertheless, fell under the official definition of poverty” is one. I posit that some do use the term in this way, but it also refers to the many households who work and earn income slightly above the official poverty threshold but are still unable to cover their basic expenses. A new study entitled “Building Economic Stability for Mississippi Families” by the Insight Center for Community Economic Development was just released, and it provides what is called a Self-Sufficiency Standard, which was first developed in 1995 by Dr. Diana Pearce for Wider Opportunities for Women (WOW). The study says that this standard is a more effective tool to measure basic needs than the Federal Poverty Thresholds.

 

According to the study, which not only explains why the standard is more accurate but also illustrates self-sufficiency levels in nine counties in the State of Mississippi and provides recommendations for programs and policies to increase economic security, 32 percent of Mississippi households are unable to cover their basic needs, as opposed to 18 percent according to the Federal Poverty Thresholds. This is a huge gap and means that over 200,000 households fall into a gray area—in poverty by this standard but do not qualify for any support that is based on the Federal threshold. In a ranking of Mississippi counties by percentage of households below the Self-Sufficiency Standard, my home county, Hinds, ranks 40th lowest of the state’s 82 counties. Hinds County was found to have 19.3 percent of households under the standard, compared to 7.5 percent below the Federal poverty line. Two of the counties that are next door, Madison and Rankin, rank 2nd and 3rd after DeSoto County, which borders Tennessee and Arkansas. The county with the highest percentage of households below the standard is Leflore, which is located in the Mississippi Delta.

 

The Self-Sufficiency Standard provides a more specific look at the cost of living than do the Federal Poverty Thresholds. Although the Federal thresholds are based on the Consumer Price Index, it does not take into account differences across geographies. In addition, it doesn’t take into account differences in cost of living that result from household type—e.g. a working mother who has to pay for childcare or an elderly couple.

 

Even if there is never a change in the methodology of measuring federal poverty thresholds, it is important that communities recognize the limitations that its residents may be facing. Ensuring that there are programs and policies, such as providing childcare options as a workforce development effort, that assist the “working poor” benefits everyone. To grow stronger communities, it is imperative that we take an accurate look at the socioeconomic struggles that residents face.