How bad is poverty?

The latest report on poverty was recently released by the government, and it wasn’t good. Poverty was up in the nation and in most states, including North Carolina. N.C. State University extension economist Mike Walden says the report confirms that more people are facing poverty’s challenges, but that there’s debate about who should be considered poor.

“There is no question that the number of people who are struggling in this economy have gone up. But I think the latest poverty report and the response to it brings up an issue about how really should we measure poverty.

“Some say that actual poverty is too low — that is to say, what we do right now is we measure poverty on an absolute scale — that is, if a household falls in terms of their income below a certain amount, then we classify those folks as poor. And some people say, ‘No, what you should do is look at poverty in terms of a relative basis. Look at those who are at the bottom rung of the income ladder and say what percent of their income do they have versus someone at the top end, and define poverty that way in terms of relative levels of income.’ And if you did that that would push the poverty rate higher.

“There is a whole other approach that says, no, rather than looking at income what we should do is look at spending what people have to spend. And this is where the current system doesn’t account for the spending that lower income people are able to do because they qualify for various kinds of government programs. Maybe like food stamps or the earned income tax credit, etc. And if you incorporated that approach you would actually get a lower poverty reading.

“So one thing that I think we may want to think about in the future is exactly how do we measure poverty. And you can make a case, interestingly, that on one hand maybe poverty is measured as being too low; on the other hand, maybe it is being measured too high.”

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