The National Academy of Science's formula for poverty levels is gaining credibility with public officials, including some in the Obama administration. Based on a revision of the half-century-old formula for calculating medical costs and geographic variations in the cost of living, the poverty rate among older Americans could be nearly twice as high as the traditional 10 percent estimate.
The new formula would put raise poverty rate for Americans 65 and over to 18.6 percent, or 6.8 million people, compared with 9.7 percent, or 3.6 million people, under the current formula. The original government formula was created in 1955 and doesn't take account of rising costs of medical care and other issues.
If the academy's formula is adopted, the overall official poverty rate would rise from 12.5 percent to 15.3 percent, for a total of 45.7 million people. This is according to estimates by the U.S. Census Bureau, which noted that all segments, not only the elderly, would be affected:
These sorts of formulaic changes have been discussed for years among academics. In a surprisingly bipartisan view, both Democrats and Republicans agree that the decades-old current formula is outdated.
The current formula sets the poverty level at three times the annual cost of groceries. For a family of four that is $21,203. However, that calculation does not factor in rising medical, transportation, child care and housing expenses.
It also does not factor in the cost-of-living differences among geographic regions. For example, what is poverty level in the Midwest is not the same as would be encountered in higher cost-of-living areas such as California or New York.
It's these sorts of issues that make questions about minimum wage obvious. If one were to take inflation into account, minimum wage in the U.S. should be in the teens now, not where it is.
The Census Bureau will publish official 2008 poverty figures next week. This time, it will add a note about the shortcomings of the current formula.
Comment and add to the story without registration, but keep the comments meaningful please. Links are not accepted.
