Robert Doar of the American Enterprise Institute explains that an accurate measurement shows a decline in American poverty.
Something that should go without saying but too often does not: When we calculate how many Americans live in poverty and how well our social safety net is reaching them, our measurements should reflect the resources available to families from their earned income, from saved money and durable goods, and from public assistance programs. …
… So it is good news that Meyer and Sullivan found a decline in consumption poverty once again in 2017, in their report issued on Wednesday. The consumption poverty rate declined from 3.0 percent in 2016 to 2.8 percent this past year — in other words, there were over 650,000 fewer Americans in material deprivation than there were in 2016. …
… Particularly noteworthy in Meyer and Sullivan’s data is the difference between after-tax money income — the earned money individuals get to take home after accounting for tax liabilities and credits — and consumption poverty. After dropping sharply between 2014 and 2016, after-tax money income poverty levels remained steady at 7.0 percent in 2017.
What accounts for consumption poverty dropping while money income remains the same — and for that matter, only a shred lower than the rate reported for the year 2000, when it was 7.2 percent?
One source of the discrepancy is likely the non-cash benefits that are not counted in after-tax income but do help relieve material poverty. Supplemental Nutrition Assistance Program (SNAP, or food stamps) is one such program, which in 2017 provided benefits to more than 42 million Americans. Medicaid, too, provided a non-cash benefit worth thousands of dollars of in-kind value for poor Americans. These benefits help relieve material deprivation, so they are captured in consumption poverty rates. …
