Rising poverty in the US

Last Sept. 13, the US Census Bureau announced that the national poverty rate in the United States in 2010 was 15.1 percent of the population, up from 14.3 percent in 2009.  This means that there were 46.2 million poor Americans in 2010, up from 43.6 million the year before.

It was the fourth consecutive year that the number of the poor increased in the United States. The number was also the largest in the 52 years that poverty estimates have been annually published.

The Census Bureau reports: “The poverty rate in 2010 was the highest since 1993 but was 7.3 percentage points lower than in 1959, the first year for which poverty estimates are available.  Since 2007, the poverty rate has increased by 2.6 percentage points.”

American families in poverty were 11.7 percent (numbering 9.2 million) in 2010, up from 11.1 percent (numbering 8.8 million) in 2009.  The percentage of poor people is higher than the percentage of poor families because the poor have larger families than the non-poor.

The US poverty estimate used an average poverty threshold of $22,314 of $22,314 for a family of four in 2010.  Dividing by 365 converts that to $61.13 for four persons over the year, or $15.28 per person per day.

For comparison, the official Philippine poverty threshold for 2009 is now P1,403 per person per month, which converts to P46.76 per day, or slightly over one dollar per day.  This is the new line released by the National Statistical Coordination Board (NSCB) in February 2011, based on a “refined” methodology that cut the line computed by the old methodology by 11.8 percent.  The NSCB claims that it discovered that a poor family could spend that much less and yet stay at the same real border of poverty.

Incidentally, the US Census Bureau reports the Gini index of income inequality for the United States to be .469 in 2010.  Given the Philippine Gini index of only .448 for 2009, according to the NSCB, incomes would appear to be more unequal in the United States than in the Philippines.

I cite the United States as a case where official poverty statistics are informative, rather than mainly decorative.  The most important attribute of the US statistics is that they are updated every year.  Thus they have shown both good news and bad news at various times in the past 52 years.

An American president receives four poverty reports during a term of office, three of which refer to his own watch.  This gives even a one-term president three official, evidence-based opportunities to modify his anti-poverty programs accordingly.

Compare this to the official Philippine poverty statistics, provided by the NSCB since 1985, but only once every three years, such that the full data series consists of 1985, 1988, 1991, 1994, 1997, 2000, 2003, 2006, and 2009, or a grand total of only nine points in time over the 20-year period.  Thus the latest figure (released only last February) is two years old, and still pertains to the Arroyo administration.

The next NSCB poverty reading will refer to 2012, but won’t be reported until early in 2014, by which time the term of the current Aquino administration will be half over.  Even with a six-year term, our president receives only two reports during his term, only one of which refers to his own watch.  Thus he has only one opportunity to modify his anti-poverty programs, if he relies only on official evidence, and if the NSCB persists in its practice of producing poverty data only once every three years.

In the NSCB series, the first seven poverty percentages progressively fell, giving the impression that throughout the 18 years from 1985 to 2003, poverty steadily declined.  It fostered a dangerous complacency that economic growth could be relied upon to trickle down to the poor.

Official NSCB poverty rose, for the first time, in 2006; then in 2009 it fell back roughly to the 2003 level, making for a flat trend in 2003-2009, or six years of wasted economic growth. These facts were only known a year and a half after each reference period, due to the lengthy period needed by NSCB to process each Family Income and Expenditure Survey.

The new Philippine development plan has made a bad mistake in ignoring the recent flat trend in poverty, and using only the 1985-2003 history as a basis for projecting how much the planned future growth in GNP will do to reduce poverty.  This will overestimate the impact of GNP on poverty, and continue the over-emphasis on growth as the main strategy for helping the poor.

The affordable way to produce poverty statistics annually instead of only every three years would be to reduce the national sample size of the Family Income and Expenditure Survey, from the present 50,000 households to, say, about 16,000, which would be enough to generate data for 16 regions, at a very adequate sample of 1,000 households per region.  In this way, one could fund three national surveys of family income in three years.

The NSCB’s justification for the enormous present sample size of 50,000 is to produce data accurate at the provincial level.  However, I submit that it is worthwhile to sacrifice provincial-level details, generated only once every three years anyway, for the sake of obtaining regional and national data every year.  I would let the generation of provincial data be the responsibility of provincial governments.

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Contact SWS: www.sws.org.ph or mahar.mangahas@sws.org.ph.