Editor's note: This post originally appeared in the third edition of New America's new digital magazine, the Weekly Wonk.
On Tuesday, the U.S. Census Bureau announced that 46.5 million people, more than half of whom were children, lived in poverty in 2012. Those numbers are staggering, and virtually unchanged from the 2012 stats. But here’s the kicker: They’re also masking the scale of the problem.
Here’s why: The way poverty is measured is outdated and based on faulty assumptions. It’s meant to tell us how many people have incomes below a federally defined threshold. In 2012, that threshold was around $23,000 for a family of four. To put this into perspective, if both parents were working full time at the minimum wage their yearly income would be just under $30,000. A poverty threshold that makes minimum wage earnings look cushy should certainly raise an eyebrow.
Since the formula was initially calculated by tripling the cost of a basic food basket in the 1960s (and adjusted from that point to inflation since), it fails to reflect a modern family budget, which allocates much more to housing, transportation, medical expenses, and child care than the Cleavers ever did. It also doesn’t account for geographical variation. The purchasing power of a family earning $23,000 in Manhattan, New York, is, unsurprisingly, different than the same family living in Manhattan, Kansas.