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November 8, 2011

New definition places more seniors in poverty category

Out-of-pocket expenses straining elderly

TERRE HAUTE — A Terre Haute woman in her mid-80s is a very good example of why a new Census Bureau measure reveals more seniors living in poverty.

The 86-year-old woman, a resident of a Terre Haute Housing Authority home who asked not to be named, has diabetes and other medical conditions that sometimes send her to the hospital and frequently to doctors’ offices.

While Medicare covers most of her expenses, she still faces monthly out-of-pocket expenses in the hundreds of dollars. Because her only income is a monthly Social Security check, she sometimes finds it very hard to make ends meet.

“You don’t have much left to do anything for yourself with,” she said. Medicare is “pretty good,” but her out-of-pocket bills can still often be as much as $300 a month, she said. “That’s a lot.”

It’s cases such as this that have the U.S. Census Bureau estimating that the number of seniors living in poverty is much higher than previously believed. On Monday, the Census Bureau released its new Supplemental Poverty Measure, which takes a much broader look at poverty than the long-used official poverty measure.

“Things have changed a great deal” since the original Census Bureau poverty measure was developed in the 1950s, said Curtis Skinner, director of family economic security for The National Center for Children in Poverty in New York City.

The old poverty measure is based around a family’s ability to purchase enough food for a modest diet and then multiples it by three. The new measure takes food and also many other expenses, such as housing and medical costs, into account, he said.

In addition to looking at new types of household expenses, the new measure also reflects the reality  that a person’s “income” is not just in the form of cash. The SPM takes many other sources of “near-cash” income into account such as subsidized housing, school lunches, food stamps and Earned Income Tax Credits.

“We think [the SPM] does a much better job in estimating what families need and what families have,” Skinner said.

While the poverty rate for those age 65 and older is 9 percent according to the old method of measuring poverty, it is much higher – 15.9 percent – according to the SPM.

This is the first year the Census Bureau has used the SPM on a wide scale. The figures, released Monday, are not yet available for individual cities as small as Terre Haute and some of the figures are estimated based on other data, Skinner noted.

Under the 1950s-era measuring system, Terre Haute has a poverty rate of 27.2 percent, well above the national average of 15 percent and third highest in Indiana among cities with populations more than 50,000. Only Gary and Elkart have higher percentages of their populations living in poverty, according to Census Bureau figures from 2008 to 2010.

Childhood poverty is also very high in Terre Haute. According to the Census Bureau, nearly 39 percent of children in the city live in poverty under the old measure – also third highest in the state among cities with populations of more than 50,000.

Nationwide, the poverty rate for working-age adults – those ages 18 to 64 – is also higher under the SPM. Working age poverty in America is 15.2 percent under the SPM compared with 13.7 percent by the old measure.

The overall poverty rate in America is also higher according to the SPM. It was about 15 percent under the old measure. The SPM shows 16 percent of Americans living in poverty.

While the new SPM shows more Americans are living in poverty, it also contains some good news.

The new measure indicates that fewer children are living in poverty than the older measuring system indicated. The SPM shows a poverty rate for children at 18.2 percent compared with 22 percent under the older measure.

“The safety net really works” for children, Skinner said. “For better or for worse, a lot of [low-income assistance] focuses on children…and it does lower poverty rates,” he said.

For example, children benefit from free and reduced-price school lunches, Skinner noted. They also benefit because Earned Income Tax Credits are significantly greater for families, he said. In fact, without the EITC, childhood poverty under the SPM measure would reach 22.4 percent compared to 18.2 percent, Skinner said.

The SPM  is still new and a little complex to calculate, Skinner said. And it will almost certainly be tweaked over the years.

“It’s really a work in progress,” Skinner said. “And they hope to keep improving it.”

Arthur Foulkes can be reached at (812) 231-4232 or arthur.foulkes@tribstar.com.

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