Poverty Numbers are Poor Reflection of America's Struggling Economy

Mizzou expert recommends looking at other factors for better analysis

Aug. 26, 2008

Story Contact:  Emily Smith, (573) 882-3346, SmithEA@missouri.edu
Colleen Heflin, Truman School of Public Affairs, HeflinCM@missouri.edu

COLUMBIA, Mo. – The U.S. Census Bureau released its “Income, Poverty, Health Insurance Coverage and American Community Survey: 2007 Report” on Tuesday morning, which stated that household incomes are up for the third consecutive year and the poverty rate is not statistically different from 2006. An expert at the University of Missouri said these numbers do not represent the current struggling economy.

“Most Americans will feel a real disconnect with these official statistics for two main reasons: First, these numbers are a reflection of the economic situation in 2007, not 2008; while the economy began to decline in mid-2007, that decline really accelerated in 2008. These numbers will be completely different a year from now,” said Colleen Heflin, an assistant professor with the Truman School of Public Affairs. “Second, these statistics paint a very rosy picture, but don’t capture the struggle Americans are facing while paying the rising costs of goods and services.”

The federal poverty measure identifies the amount of household income available and compares it to a predetermined level of income that would be sufficient to cover basic necessities. The number of Americans living in poverty in 2007 was 37.3 million, or 12.5 percent. Real median household income climbed 1.3 percent to $50,233. The number of people without health insurance coverage declined from 47 million (15.8 percent) in 2006 to 45.7 million (15.3 percent) in 2007.    

“The report shows that the median household had increased income in 2007, but it does not show that this level of income did not buy as much as it did a year earlier,” Heflin said. “People aren’t necessarily taking home less money, but they are spending substantially more on gas, food and heating costs than they were a year ago.

“The current federal poverty measure is not designed to capture this trend. The results of the 2007 report make the case that material hardship measures are needed to supplement the official poverty report. Currently, there is no nationally representative annual measure to show whether people are able to meet the cost of the basic necessities required to participate fully in society. Material hardship measures would show that people aren’t able to afford food for their families, heat for their homes or the cost of their mortgage payment.”

Heflin's research interests include welfare and poverty policy, social stratification, health inequality, and women and work. Her recent work appears in the Journal of Policy Analysis and Management, Journal of Health and Social Behavior, Social Service Review, Social Science Quarterly, and Social Science & Medicine. She served as an executive board member for the University of Kentucky Center for Poverty Research from 2002-07.

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