The formula developed by the NAS estimates that 18.6 percent of Americans over 65 live below the poverty line: that's 6.8 million people. The traditional government formula, created in 1955, puts the elderly poverty rate at 9.7 percent (3.6 million people). The NAS claims that its methodology accounts for increases in the cost of medical treatment and other factors that the incumbent formula does not. Rather, the mid-century method is based on an "emergency food diet" that doesn't necessarily reflect the realities of modern economic life. Academics and members of both major political policies agree that change is necessary.
As a result, a "hidden" problem is being unearthed, according to Robin Talbert, president of the AARP Foundation. Talbert and AARP are pushing for legislation that would lead to the adoption of the NAS standard.
Profound implications would follow from this shift, as the NAS formula could provide a clearer view of poverty in the United States that is based on more than the cost of food. If adopted, the formula could change the allocations of billions of dollars in a variety of federal programs.
A revision to the size of the elderly population living in poverty would have broader effects, as well. The official poverty rate – across all age groups – would grow from 12.5 percent to 15.3 percent, based on what The Associated Press calls "rough calculations" conducted by the U.S. Census Bureau.
The poverty rate among children would slip to 17.9 percent, and the rate for single mothers and their kids (disproportionate recipients of food stamps) would decline, as well, since aid in forms other than cash would be considered. The working poor would grow in size, because of costs associated with childcare and transportation. Intuitively, cities where the cost of living is high – such as New York and San Francisco – would sustain increases in poverty rates, while less expensive parts of the country would see drops.
Housing and other noncash benefits would cut the rate of extreme poverty in the United States – i.e., income of less than 50 percent of the poverty line, currently $21,203 for a family of four. Immigrant poverty would be increase, though, because of transportation costs and the fact that they don't participate as heavily in government relief programs.
New York City adopted the NAS formula last year, and the result was that one out of every three senior citizens residing in the five boroughs was living below the poverty line. The state is planning to release results under the new approach next month. Several other cities – including Chicago, Los Angeles, Miami, San Francisco and Washington – are thinking about moving from the old standard.
In New York City, the result has already been a change in policy. Mayor Michael Bloomberg shifted his stance on programs for the elderly from cost-cutting to investment. Pilot programs currently under consideration would offer cheaper transportation and legal aid for eviction cases. If this formula gains momentum nationwide, it could lead to a major change in both public policy and the distribution of government aid resources.