The Office of Management and Budget issued a notice requesting public comments on a recommended change to update the federal poverty line for inflation as indicated by various consumer price indexes (CPI). The comment period closed on Friday, June 21, with little public awareness.
The recommended change considers lowering the poverty line by applying a smaller cost-of-living adjustment each year, using an alternative, lower measure of inflation than the traditional CPI. United Way of Southeast Louisiana strongly rejects this change.
If passed, the impact would be minimal at first, but it would increase dramatically each year as the income-eligibility criteria drops for dozens of federal safety net programs, reducing or eliminating critical assistance to individuals and families.
And who would suffer most? Low-income children, working families, our neighbors with disabilities, and seniors. Ultimately, the stability of our entire community is at stake when the most vulnerable among us are threatened and destabilized.
Lowering the poverty line further would make poverty measurement less accurate, giving policymakers and the public less credible information about the number and characteristics of Southeast Louisiana families struggling to get by. Moreover, the OMB notice failed to consider a range of important issues that would need to be carefully studied before making any change to the poverty line.
The Official Poverty Measure is Already Too Low
First, the poverty line is already below what is needed to raise a family, as shown by the high rates of hardship among families with incomes just above the poverty line.
United Way’s ALICE Report indicates that the prevalence of financial hardship among households just above the poverty line, 30 percent in our region. This suggests that households earning just below the poverty line, who would be defined as no longer poor by the proposed change, do not have sufficient income to make ends meet.
The Notice Fails to Consider Other Significant Problems with the Poverty Line
Second, extensive research over the years has identified various ways in which the poverty line appears to be inadequate. For example, the poverty line does not fully include certain costs that many low-income families face, such as child care, which accounts for the largest portion of the conservative ALICE Household Survival Budget.
The Notice Fails to Consider Evidence That Low-Income Households May Experience Higher Inflation
Third, it is not at all clear whether the proposed methodology is a more accurate measure for low-income households.
Prices have been rising faster for the types of goods and services that dominate poorer households’ spending. For example, low-income households spend a larger than average share of their budgets on housing, which is becoming significantly less affordable throughout Louisiana.
Low-income households may experience higher rates of inflation than average or high-income households. If so, indexing the poverty threshold by an inflation measure that grows less rapidly, such as the chained CPI, could make the poverty measure less accurate, not more so. At the very least, considerably more research is needed on this issue. OMB should undertake such research and solicit additional input from researchers, as well as public comment, before making any change.
OMB Should Analyze and Seek Comment on Impact of Poverty Line Changes on Program Eligibility
Before considering moving forward with changing the Census poverty thresholds that would impact the poverty guidelines, we are urging the OMB to conduct an in-depth analysis of all of these issues, including research on how the impacts would grow over time. After all, the future of Louisiana is at stake.
President and CEO
United Way of Southeast Louisiana