This summer, the Office of Management and Budget (OMB) held a comment period for the public to submit feedback on Consumer Inflation Measures Produced by Statistical Agencies—a proposal that would ultimately change the way poverty is measured in the United States. The proposal set forth by OMB raised concern for Missouri CAN, along with fellow nonprofit and advocacy groups. Here are reasons this proposal is concerning and some key takeaways from our comments submitted to OMB.
What the OMB Poverty Measure Proposal Suggests
For many decades, OMB has used the Consumer Price Index-Urban Inflation measure to update the Official Poverty Measure each year. This current inflation rate underestimates what low-income families need to get by and merits an update. OMB is suggesting several different inflation measures to change how poverty is measured. However, these inflation measures up for consideration would result in an even smaller cost of living adjustment each year, thus creating a lower poverty line. This lower poverty line would result in a less-accurate measure of individuals and families struggling to afford basic needs, and therefore reduce eligibility for assistance programs such as Medicaid and nutrition assistance programs.
The two inflation rates up for consideration as proposed by OMB are:
– Chained Consumer Price Index for All Urban Consumers (C-CPI-U)
– Personal Consumption Expenditures Price Index (PCEPI)
Although we appreciate the desire to update how the poverty measure is calculated to make it more meaningful, the strategies outlined in the OMB proposal are concerning. Neither the Chained Consumer Price Index for All Urban Consumers (C-CPI-U) nor the Personal Consumption Expenditures Price Index (PCEPI) would adequately or accurately assess the status and well-being of lower income individuals and families.
OMB’s call for comment was not asking whether the poverty measure should be calculated differently; there is no doubt the calculation needs to be updated. The comment period was to seek feedback on OMB’s proposal for how to calculate poverty moving forward.
Why the Poverty Measure Proposal Concerns Us
Low-income households purchase goods that experience more inflation on average when compared to households with incomes above the poverty line. The C-CPI-U (proposed inflation measure to use) shows a lower rate of inflation compared to the CPI-U (inflation measure currently used), and therefore the result is an overall reduction in the poverty threshold.
This means fewer individuals and families will qualify for critical programs that tie eligibility to the Federal Poverty Line, including:
– TANF
– SNAP
– WIC
– School Meals
– CHIP
– Medicaid
– LIHEAP
– Head Start
-Family Planning
-and many others
And over time, the proposed use of a lower measure of inflation would reduce or eliminate critical services, including programs that address the very indicators of need that help families and communities thrive – economic and family security; education; food and nutrition; health; and housing and energy.
No information was provided as part of the Request for Comment that shows how the proposed changes would affect the most economically vulnerable Americans who rely on these programs as a pathway out of poverty. And given that the proposed measures would not accurately reflect how inflation impacts people with low incomes, many working individuals and families will essentially be “defined out” of poverty and denied access to programs vital to helping them achieve economic stability. This would create a devastating ripple effect as all levels of government use poverty data when determining allocation of resources, and an incorrect count of those in poverty will likely result in the further reduction of support to economically vulnerable populations.
OMB Needs to Investigate a Few Things Further
In addition to our concerns with the proposed inflation measures for calculating poverty, we strongly believe that any change to the inflationary measure used to establish the Official Poverty Measure should not be undertaken without in-depth research and analysis.
The notice in the Federal Register states that OMB is not seeking comments on the impact of the proposed changes. However, before moving forward, it would be prudent for the Administration to conduct additional research and seek further comment on the accuracy of current and proposed measures of poverty and the number of individuals who would potentially lose access to critical services as a result of the change.
Areas of the proposal we believe merit further investigation include these four key factors:
1. Do these measures accurately or inaccurately reflect the true extent of poverty in America’s communities?
2. What is the potential for direct negative impact on individuals, children, and families through restricted eligibility on programs that serve those most in need?
3. What other poverty measures need to be considered?
4. How will a false perception of lower poverty rates further reduce funding for programs?
With the current proposal from OMB, individuals and families would essentially be defined out of poverty though their situation remains unchanged. How poverty is measured matters greatly. An accurate poverty measure impacts the resources communities have to help those in need move out of poverty. For more information regarding Missouri CAN’s efforts, contact Missouri CAN’s Director of Public Affairs and Community Engagement Jessica Hoey at jhoey@communityaction.org.