An Official Explanation of Bloomberg's New Poverty Numbers

Twenty-three percent of New York City residents live in poverty, according to a new formula unveiled by Michael Bloomberg yesterday, which he says is more accurate than the one used by the federal government, which puts the poverty number for the city at 18.9 percent.

Bloomberg’s new formula is based on recommendations made in 1995 by the National Academy of Sciences (NAS) but never put into place. Bloomberg was scheduled to announce the new formula during a speech at the 99th annual NAACP Convention in Cincinnati, where John McCain and Barack Obama will speak later in the week, but due to storm conditions in New York City, Bloomberg’s plane was not allowed to depart in time and a speech was delivered instead by deputy mayor for health and human services Linda Gibbs.

During a briefing with reporters, Gibbs said that the change in New York City’s poverty rate will not have not have an impact on funding from federal or state anti-poverty programs, but that it is intended to prompt constructive discussions.

"At this point there’s obviously huge consequences in advancing the conversation and having folks across the city and across the country really discuss and debate the implications" of the new formula, she said. "One very practical consequence is that we hope it does advance that national conversation."

According to the current federal formula, a family of two adults with two children is at the poverty line if they make $20,444 or less. Under Bloomberg’s formula, that income level deemed at the poverty level jumps to $26,138. Under the federal formula, the poverty level for a single adult is $10,488. Under Bloomberg’s, it is $12,114.

Under Bloomberg’s formula, there’s about half a percentage point fewer children under the age of 18 in poverty, which Gibbs attributes to better accounting of already-existing poverty plans.

According to Gibbs, the formula for determining what income level is at the poverty line is based on a standard created in the 1969s, which they say is now outdated.

At the time, the prevailing thought was that families spent about one-third of their income on food. Therefore, federal regulators deemed the poverty line to be the "price of food, times three," she said.

Gibbs, citing figures from the U.S. Bureau of Labor, said families today spend about one-eighth of their income on food, but spend a greater percentage of their money on other things like housing and transportation.

Also not factored into the federal formula is the high cost of housing in New York City, Gibbs said. "The average, fair-market rent for a two-bedroom apartment in the United States is $867. And that compares to $1,318 in New York City," she said. "That’s 45 percent greater than the national average."

Gibbs also said the federal government only measures the pre-tax dollars families earn when calculating how much money they have, and ignores government assistance they may receive, like Section 8, which helps pay for rent, and food stamps.

UPDATE: Here’s a copy of the prepared text of the speech Bloomberg was supposed to give. An Official Explanation of Bloomberg's New Poverty Numbers