Are we as poor as they say we are?

For many years, Alabamians have been told that their state is one of the poorest in the nation. This purported fact has been the subject of countless newspaper editorials and political ads, and it has given rise to a statewide anti-poverty "industry", of sorts. For example, on its "Research" web page, the Alabama Poverty Project cites several sources stating that Alabama's poverty rate, as measured by the U.S. Census Bureau, is one of the nation's highest:

The U.S. poverty rate in 1999 dipped to 11.8%, the lowest point in 212 years. In Alabama the poverty rate in 1999 was 14.8%, 7th highest among all states, but down from 15.1% a year earlier. The U.S. percentage of children in poverty fell to 16.9%, the lowest figure since 1979. (Birmingham News, Sept. 27,2000) ...

According to 2001-2002 U.S. Census data, Alabama had the 7th highest poverty rate in America (679,000, or 15.2% of the state population, up from 14.6% during the previous two year period). Alabama’s median household income ranked 9th lowest. Region-wide the poverty rate was 13.8%. (Poverty in the United States, 2002, U.S. Census Bureau) ...

Alabama's poverty rate for 1990 was the 5th highest in the U.S. (nearly 1/5 the population). Alabama contained eight of the nation’s 100 poorest counties in 1990 according to the U.S. Census Bureau. (Birmingham Post-Herald, Feb. 8, 1993)

These Census figures can be somewhat misleading, though, especially when they are used to make comparisons between states or regions. The reason is that Bureau's method for computing the poverty rate does not vary geographically. More specifically, the thresholds used to define poverty are not adjusted state-by-state or region-by-region to account for variation in cost of living and other economic factors. (See "How the Census Bureau Measures Poverty") Thus, comparing the Census estimate of Alabama's poverty rate to that of other states is not very useful, except maybe to create headlines or to help organizations like the Alabama Poverty Project and Alabama Arise raise money.

This week, a report came out that does adjust for at least one cost of living measure - housing costs - and it may be that Alabamians aren't as impoverished as commonly believed. According to the New York Times today:

SAN FRANCISCO, May 10 — A new report that adjusts the poverty line to reflect housing costs says New York, California and Washington, D.C., have the highest percentage of residents living in poverty, surpassing traditionally impoverished regions like the Deep South.

The report, to be released Thursday by the Public Policy Institute of California, took into account the high rents and utility rates in major cities like Los Angeles, New York and San Francisco and adjusted the national poverty line, about $19,000 for a family of four, accordingly. The results showed all three regions with significantly higher poverty rates than the Census Bureau reported in the fall. ...

The author of the study, Deborah Reed, said it "changes our perception of poverty mainly affecting the Southern states to something that affects high population states," where housing costs can consume a majority of income.

The PPIC report is available online here. Unfortunately, it focuses primarily on California and does not present state-by-state statistics and rankings. If the Alabama numbers become available, I'll be sure to post them.

Failure to account for regional cost of living disparities isn't the only flaw in the Census measurement of poverty, by the way. Bruce Bartlett (author of Impostor: How George W. Bush Bankrupted America and Betrayed the Reagan Legacy) discussed some of them here, and this Heritage Foundation backgrounder has more.