Press Release Inequality

Add Inflation Inequality to Why the US Needs to Update the Poverty Measure

November 06, 2019

Contact: Karen Conner, (202) 293-5380 x117Mail_Outline

November 6, 2019

For Immediate Release: November 5, 2019
Contact: Karen Conner, (202) 293-5380 x117, [email protected]

Washington, DC — Is your family food budget based on meals prepared at home by a “frugal housewife?” That’s just one example of the out-of-date poverty measure currently used in the United States. In today’s CEPR Blog, Senior Policy Fellow Shawn Fremstad writes that the US “is the only country in the world that measures present-day poverty by using a poverty line set over half a century ago and since then only adjusted for inflation.”

Fremstad cites new research from the Groundwork Collaborative that there is a second reason that the US poverty measure is inaccurate. When the poverty line is adjusted for inflation, there is an assumption “that the inflation rate for the households most at risk of poverty — including working-class households, households with minor children, and households with disabled members — is the same as the inflation rate for wealthy and upper-class households. A growing body of economic research suggests that this assumption is incorrect.”

“If inflation inequality continues to grow over time, so will the difference between the poverty estimates that only adjust for the CPI-U and ones that take inflation inequality into account,” explains Fremstad.

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