Broken Yardstick examines the flawed poverty rate statistic:
The most widely quoted federal statistic on deprivation and need in modern America is the ‘poverty rate’ — a measure tracking households with annual incomes below a ‘poverty threshold’ established at the beginning of the Johnson administration’s ‘war on poverty’ in the 1960′s and adjusted over time for inflation. According to the latest poverty rate estimates — released by the Census Bureau on Aug. 30 — the total percentage of Americans living in poverty was higher in 2004 (12.7 percent) than in 1974 (11.2 percent). According to that same report, poverty rates for American families and children were likewise higher last year than three decades earlier.
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Per capita income adjusted for inflation is over 60 percent higher today than in 1974. The unemployment rate is lower, and the percentage of adults with paying jobs is distinctly higher. Thirty years ago, the proportion of adults without a high school diploma was more than twice as high as today (39 percent versus 16 percent). And antipoverty spending is vastly higher today than in 1974, even after inflation adjustments.
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In 1972-73, for example, just 42 percent of the bottom fifth of American households owned a car; in 2003, almost three-quarters of “poverty households” had one. By 2001, only 6 percent of “poverty households” lived in “crowded” homes (more than one person per room) — down from 26 percent in 1970. By 2003, the fraction of poverty households with central air-conditioning (45 percent) was much higher than the 1980 level for the non-poor (29 percent).
(Hat tip to Marginal Revolution.)