National Academies Press: OpenBook

Measuring Poverty: A New Approach (1995)

Chapter: Issues in Program Benefit Design

« Previous: A National Minimum Benefit Standard for AFDC
Suggested Citation:"Issues in Program Benefit Design." National Research Council. 1995. Measuring Poverty: A New Approach. Washington, DC: The National Academies Press. doi: 10.17226/4759.
Page 341

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THE POVERTY MEASURE AND AFDC 341 The Family Assistance Plan (FAP) put forward by the Nixon Administration in the late 1960s provided for two kinds of programs, each with national minimum benefit standards: a program for low-income elderly, blind, and disabled (which subsequently became the Supplemental Security Income [SSI] program), and a program for all families with dependent children, regardless of work status. The proposed FAP AFDC minimum benefit was $1,600 a year for a family of four (about 40% of the official poverty line at that time)—a level that would have raised benefits in 16 states. FAP passed the House in 1970 but died in the Senate: conservatives questioned the adequacy of the work incentives; liberals criticized the national minimum benefit as inadequate. The Carter Administration's Better Jobs and Income Program, proposed as legislation in 1977, also included a national minimum benefit for a program that would have combined AFDC, SSI, and food stamps; the minimum was set at $4,200 for a family of four whose head could not be expected to work (about 70% of the poverty line). This proposal died in Congress. In 1979 a scaled-back plan was introduced that proposed a national minimum benefit for AFDC at about 75 percent of the poverty line. The House passed this plan with the minimum benefit lowered to 65 percent of the poverty line (which would have raised benefits in 13 states). This bill died in the Senate. As noted above, proposals for a national minimum benefit were originally considered for the 1988 FSA. In 1987 the House Ways and Means Committee approved a minimum benefit standard, but opposition from southern Democrats on the grounds of increased costs to their states resulted in stripping this provision from the legislation. The FSA instead mandated a study of minimum benefit standards. Issues in Program Benefit Design Today, the de facto national minimum level of available benefits for AFDC recipients is the maximum food stamp allowance combined with the maximum AFDC benefit in the lowest benefit state. In January 1994, this amount was $415 per month for a three-person family, or 43 percent of the corresponding poverty threshold. Hence, the issue of a national minimum benefit standard for AFDC really comes down to an issue of raising this de facto standard. Arguments for adopting such a nationwide minimum benefit standard for AFDC have been made on the basis of equity: that low-income families with children should not be disadvantaged simply by reason of their state of residence. In addition, others have argued that differences in benefits encourage low-income families to migrate from low-benefit to high-benefit states. There have been studies of the migration effects of AFDC, but they suffer from serious data and methodological problems. The results suggest that there is an effect on the migration behavior of low-income families but that the effect, for a number of reasons, is quite weak (see below).

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Each year's poverty figures are anxiously awaited by policymakers, analysts, and the media. Yet questions are increasing about the 30-year-old measure as social and economic conditions change.

In Measuring Poverty a distinguished panel provides policymakers with an up-to-date evaluation of:

  • Concepts and procedures for deriving the poverty threshold, including adjustments for different family circumstances.
  • Definitions of family resources.
  • Procedures for annual updates of poverty measures.

The volume explores specific issues underlying the poverty measure, analyzes the likely effects of any changes on poverty rates, and discusses the impact on eligibility for public benefits. In supporting its recommendations the panel provides insightful recognition of the political and social dimensions of this key economic indicator.

Measuring Poverty will be important to government officials, policy analysts, statisticians, economists, researchers, and others involved in virtually all poverty and social welfare issues.

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