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THE POVERTY MEASURE AND AFDC 368 (basic unit plus four added children). At one extreme, Louisiana increases its $138 benefit for the basic two-person unit by 32 percent on average ($44) for each additional child. At the other extreme, Alaska increases its much higher benefit of $821 for the basic unit by only 12 percent ($102) for each additional child. The median value that is added on average to the basic unit benefit for each added child is 23 percent.20 In looking at the shape of the equivalence scales for AFDC benefits, five states have a regular pattern whereby, within 1 or 2 percentage points, they add the same amount to the basic unit benefit for each additional child; 10 other states have a regular pattern within 6 percentage points. Ten states have a declining pattern, whereby they add progressively less for each child after the second or third. In contrast, 10 states add more for the third and fourth child than for either the second or fifth. Finally, 16 states have erratic patterns. For instance, they may add more for the third and fifth children than for the second and fourth. In this, they resemble the equivalence scale implicit in the current U.S. poverty measure, in which the second child adds 17 percent to the two- person (one-adult/one-child) poverty threshold, the third child adds 31 percent, the fourth child adds 23 percent, and the fifth child adds 20 percent.21 The type of equivalence scale that we recommend for the poverty measure would increase the benefit for a one-adult/one-child family the most for the second child, with declining percentages for each additional child to reflect household economies of scale. Depending on the value of the scale economy factor, our proposed equivalence scale would add an average of 27 percent (using a factor of 0.75) or an average of 22 percent (using a factor of 0.65) to the basic unit benefit for each additional child. Trends in Need Standards and Benefits Looking at trends over the last two decades, it appears that relatively few states have increased their need standard or maximum benefit to keep up with inflation. Relatively few states have statutes that require them to adjust their standards for inflation, and even those states that have such requirements do not always heed them in periods of budget stringency. As of 1988, seven states had statutory requirements for adjusting their need standard to keep up with inflation, one state had a requirement to update its benefit level, and three 20 Note that the ratios of the benefit for an added child to the benefit for the basic AFDC unit are not comparable to equivalence scales expressed in terms of a one-person family or house-hold. Such scales can be constructed for January 1994 from U.S. House of Representatives (1994:368-369). 21 The average value added per child to the U.S. poverty threshold for the two-person (one- adult/one-child) family is 23 percent, the same as the median value for the 50 states and the District of Columbia.
