Are Numbers Relative?

Nov 10, 2016

Let’s talk numbers. Two of them, to be specific — the poverty rate, and the area median income, or AMI.

Both numbers can determine how much help a struggling family gets from the government, from food benefits to housing assistance. But the two numbers aren’t interchangeable, and in fact can paint very different pictures of the same family.

At Good Shepherd Housing, we wish everyone used the AMI. But they don’t. Here’s why that matters.

The Definition of Poverty

The federal poverty level compares pre-tax income against “three times the cost of a minimum food diet in 1963, which is updated annually for inflation using the Consumer Price Index” and then adjusted again for family size, as the Institute for Research on Poverty notes. The calculations may seem clunky – grocery costs during the Kennedy administration? – but that’s the mandate.

The 2016 poverty rate for a family of four was set at $24,500 for the lower 48 states and Washington, D.C. Supplemental Nutrition Assistance Program, or SNAP, sometimes still known as food stamps, relies on this number. So do government programs such as Head Start, the National School Lunch Program, and the Children’s Health Insurance Program, or CHIP. Some programs have a maximum income level set at, say, 130 percent of the poverty line — that’s the case with SNAP, where a family of four must make under $31,600 a year (give or take a few dollars) in order to qualify.

But benefits that focus on the national poverty rate don’t take into account different costs of living. The federal poverty rate, and the benefits that go with it, are the same whether someone lives in rural Alabama or urban Los Angeles. The median family income in Jackson, Mississippi is about $47,000, as Forbes notes. The median family income in the Washington, D.C. metro area, which ranked as the highest in the nation for 2016, is just north of $93,000, according to The Washingtonian. The average rent in Jackson is $804 for an apartment. In the D.C. average, the average for a one-bedroom rental is $2,000. A small rental in Jackson would cost $9,600 a year. A family poor enough to qualify for food stamps would have about $22,000 left over every year after housing payments. In the D.C. area, rent of $24,000 a year would swallow all but $7,000 of the income from someone poor enough to qualify for food stamps. That’s a huge difference, but the federal rate views both families, and both areas, as if they were the same for the sake of helping them.

Defining the AMI

The area median income, or AMI, is determined by taking an average of the incomes across a specific metropolitan area. This makes the AMI more specific to a geographic area and, when it comes to offering services, more realistic.

For 2016, the AMI for the D.C. metro area is just over $108,000. Living expenses mirror that level. Food, clothing, and especially childcare, are also higher in the D.C. metro area. Consider that a family of four could have an income that is less than half of the average for the area, as noted by the D.C. Department of Housing and Community Development, and still not qualify for food assistance.

Back in Jackson, the AMI is $46,757 — less than half that of the D.C. metro area. And yet the rates for qualifying for national assistance programs don’t dip. It’s great for residents who qualify and can still afford additional needs, but it demonstrates how arbitrary, and unhelpful, a national poverty number can be. Families along the mid-Atlantic can struggle to have decent housing, childcare, a car and food even if they make significantly more than their counterparts elsewhere.

At Good Shepherd Housing, we are able to base our assistance on the locally relevant AMI numbers. This helps us reach more people who truly need assistance to keep their families together and safe. We urge any and all programs who work with lower-income families to support using the AMI as their framework. Poverty may be a weighted word, but the technical definition doesn’t weigh upon families the same across our country, and it shouldn’t burden some families more than others simply because of unfortunate geography and unrealistic statistics.