As it has since the 1960′s, the 2010 Census Bureau numbers will be based on a measure that looks strictly at a household’s cash income and that is pegged to the cost of a 1950s basic food diet, adjusted for inflation.  The measure has long been criticized as inadequate: among other limitations, it fails to reflect the real costs families face in meeting basic needs; it fails to adjust for regional differences in the cost of living; and it excludes non-cash income and benefits received by low-income families. Over the years, a number of researchers and policy groups have developed alternate measures of poverty and economic security, including the Self-Sufficiency Standards that were developed for Oklahoma and other states.  Back in 1995, the National Academy of Science issued a report called Measuring Poverty that provided recommendations for modernizing the poverty measure. The NAS recommendations were adopted by Mayor Bloomberg in New York, among others, as a basis for formulating anti-poverty policies. but were ignored, for various reasons, by the Clinton and Bush administrations.

This past March, the Obama Administration announced that beginning in 2011, the federal government will release a Supplemental Poverty Measure (SPM) alongside and concurrently with the official poverty measure. The new measure will include a broader set of expenditures, such as housing, clothing, utilities and child care, in determining the poverty threshold. It will also include more sources of income, such as the Earned Income Tax Credit and food stamps, in calculating a family’s resources.

According to Rebecca Blank, the Under Secretary for Economic Affairs in the Department of Commerce who was instrumental in promoting the measure:

The supplemental poverty measure will provide an alternative lens to understand poverty and measure the effects of anti-poverty policies. Moreover, it will be dynamic and will benefit from improvements over time based on new data and new methodologies.

The Administration was quick to stress that the new measure is intended to supplement, not replace, the official poverty measure, which will “remain the definitive statistical measure” and will continue to be used to determine eligibility for government programs.

Some critics, such as Robert Rector of the Heritage Foundation and columnist Robert Samuelson were quick to ascribe the new measure to a desire to increase the ranks of the poor so as to promote income redistribution programs. However, as Michael Laracy of the Annie E. Casey Foundation has noted, the SPM is based on the recommendations of a non-partisan panel of experts, and it is unclear whether the poverty rate will be higher or lower under the supplemental measure.

Jodie Levine-Epstein, a leading social policy analyst, notes that the supplemental poverty measure will bring new and rich data to bear on such questions as the effect that government programs have on reducing poverty and how the costs of basic needs contribute to poverty. If this new data can help us paint a more accurate picture of the situation of low-income families and design more effective policies, it will mark an important step forward.

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Not surprisingly, the report showed that 2009 was a rough year. Across the nation, state personal income declined by an average of 2.6 percent. As we discuss in the April edition of Numbers You Need, our monthly bulletin of key economic and budget data, in Oklahoma, per capital personal income (PCPI) fell by 1.9 percent, from $35,969 in 2008 to $35,268 in 2009. This drop ranked Oklahoma 22nd among the states in percent change from 2008 to 2009. West Virginia saw the strongest growth in 2009 and was one of only three states, along with Maine and Maryland, that registered positive growth. Wyoming saw the steepest decline, -5.9 percent, with Nevada, South Dakota, Idaho and Arizona rounding out the bottom five.

Oklahoma’s per capita personal income of $35,238 in 2009 ranked 34th among the states and was 90.0 percent of the national PCPI of $40,168. Oklahoma fell one spot from its 2008 ranking of 33rd (note that the preliminary numbers for 2008 showed Oklahoma as 28th highest, as we discussed in this blog post, but were revised downwards). In 2009, Oklahoma placed just ahead of North Carolina, Tennessee and Michigan and just behind Ohio, Louisiana and Oregon. Among neighboring states, Oklahoma’s per capita personal income is comparable to Missouri (30th) and Texas (29th), significantly below Kansas (23rd) and Colorado (13th), but well ahead of New Mexico (42nd) and Arkansas (45th).

Despite the drop from 2008 to 2009, it was a prosperous decade for Oklahoma. From 2000-2009, Oklahoma’s PCPI grew by 44.5 percent in constant dollars (not adjusted for inflation), or an average annual rate of growth of 4.2 percent. This far outpaced the nation as a whole, which saw PCPI grow by 31.4 percent overall, or an annual average rate of growth of 3.1 percent. Oklahoma’s growth for the decade was 9th highest in the nation. The fastest growing states in the 2000’s were Wyoming, North Dakota, Louisiana and New Mexico, while Colorado, Georgia and Michigan saw the decade’s weakest growth. Among its neighbors, only New Mexico grew more quickly than Oklahoma; Oklahoma outperformed Kansas (21st), Texas (29th), Missouri (31st), Arkansas (41st) and Colorado (48th).

It’s worth recalling that per capita income, which measures total income divided by the population, is only one way of calculating the state’s wealth.  In the last Census Bureau report, Oklahoma’s median household, the one exactly at the mid-way point along the income ladder,  had income of  $45,494 for the two-year average of 2007-08, which ranked 39th in the nation. Meanwhile, the state’s poverty rate in 2008 was 15.9 percent, a full 2.7 percentage points above the national average and the 8th highest rate in the nation.  Do we yet have a good explanation for why a state that has climbed to among the middle rung of states in terms of the average income of its population continues to suffer from such persistently high rates of poverty and fare so poorly on so many indicators of personal and social well-being?

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What is less frequently noted is that the racial wealth gap in America is even greater than the income gap. The 2009-10 Assets and Opportunity Scorecard that was recently released by CFED reports that for the nation as a whole,  the median White household possesses net worth (the sum of all assets less liabilities) six times greater than the median minority household: $122,505 compared to $20,132. In Oklahoma, the racial wealth gap was found to be even larger: the median white household enjoys net worth of $66,468 compared to just $6,620 for the median minority household, a gap of  10:1. Additionally, the report found that 37.2 percent of minority households nationally and 43.7 percent in Oklahoma live in “asset poverty”, meaning that they lacked sufficient net worth to subsist at the poverty level for three months in the absence of income. (By comparison, 16.4 percent of White households nationally and 15.9  in Oklahoma were determined to be “asset poor”).

At the CFED conference that launched a national policy campaign around the Scorecard, I heard a powerful presentation on the racial wealth gap from Meizhu Lui,  the director of the Closing the Wealth Gap Initiative at the Insight Center for Community Economic Development and co-author of The Color of Wealth: The Story Behind the U.S. Racial Wealth Divide. Building on the pioneering research of social scientists such as Melvin Howard and Tom Shapiro, Lui’s main argument is that the vast racial wealth gap in American is far from a natural outcome or matter of chance. As much as public policies over the course of American history have actively sought to promote ownership, wealth, and economic mobility for American families – think the Homestead Act, the Federal Housing Administration, the home mortgage deduction, 529 College Savings Program – minorities must still contend with the legacy of policies, practices, and institutions from which they were excluded or which were actively designed to strip away their wealth.

Historically, of course, the appropriation of Native lands and the practice of slavery systematically concentrated property and wealth in White hands. But even in more recent times, policies and practices have continued to perpetuate or accentuate the wealth gap. Just in the area of housing – which for most Americans is the single largest source of household wealth – minorities over the past century have had to contend with segregation, housing covenants, redlining, and predatory mortgage lending. It is no surprise, then, that nationally, there is a 23 percentage point gap in home ownership rates – 71.5 percent for White households compared to 48.2 percent for minorities. In every other important area of asset development, whether it is business capital, educational opportunities, health care, or financial services, discriminatory treatment has limited minorities’ access to the building blocks of financial security.

The lessons I took away from the data and Meizhu Lui’s presentation are two-fold. First, communities and governments must acknowledge the ongoing impact of the policies that offered greatly disparate opportunities based on race and gender.  Second, public policy can and must play an important role in clearing the pathway to prosperity and in closing the wealth gap, just as  public policies played a role in creating wealth inequality. As Lui and her co-authors stress in The Color of Wealth, “the very success of programs to move white men into the middle class shows that it can be done for everyone.” Developing those inclusive policies that expand the promise of the American Dream–for everybody–needs to be our priority.

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