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Abstract
Older adults often are left out of policy conversations on poverty because many believe that relatively few of them experience economic hardship. Yet an updated measure of poverty indicates that the rate for adults ages 65 and older matches the rate for children. The Economic Recovery package under consideration includes some provisions that would benefit older adults, but more could be done. One-time payments for those receiving welfare and increases in food assistance benefits especially would help some poor older adults. Investments in the job skills of those who want to work should also be considered.
Introduction
The needs of older adults are often left out of policy conversations on poverty and economic hardship. Many policymakers, perhaps believing that seniors are less vulnerable, have concentrated their efforts on reducing poverty for children. However, an updated poverty measure finds that adults age 65 and older are much more likely to be poor than official estimates say, and, in fact, have a poverty rate that rivals the rate for children.
Legislators could use the Economic Recovery Package to do more for older adults. Some poor older adults will benefit from one-time cash payments for Supplemental Security Income (SSI) beneficiaries and the increases in food assistance currently included in the economic recovery package. New investments in the skills and job placement of older adults able to work would reduce future poverty rates among this group.
Measuring Poverty
The Census Bureau reported that the official 2007 poverty rate for the “elderly” (adults age 65 and older) was 9.7 percent; the rate for dependent children under age 18 was 17.6 percent. Also, Census reports that poverty among the elderly has declined dramatically over the past four decades. About a quarter of adults ages 65 and older was poor in the late 1960s.
However, a 1995 National Academy of Sciences (NAS) panel and a substantial body of subsequent research have concluded that these official poverty rates are seriously flawed. The official rate uses woefully out-of-date income thresholds to define poverty, fails to measure all resources available to families, and fails to take into account nondiscretionary expenses that limit a family’s ability to pay for the basics of life. A new definition of poverty that addresses these flaws would substantially change the relative poverty rates for different groups.
The original poverty thresholds, developed more than 45 years ago, were based on the cost of an Economy Food Plan multiplied by a factor of three, the share of income an average family spent on food in the mid-1950s. Since the elderly spent less on food than the nonelderly, the thresholds for older adults were set lower than those for younger adults. The thresholds are adjusted annually for the change in the Consumer Price Index (CPI). (The 2007 thresholds were $13,884 for a two-person family of younger adults and $12,533 for a two-person older adult family.) These ratios are seriously out of date. Recent consumption data show that food now only represents about an eighth of a typical family’s budget, and older adult families spend about as much on food as younger families of the same size.
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