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Despite expense, Alaska's poverty rate among lowest in US

Scott Woodham
istockphoto

Correction: Added "locality pay" into the Office of Personnel Management's geographical wage adjustments for Alaska.

First the good news: The U.S. Census Bureau's 2010 American Community Survey one-year estimates, released at the end of September, found that Alaska has one of the lowest percentages of individuals and families living below the official federal poverty line.

According to the survey, 9.9 percent of Alaska households fell below their respective poverty thresholds in 2010, putting the state in an effective statistical tie for second-lowest with Connecticut, Maryland, and New Jersey. New Hampshire's rate was found lowest, at 8.3 percent. Mississippi's was highest, at 22.4 percent.

State demographer Eddie Hunsinger, of the Alaska Department of Labor and Workforce Development, wrote in an email that the survey was designed to replace the decennial “long form” Census questionnaire in collecting detailed income and poverty data.

“The (American Community Survey) has benefits and drawbacks,” Hunsinger wrote, “but one of the benefits is that, at least at the state level, we now have annual data.”

Yearly data, of course, means statistics can reveal finer changes over time. While Alaska's poverty rate increased between 2009 and 2010, it rose at a smaller rate than the nation. In 2009, Alaska's poverty rate was 9 percent, so the state saw an estimated 0.9 percent (or 7,626 people) increase in people below the poverty line. Nationally, though, the rate jumped from 14.3 to 15.3 percent.

“A lower poverty rate (by a few percent) for Alaska than the U.S. as a whole is pretty consistent, at least back to 2000,” said Hunsinger. “The Alaska-to-U.S. difference has been a little bigger in the past couple years, and this may be because Alaska was not hit as hard as the rest of the nation by the 'Great Recession'."

Now the tricky part.

The Census Bureau relies upon “poverty thresholds” for statistical purposes only and doesn't intend them to measure people's needs or how well they're being met. Data merely counts the number of Americans who live in poverty as defined by the official standard.

And the Census Bureau's thresholds are distinct from the Department of Health and Human Services' “poverty guidelines,” which are used for administrative purposes and eligibility for such assistance programs as Head Start, the Food Stamp Program, the National School Lunch Program, the Low-Income Home Energy Assistance Program, and the Children’s Health Insurance Program. Health and Human Services uses an Alaska-specific set of guidelines; the Census Bureau's thresholds are the same nationwide.

The Census Bureau's poverty thresholds, the federal government's official measure, were created in 1963-64, shortly before President Lyndon B. Johnson declared a “War on Poverty.” The poverty thresholds for 1964 separated households by gender: $1,650 for an individual, non-farm male under 65 years old, and $3,167 for a four-member, non-farm, male-headed household. For the same households headed by women, the mark was $1,526 and $3,042.

The original measurement was based on the U.S. Department of Agriculture's estimated food budgets designed for families under economic stress, plus data indicating what proportion of a household's budget was thought to be spent on food. Updates occur annually to account for inflation using the consumer price index. In determining who falls below the line, Census only considers pre-tax income, including earnings, interest, unemployment, worker's compensation, Social Security, veterans and other benefits, as well as pension or retirement income. Earnings don't include capital gains or losses, or non-cash forms of public assistance.

In 2010, for an individual younger than 65, the Census poverty threshold was set at $11,344, and for a family of four with two children under 18, at $22,113. Add Alaska's 2010 Permanent Fund Dividend ($1,281), and the remainder an individual Alaskan had to earn to exceed the threshold was $10,063. For a family of four with two children, it was $16,989. In contrast, the 2009 Health and Human Services poverty guidelines set the pre-PFD bar at 13,530 per individual, and $27,570 per family of four.

Those thresholds may strike Alaskans as low. And there's at least one reason. The Census Bureau doesn’t take into account cost of living or the state’s generally higher per-capita wages. Alaska's minimum wage, for instance, is $7.75 per hour, 50 cents higher than the federal standard, and many of its industries are seasonal in nature. The American Community Survey also only considers the money economy and doesn't translate subsistence food into cash equivalents.

Alaska cost of living is generally higher than the rest of the country's. In the year 2011, for example, the U.S. Office of Personnel Management set its non-taxable cost of living allowance in Alaska's three major urban areas (Anchorage, Fairbanks and Juneau) at 10.68 percent, and in the rest of the state at 12.28 percent, and adds taxable "locality pay" bringing the total adjustment across the state up to between 22 and 26 percent. Across much of Alaska, store-bought food and fuel are dramatically more expensive than they are in the Lower 48. And, perhaps fittingly, some of the most expensive places to live in Alaska are also some of the most subsistence-reliant places.

Alaska's low rate of poverty in 2010 may not indicate that we’re doing better relative to the rest of the country. It may simply indicate what many already know: It's harder to live at an equivalent lifestyle in Alaska with as little money as it takes to fall below the Census Bureau's poverty guidelines. Or harder to earn that little in the first place.

Debate has surrounded the poverty thresholds from the beginning, say Census officials. A new federal effort is under way to devise a Supplemental Poverty Measure to enhance, but not replace, the official thresholds. The White House Office of Budget and Management and other agencies provided the U.S. Census Bureau and the Bureau of Labor Statistics with starting points to devise a measurement based on more complex data to better assess economic need.

The new supplemental measurement is due to be released Nov. 7.

Contact Scott Woodham at swoodham(at)alaskadispatch.com

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