Poverty Rates Trend Lower

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Poverty rates declined last year for both the overall southwestern Pennsylvania population and among children in the region, according to recent U.S. Census Bureau American Community Survey data.

The annual overall poverty rate for the seven-county Pittsburgh Metropolitan Statistical Area fell from 12.3 percent in 2015 to 10.8 percent in 2016. The decrease dropped the Pittsburgh MSA slightly below the average poverty rate for the 15 Pittsburgh Today benchmark regions.

Among benchmark regions, Minneapolis has the lowest poverty rate at 8.8 percent. Detroit had greatest percentage of people living in poverty at 14.9 percent.

The poverty rate is the percentage of people whose annual incomes are below federal poverty thresholds. Income includes money from cash assistance programs, such as Temporary Assistance for Needy Families and Supplemental Security Income. Other non-cash assistance is not counted as income, including food stamps program, housing subsidies and low-income tax credits, such as the Earned Income Tax Credit.

Federal poverty thresholds vary by family size. In 2016, the poverty threshold for a family of four was an annual household income of $24,563. The same thresholds are used throughout the United States and don’t account for differences in regional costs, which can diminish the buying power of families when they rise.

“The most confident thing I can say about the poverty rate is that it looks great, but it doesn’t tell the whole story,” said Anita Zuberi, assistant professor of sociology at Duquesne University. “I would caution about the increase in expenditures through health care and housing, which are not captured in the official poverty rate and might not appropriately represent the lived experience of the poor, especially in Allegheny County and the City of Pittsburgh.”

 Children in poverty

Perhaps even more significant than the decline of overall poverty is the decline in the child poverty rate in the Pittsburgh region—an indicator that has been a black mark for the region since the recession. The percentage of children under age 18 living in poverty dropped 3 percentage points from 17.4 percent in 2015 to 14.4 percent in 2016.

Child poverty rates aren’t just falling in Pittsburgh. Nationally, child poverty rates are at a record low in 2016, according to a report by the Center on Budget and Policy Priorities, a nonpartisan, Washington-based think tank. The data is based on the supplemental poverty measure, which unlike the federal poverty measure, includes food stamps and the EITC in calculating income.

Economic health matters

The reasons for the decline are complex and even puzzling to researchers. But a robust economy affecting a wide range of income brackets is key factor.

A strong economy even in the low-wage sectors can signal a decline in the poverty rate according to Zuberi and the Center on Budget and Policy Priorities report. With a labor market at almost full employment, simple competition among employers may be starting to drive up wages even for low-income workers.

Social safety net programs, such as Medicaid health insurance, have been shown to reduce out of pocket spending for those living in poverty and contribute to lowering poverty rates, according to a 2013 report published in the Journal of Health Economics. The study reported that reducing out-of-pocket spending is particularly helpful in lowering child poverty rates.

Other demographic factors such as population migration or women living in poverty having fewer children could also affect the poverty rate.

Some more vulnerable

Despite an overall decline in the poverty rate, disparities in the region persist. Children, the elderly, female-headed households, people with disabilities, veterans and people of color are the most at risk for living in poverty in the region, according to a 2014 report on poverty and income insecurity in the Pittsburgh Metropolitan Statistical Area by the Urban Institute.

The poverty rate among whites in the Pittsburgh MSA was 9 percent, for example, while the poverty rate for African Americans was 26 percent, according to the recent Census Bureau data.

“The current direction of poverty programs from the government is to make sure people are working,” said Zuberi. “The only way we’re going to see a decline in the poverty measure is if we see an increase in wages or we provide more supports for families with children that will allow parents to work.”