A FutureOfCapitalism.com reader who liked the post on "Health Care and Income Inequality" wrote to ask for more information on other subsidies, reduced fees, and programs that also make standard measures of income inequality a joke.
The American Enterprise Institute, on the right, and the Center for American Progress, on the left, both have brief, accessible explanations of why the Census Bureau's poverty rate is inadequate.
As the Center for American Progress puts it, "because the rules don't reflect the impacts of tax policies, noncash benefits, child care assistance, and assistance with medical costs, the current measure doesn't show a reduction in poverty when such policies are expanded or an increase in poverty when they are contracted."
Or, as the American Enterprise Institute puts it, "In 2003...14 percent of households below the poverty line owned two or more cars, and 7 percent had two or more trucks."
Earlier this month the Obama administration announced plans to follow in the footsteps of the Bloomberg administration and begin reporting alternative measures of poverty, while insisting that the existing poverty measurement, "in use since the 1960s," "will remain the definitive statistical measure."
No amount of accounting for the earned income tax credit, food stamps, the value of below-market-rate housing, Medicare, or Medicaid will erase the fact that there is income inequality in America, but it may affect ideas about how extreme it is and how much it is increasing or decreasing. Besides the fact that looking at income and looking at assets can be two different things; a person can be income-poor but asset-rich.
The alternative measures of poverty don't always make it look like there is less poverty; in addition to counting non-cash income, they also tend to adjust for regional cost of living and otherwise tinker with thresholds in various ways that can make it look like there are more poor people than under the old standard poverty rate.