How Should We Measure Community and Household Economic Conditions?

One of the fundamental measures for CED officials to track is a community’s economic condition. This issue of measuring economic condition, whether for an entire community or a single household, has taken on a central role in policy discussions recently, ranging from an emphasis on income inequality in academic research, to social movements, to political discussions on reforming anti-poverty social safety net programs such as Medicaid and the Supplemental Nutrition Assistance Program (SNAP). It is also part of the discussion in new analysis of the types of jobs coming to North Carolina, which is finding that the state is missing out on middle-class wage job growth.

In many instances, official government measures such as the poverty, unemployment, and related social safety net participation rates are used to reflect local economic condition.  These measures have long been recognized as flawed and/or limited – they were established in the 1960s and do not take into account cost of living differences across communities or what people purchase or need.  Food was a major part of household purchases at the time the poverty measure was developed, but it is less so now, and the threshold itself between what was ‘poverty’ and what was not was somewhat arbitrary.

And at the time, the measure indicated that poverty touched many more people in our communities.  For example, at the time the measure was adopted, it represented 50 percent of median income.  It now represents 30 percent, resulting in a stricter interpretation of what is considered to be the line between being in or out of poverty.  In effect, our conception of poverty is based on a view that originally captured a much broader reflection of quality of life.  Now, our measures still refer to identifying the ‘poor’, but capture only the poorest of the poor.

Some policy discussions in communities refer to those in poverty as only those participating in government programs, but that does not capture the extensive work done by the nonprofit sector in meeting basic human needs.  If we rely on these standard government statistics on poverty, CED officers could be presenting an incomplete picture to decision-makers.

Ultimately, what policy-makers and practitioners need to know about economic condition at the household level in their communities is, can people meet basic needs?  For researchers, the question is whether there is an approach that provides a more complete picture than is being currently used. Some practitioners and researcher are exploring alternative approaches using multi-dimensional measures of material deprivation.  In other words, instead of measuring income coming into a household, measuring whether a family can put food on the table or a roof over one’s head.

In future blogs, I’ll be exploring how other communities in the U.S. and abroad are using this different approach, and whether or not it presents a different picture for North Carolina, but the fact that a new conversation is happening indicates there is a disconnect between official measures and life on main street.