Two Approaches to Reducing Poverty—Only One Works

White non-Hispanics will be a minority in the U.S. in 30 years, demographers say. There are four states, California, Texas, New Mexico and Hawaii, where tomorrow is a reality today. Statistics indicate that demographics are predictive of poverty levels. So, which states have less poverty?

There are two ways the federal government gauges poverty, the 50-year-old Official Poverty Measure and the new Supplemental Poverty Measure. The old poverty yardstick neither accounts for the cost of living from state-to-state, nor does it consider all government benefits, such as food stamps and housing vouchers. The U.S. Census Bureau’s new poverty measure is more comprehensive, even including work-related expenses and taxes.

The official poverty rate from 2011 to 2013 was 21.5 percent in New Mexico; 17.2 percent in Texas; 16.0 percent California; and 12.4 percent in Hawaii.

But things cost more in California and Hawaii—far more, much of which can be laid at the doorstep of liberal public policies such as restrictive zoning laws that drive up the cost of housing, burdensome regulations, and high taxes.

The Supplemental Poverty Measure counts these costs and tells a different story showing 23.4 percent of Californians in poverty—the nation’s highest rate—followed by 18.4 percent in Hawaii; 16 percent in New Mexico; and 15.9 percent in Texas, the same as the national average.

According to the Tax Foundation California’s state and local taxes were 52 percent higher than Texas’ as a share of state income in 2011; Hawaii’s taxes were 28 percent higher; New Mexico’s were 15 percent higher.

Proportionately, California had 47 percent more people in poverty per capita than Texas; Hawaii, 16 percent; and New Mexico, just under 1 percent more.

There are two competing poverty reduction concepts.

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