Poverty & Hunger Myths

It’s hard to scroll through headlines these days without coming across stories about poverty and hunger problems in the U.S.

Consider this recent article from the San Francisco Chronicle:

1 in 6 Americans in poverty, new formula shows

The level of poverty in America is even worse than first believed.

A revised formula for calculating medical costs and geographic variations show that approximately 47.4 million Americans last year lived in poverty, 7 million more than the government's official figure.

The disparity occurs because of differing formulas the Census Bureau and the National Academy of Science use for calculating the poverty rate. The NAS formula shows the poverty rate as 15.8 percent, or nearly 1 in 6 Americans, according to calculations released this week.

That's higher than the 13.2 percent, or 39.8 million, figure made available recently under the original government formula. That measure, created in 1955, does not factor in rising medical care, transportation, child care or geographical variations in living costs. As a result, official figures released last month by the Census may have overlooked millions of poor people, many of them 65 and older.

Never mind that the article completely neglects to define what living in poverty actually means. But how bad is it really? I admit I probably live a somewhat sheltered life, but are things really that bad for so many?

Take the often quoted statistic that “one in eight Americans is struggling with hunger.” Is this really accurate?

In his article, “Is America Struggling with Hunger?” Jeremie T.A. Rostan answered where that “one in eight” comes from and what it means.

To quote Rostan:

…The now-famous statistic comes from the annual Food Security Survey (FSS) of the United States Department of Agriculture. The first thing to point out is that this level of hunger is not new: contrary to what one may infer from the current campaign, the recent economic crisis has little to do with it. In fact, while food insecurity in America has increased slightly under recent economic conditions, it has been more or less stable for the last 15 years, affecting around 11 percent of households.

Another interesting tidbit of information is that until 2005, the FSS divided food insecurity into "food insecurity without hunger" and "food insecurity with hunger." It then replaced those labels, without any change in their statistical definition, with "low food security" and "very low food security," respectively. Thus, the famous "one-in-eight" hungry Americans include all Americans living in households that, until 2005, were described as food insecure, but without hunger.

So, just how many Americans do face hunger? Well, households with "very low food security" have represented a consistent third of all food-insecure households in past years — around 4 percent of total households. Yet, this still does not mean that one in twenty-five Americans struggles with hunger.

Indeed, what do these statistical categories mean? This question is essential, because it is only deceptive definitions that allow activists and the mass media to foster the myth that "one in eight Americans is struggling with hunger."

In the survey, households were counted as having low food security if they reported, for instance, that in the past year they had been "worried whether [their] food would run out before [they] got money to buy more."

This is a good description of an obviously very unsatisfying condition: a feeling of insecurity concerning food. But it does not imply and must not be confused with actual insecurity concerning food, i.e., actual threats to one's ability to afford food.

Other criteria were the incapacity to afford "balanced meals," or the need to rely on a "few kinds of low-cost food." Moreover, such conditions need not be a household's constant situation, but only the case "sometimes" during the past year.

Once again, a feeling of insecurity, or the dependence on cheap food is certainly very undesirable. Still, it seems an outright lie to describe as "struggling with hunger" those households (accounting for two-thirds of all food-insecure households) which reported "few, if any, indications of reduced food intake" at anytime during the year.

What about households with very low food security? The distinction between low and very low food security can best be described as a distinction between subjective and objective food insecurity.

The "defining characteristic" of households with very low food security "is that, at times during the year, the food intake of household members is reduced and their normal eating patterns are disrupted because the household lacks money and other resources for food."

Now, even this hardly fits in the definition of hunger as formulated by the Committee on National Statistics: "a potential consequence of food insecurity that, because of prolonged, involuntary lack of food, results in discomfort, illness, weakness, or pain that goes beyond the usual uneasy sensation."

In fact, households with "very low food security" include all those that, because of reduced food intake, sometimes felt the "usual uneasy sensation" of hunger — not hunger in the sense of a day-to-day struggle to maintain one's health and strength.

Likewise, publicizing the disastrous situation of America in the face of hunger, activists obviously point out the case of children. Yet, a close look at the actual data reveals that less than 1 percent of households with children had very low food security among children.

One would expect food insecurity to be closely linked to household resources. However, half of the households categorized as having very low food security have incomes well above the poverty line. "On the other hand," the 2005 report states, "many low-income households (including almost two-thirds of those with incomes below the official poverty line) were food secure." Indeed, only 15 percent of households with incomes below the poverty line have very low food security.

This means that 2 percent of all American households sometimes feel the "usual uneasy sensation" of hunger due to a lack of economic resources — and the vast majority of those with children manage to spare them from hunger.

Certainly, this constitutes a problem; even more certainly, the truth is far from the collective-emergency myth that "one in eight Americans is struggling with hunger."

So what’s the point of that lengthy but, in my mind, necessary quote?

The point is that politicians and special interest groups use bogus statistics like the “one in eight” to pull at the heartstrings of the public and more easily extract their wealth for personal gain. Only armed with the truth do you stand a chance at fighting back.

Chris Wood
Casey Research, LLC

Media Watch Dogs

It amazes me that the so-called "media" kisses ass to the IOTUS.  Maybe it shouldn't.  After all, these "journalists" come from the ivy covered halls of our colleges and universities seething with leftist, socialists and commies.  A journalist is suppose to investigate and logically put the facts together...not have their collective noses up an orifice.  Keep reporting the news, FOX.

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FACT CHECK: Health insurer profits not so fat

By CALVIN WOODWARD, Associated Press Writer

WASHINGTON – Quick quiz: What do these enterprises have in common? Farm and construction machinery, Tupperware, the railroads, Hershey sweets, Yum food brands and Yahoo? Answer: They're all more profitable than the health insurance industry.

In the health care debate, Democrats and their allies have gone after insurance companies as rapacious profiteers making "immoral" and "obscene" returns while "the bodies pile up."

Ledgers tell a different reality. Health insurance profit margins typically run about 6 percent, give or take a point or two. That's anemic compared with other forms of insurance and a broad array of industries, even some beleaguered ones.

Profits barely exceeded 2 percent of revenues in the latest annual measure. This partly explains why the credit ratings of some of the largest insurers were downgraded to negative from stable heading into this year, as investors were warned of a stagnant if not shrinking market for private plans.

Insurers are an expedient target for leaders who want a government-run plan in the marketplace. Such a public option would force private insurers to trim profits and restrain premiums to compete, the argument goes. This would "keep insurance companies honest," says President Barack Obama.

The debate is loaded with intimations that insurers are less than straight, when they are not flatly accused of malfeasance.

They may not have helped their case by commissioning a report that looked primarily at the elements of health care legislation that might drive consumer costs up while ignoring elements aimed at bringing costs down. Few in the debate seem interested in a true balance sheet.

But in pillorying insurers over profits, the critics are on shaky ground. A look at some claims, and the numbers:

THE CLAIMS

_"I'm very pleased that (Democratic leaders) will be talking, too, about the immoral profits being made by the insurance industry and how those profits have increased in the Bush years." House Speaker Nancy Pelosi, D-Calif., who also welcomed the attention being drawn to insurers' "obscene profits."

_"Keeping the status quo may be what the insurance industry wants their premiums have more than doubled in the last decade and their profits have skyrocketed." Maryland Rep. Chris Van Hollen, member of the Democratic leadership.

_"Health insurance companies are willing to let the bodies pile up as long as their profits are safe." A MoveOn.org ad.

THE NUMBERS:

Health insurers posted a 2.2 percent profit margin last year, placing them 35th on the Fortune 500 list of top industries. As is typical, other health sectors did much better — drugs and medical products and services were both in the top 10.

The railroads brought in a 12.6 percent profit margin. Leading the list: network and other communications equipment, at 20.4 percent.

HealthSpring, the best performer in the health insurance industry, posted 5.4 percent. That's a less profitable margin than was achieved by the makers of Tupperware, Clorox bleach and Molson and Coors beers.

The star among the health insurance companies did, however, nose out Jack in the Box restaurants, which only achieved a 4 percent margin.

UnitedHealth Group, reporting third quarter results last week, saw fortunes improve. It managed a 5 percent profit margin on an 8 percent growth in revenue.

Van Hollen is right that premiums have more than doubled in a decade, according to a Kaiser Family Foundation study that found a 131 percent increase.

But were the Bush years golden ones for health insurers?

Not judging by profit margins, profit growth or returns to shareholders. The industry's overall profits grew only 8.8 percent from 2003 to 2008, and its margins year to year, from 2005 forward, never cracked 8 percent.

The latest annual profit margins of a selection of products, services and industries: Tupperware Brands, 7.5 percent; Yahoo, 5.9 percent; Hershey, 6.1 percent; Clorox, 8.7 percent; Molson Coors Brewing, 8.1 percent; construction and farm machinery, 5 percent; Yum Brands (think KFC, Pizza Hut, Taco Bell), 8.5 percent.

___

Associated Press writer Tom Murphy in Indianapolis contributed to this report.

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