Protect Vermonters in poverty

Thousands of Vermonters are in danger of losing critical public benefits if proposed changes to national poverty thresholds are approved. The federal Office of Management and Budget (OMB) is exploring the impacts of using a lower inflation rate when updating the Official Poverty Measure (OPM), used by the U.S. Department of Health and Human Services to create poverty guidelines that regulate the receipt of many public benefits. They are accepting comment on the proposal  until 11:59 PM on Friday, June 21, 2019. Public Assets filed comments earlier this week.Reducing the poverty threshold, which the OMB proposal effectively does, damages an already fragile safety net.

The OMB proposal will make it appear as if fewer people in the U.S. are living in poverty, when in fact more people will be experiencing material hardship. The proposed change would be problematic because:

• The current poverty threshold is already too low.
• Lower inflation underrepresents cost of living changes for low-income households.
• Fewer people will qualify for needed benefits.

The current poverty threshold is already less than what families need to make ends meet. The poverty threshold in 2018 for a family of four was $25,465, while Vermont’s Joint Fiscal Office estimated that a family of four needed $57,404 to meet their monthly expenses last year. That means there are many Vermonters beyond the approximately 70,000 officially living in poverty that struggle to make ends meet.

The magnitude of the OPM’s inaccuracy increases annually as the current inflation adjustment does not reflect low-income Vermonters’ actual cost increases. For example, families with low income pay a higher percentage of their incomes for housing than upper-income families do, so housing costs play a bigger role in their annual cost of living increases. From 2006-2016 the cost of Vermont’s rural housing, where most people living in poverty reside, grew by 30.9 percent while general inflation increased by 19.3 percent.

The proposed lower rate of inflation will make this problem worse. The alternatives proposed by the OMB assume that if prices increase for goods, households will substitute cheaper products. However, households with few resources often are already buying the cheapest products. With 75 percent of those living in poverty in Vermont in rural areas, transportation and access to reliable internet further limit households’ access to markets with cheaper products.

The OMB proposal means that an increasing number of the Vermonters living in poverty will no longer qualify for public benefits, including food, medical, childcare, and heating assistance when administrative poverty guidelines are updated based on the OPM. More families will struggle to make ends meet. This will impact kids receiving healthy meals at schools, and elders who rely on prescription assistance. And it will disproportionately impact youth, those with disabilities, and people of color, as these people live in poverty at the highest rates in Vermont and the U.S. overall.

Reducing the poverty threshold, which the OMB proposal effectively does, damages an already fragile safety net.