The poverty rate drops in the midst of a crisis. How is that possible? The response from Louis Maurin, director of the Observatory of Inequalities.
The figures have not yet been published, but they will be in a few days by Insee, and we can place our bets. In 2013 [1], as in 2012, poverty decreased. You read that correctly. Not by much, but the indicator could drop from 14 to 13.5%, half a percentage point, as in 2012 [2].
How can poverty decrease in the midst of a crisis? The event is surprising. In 2013, the number of job seekers increased by 220,000 according to Pôle emploi, and the number of people receiving social benefits increased by 170,000 according to the Ministry of Social Affairs. The decrease is not the result of the anti-poverty plan which includes very few concrete measures, but – paradoxically in the history of statistics –, the result of the worsening crisis, which affects an increasingly large segment of the population.
To fully understand the subtlety of the phenomenon, we must examine the method of calculating the poverty threshold. In France – and in Europe in general – this threshold is measured relative to the median standard of living, which separates households into two groups, half earn more, and half earn less. However, the crisis is not only affecting the poorest, but also the middle classes who live with about 1,600 euros per month for a single person. In the private sector, but also in the public sector where salaries are decreasing, especially in 2013.
Thus, the median standard of living is dropping. As a result, the poverty threshold likewise decreases, and some households then cease to be considered poor even though their incomes have not changed. This effect, at least at the 60% threshold, is stronger than the impact of the increasing number of households whose incomes are falling (for example, due to unemployment) and who fall below this threshold. In the end, poverty – as measured – decreases [3].
The relative poverty rate, which was previously undisputed among all French experts, is starting to stand out in the midst of a recession and spark debate. This indicator does not measure an absolute level of poverty but the inequalities between the bottom of the income scale and the median income. During the crisis, these inequalities between the poor and middle classes flatten a bit. That is precisely what this story of the decreasing poverty rate tells us.
Do we at least have alternative indicators? Once ignored, we are now rediscovering poverty rates at 50% or even 40% of the median, further distant and less sensitive to the decline in the median standard of living. But, ultimately, they function the same way: whether the threshold is at 40, 50, or 60%, it decreases.
Can we at least rely on indicators of poverty in “living conditions”? These indicators measure deprivations: they have been very trendy in recent years, but they too are failing. Deprivations are also decreasing in the midst of a crisis. Partly because our social model protects the most vulnerable, but mainly, as explained by an Insee working paper, these data constitute a mishmash that is difficult to grasp, integrating too many subjective criteria, including affluent populations who claim they do not have enough money. Unless you are the richest, you are always someone else’s poor. Even the National Observatory of Poverty and Social Exclusion, which previously firmly believed in these indicators, indicates that the “choice of items [that make up the indicator] cannot be considered as having an unchallengeable consensus”. Understand that they are not worth much. They should be shelved.
This situation once again illuminates the inadequacy of the debate on tools for measuring poverty, used as cash equivalent. The Observatory of Inequalities had already raised the alarm, without much noise, about the risks of the relative poverty indicator at 60% of the median standard of living and the exaggeration of the level of poverty. We are beginning to see the start of the problem. The current situation should at least lead us to question the necessity of defining an absolute threshold: how much must one earn to live decently, and therefore, what does one need? Not to replace the relative rate – because ultimately poverty is measured in relation to social norms and standards of living –, but to complement it.
The data published by Onpes on the income required for “effective participation in social life”, based on a “consensus of enlightened experts”, lean in this direction. Certainly, the results may raise eyebrows: below 1,400 euros for a single person, one would not “effectively participate in social life”. Strange concept of participation: half of single people live with less than that. The indicator is so broad that it becomes meaningless.
The idea of defining a minimum budget – previously very criticized [4] – goes in the right direction [5]. This will not entirely solve the problem, as the threshold will need to be raised over time, in line with the country’s economic growth: measuring poverty in France in 2015 with the needs of the 1950s would make no sense. At the very least, the threshold should not fall during a crisis if we do not adjust basic needs based on every fluctuation in income. This measure could be used to complement a relative poverty index, allowing for debate on the essential goods and services necessary to live without falling into the overly broad concept of “participation in social life”, which is much more complex.
Finally, we should delve into the details of data on deprivations in terms of living conditions. Being poor is indeed about being “deprived of”. These data provide concrete elements: who does not have enough to buy certain goods or services? The survey is conducted annually by Insee, but it is not published as the institute lacks the human resources to do so. Thus, a wealth of information is not utilized. However, a small portion is available on the European Union’s Eurostat website. For example, in France, 2.5% of the population cannot afford a computer, 0.5% have neither a bath nor shower, and 28% cannot afford a week’s vacation away from home (2013 data). There is much to say about the ambiguity of these indicators [6], but if improved, they could describe the lack of access to a set of goods and services collectively deemed essential.
Louis Maurin
Observatory of Inequalities
Notes
[1] In France, the poverty rate is known two and a half years later.
[2] At the threshold of 60% of the median standard of living.
[3] Incidentally, the “time-anchored” poverty threshold (adjusted only for inflation), proposed under the previous majority and also strongly criticized, would not have decreased either.
[4] This is the approach in the United States, where the threshold is rarely updated.
[5] The National Union of Family Associations has long calculated “typical budgets” for various types of families that correspond to the minimum for a “decent” life, one step below those of Onpes.
[6] For example, “far” does not mean much in the response about vacations, and respondents often answer based on their situation (they do not go away) rather than their precise financial capacity.
