When do rising incomes increase child poverty?

AHC = after deducting housing costs

BHC = before deducting housing costs

‘anchored line’:

  • this is the line set at a chosen level in a reference year (now 2007), and held fixed in real terms (CPI adjusted)
  • the concept of ‘poverty’ here is – have the incomes of low-income households gone up or down in real terms compared with what they were previously?

‘moving line’:

  • this is the fully relative line that moves when the median moves (e.g. if median rises, the poverty line rises and reported poverty rates increase even if low incomes stay the same)
  • the concept of ‘poverty’ here is – have the incomes of low-income households moved closer or further away from the median?

Bryan Perry, Household Incomes in New Zealand: trends in indicators of inequality and hardship 1982 to 2014 – Ministry of Social Development, Wellington (August 2015), p. 133.

image

Source: Bryan Perry, Household Incomes in New Zealand: trends in indicators of inequality and hardship 1982 to 2014 – Ministry of Social Development, Wellington (August 2015), p. 133.

Is child poverty in New Zealand 245,000 children or 305,000 children?

If you base your estimate of child poverty on the 60% of median income after housing costs moving line, which is the number of low income households who moved further away from 60% of median income, a median which increased by 5% last year, the figure is 305,000 children after housing costs. 45,000 children are in households that is not as close to the median as last year but are not necessarily any poorer than last year in terms of money coming into the house.

If you base your estimate on the anchored line, which is the number of low income households whose income has gone up on down compared to what they were on previously,the number of children in poverty has increased from 235,000 to 245,000 after housing costs. About 10,000 children are poorer than last year – poorer enough than last year to be classified as in poverty.

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