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In early November 2011, the Census Bureau released the Supplemental Poverty Measure (SPM). By this new measure, 16 percent of the U.S. population lives in poverty—more than the official poverty number of 15.1 percent announced in September. The U.S. Census annually updates the poverty thresholds to reflect price changes. Among its many purposes, the poverty measures are used to determine financial eligibility for various income-tested federal programs.
Taking a broader view of poverty, the SPM better reflects the reality of poverty in America. For instance, among the changes, the SPM adjusts for regional differences and considers the cost of working, such as childcare. It also accounts for benefits from the government, such as food stamps and the Earned Income Tax Credit. This new measure provides a better analysis of how effective some federal programs are in helping to reduce poverty (or their ineffectiveness). For instance, the alternative measure suggests lower rates of youth poverty than the current measure and shows much greater rates of poverty for the elderly— an increase from 9 percent to 15.9 percent.
The current official poverty measure, developed in the late 1960s and based on the price of food, largely estimates poverty rates by looking at a family or individual cash income. The use of an absolute measure rather than a relative one has caused some recurring criticism. The supplemental measure will be a more complex and refined statistic, including such additional items as tax payments and work expenses in estimating family resources. The current approach to determining poverty will remain the definitive measure; the Supplemental Poverty Measure will not be used to determine eligibility for government programs. Instead, the SPM is designed as an experimental poverty measure that provides further understanding of economic conditions and trends. New questions on the Current Population Survey (CPS) Annual Social and Economic Supplement (ASEC) help to inform the SPM.
Over the last few decades there have been a series of studies and reviews of the conceptual and technical elements that make up the measure. These studies produced a large number of technical working papers and reports. Most influential on the new SPM was the National Academy of Sciences (NAS) 1995 report Measuring Poverty, which addresses a important measurement issues that are still being discussed by researchers and policy makers today.
Plans to develop a supplemental poverty measure to complement the existing official poverty statistic were announced by the U.S. Commerce Department on March 2, 2010. The measure was developed by analysts from the U.S. Census Bureau and the U.S. Bureau of Labor Statistics. Their goal was to use the best new data and methodologies to obtain an improved understanding of the economic well-being of American families and of how federal policies affect those living in poverty.
The initiative to create the new statistic was included in President Obama’s FY2011 budget proposal, but was not funded; however, research on many aspects of the SPM has already advanced. Given the importance of this initiative, the Census Bureau redistributed existing resources in order to maintain the new questions on the CPS ASEC and were able to release a new set of preliminary poverty estimates using the 2011 at a CPS ASEC end of the year.
For more information on the new Supplemental Poverty Measure, see the Pew Research Center’s “Re-Counting Poverty” at www.pewsocialtrends.org/2011/11/30/re-counting-poverty/ and for the methodology and background behind the alternative measure, see the U.S. Census Bureau’s “Poverty—Experimental Measures” at www.census.gov/hhes/povmeas/methodology/supplemental/.