The Research Supplemental Poverty Measure David S Johnson US Census Bureau And Visiting Scholar, Russell Sage Foundation April 2012
Mar 31, 2015
The Research Supplemental Poverty Measure
David S JohnsonUS Census Bureau
And Visiting Scholar, Russell Sage Foundation
April 2012
What is Poverty?
National Academy of Science Panel on Poverty and Family Assistance
“We define poverty as economic deprivation. A way of expressing this concept is that it pertains to people’s lack of economic resources (e.g., money or near money income) for consumption of economic goods and services (e.g., food, housing, clothing, transportation). Thus, a poverty standard is based on a level of family resources (or, alternatively, of families’ actual consumption) deemed necessary to obtain a minimally adequate standard of living, defined appropriately for the United States today.”
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Supplemental Poverty Measure (SPM)Observations from the Interagency Technical Working Group - March 2, 2010
•Based on NAS panel 1995 recommendations•“is necessarily a more complex measure than the official poverty measure, requiring more complex estimates of both poverty thresholds and household resources.”•Will not replace the official poverty measure•Will not be used for resource allocation or program eligibility•Census Bureau and BLS responsible for improving and updating the measure, and continuing research
Census Report by Kathleen Short released November 7, 2011
http://www.census.gov/hhes/povmeas/methodology/supplemental/research/Short_ResearchSPM2010.pdf
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Poverty Threshold and Resources
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Economic Unit of Analysis
Official
• All related individuals who live at the same address
Supplemental
• All related individuals who live at the same address
• Cohabitors and their relatives
• Coresident unrelated children who are cared for by the family (such as foster children)
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Thresholds
Official Measure
• Cost of a minimum food basket• Food expenditures as a
percentage of after-tax money income: 1/3rd
• Families of three or more persons• Separate thresholds developed for
different family types• 1955 Food Consumption Survey• 1963 as base• Updated each year with the CPI
• 33rd percentile of sum of expenditures for food, clothing, and shelter, and utilities (FCSU)
• Consumer units with 2 children and any number of adults
• Adjust for differences in number of adults and children using “three-parameter” equivalence scale
• Consumer Expenditure Interview Survey (CE)
• Most recent 5 years of CE data• Updated each year with most
recent 5 years of data
Supplemental Measure
Threshold Adjustments: by tenure and geography
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Official
No adjustments
Supplemental
Tenure– Renters – Owners with a mortgage– Owners without a mortgage
Housing cost differences – Make adjustments by MSA and
non-MSAs in each state– Five years of ACS data on rental
costs for 2 bedroom units
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Official Overall Owners with mortgages
Owners without mortgages
Renters$0
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
21756
2385424450.46
20298.1499999999
23873.7922113
2434325018.26
20590.22
24390.5
20092010
Supplemental Poverty Thresholds
Official and Research SPM Thresholds for 2 Adults and 2 Children Economic Units
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Official and Research SPM Thresholds for Two Adult, Two Child Units with Geographic Adjustments: 2010
Official SPM - overall Nonmetro North Dakota - No
mortgage
DC Metro Area - Renter
San Jose, CA - Homeowner with
mortgage
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
$22,113 $24,343
$17,060
$30,733
$34,152
Supplemental Poverty Thresholds
Income/Resource Definition
Official
• Gross (before-tax) cash income from all sources
Supplemental
• Gross money income: • PLUS value of near-money
federal in-kind benefits for FCSU – SNAP, school lunch, WIC– Housing subsidies– LIHEAP– Tax credits (EITC).
• MINUS income and payroll taxes and other nondiscretionary expenses
– child care, work-related expenses; – child support payments;– out-of-pocket medical care
expenses, including health insurance premiums
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Comparison of benefits included in the SPM vs. the official poverty measure
• Cash benefits in the official measure and SPM– Temporary Assistance to Needy Families (TANF)– Social Security– Supplemental Security Income– Unemployment Insurance
• In-kind benefits only in the SPM– Supplemental Nutritional Assistance Program (SNAP)– National School Lunch Program– Special Supplemental Nutrition Program for Women Infants and
Children (WIC)– Low Income Energy Assistance Program (LIHEAP)– Housing subsidies
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SNAP
Sch
ool lunch
W
IC
Housi
ng subsi
dy/ca
p
LIH
EAP
EIT
C +/-
Tax
es b
efore
cre
dits
FIC
A
W
ork e
xpen
ses
Child
care
M
OOP
Child
support
paid
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
Aggregate Additions and Subtractions for Poor SPM Groups: 2009 and 2010
2009
2010
bil
lio
ns$
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All People Under 18 years 18 to 64 years 65 years and older
Official** 15.2 NaN 22.5 13.7 9
SPM 16 NaN 18.2 15.2 15.9
2.5
7.5
12.5
17.5
22.5
Poverty rates for all people and by age group: 2010
Per
cen
t
**Includes unrelated individuals under age 15.Source: Current Population Survey, 2011 Annual Social and Economic Supplement.
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All People Under 18 years 18 to 64 years 65 years and older
SPM 2009 15.3 NaN 17.3 14.4 15.5
SPM 2010 16 NaN 18.2 15.2 15.9
1.0
3.0
5.0
7.0
9.0
11.0
13.0
15.0
17.0
19.0
SPM rates for all people and by age group: 2009 and 2010
per
cen
t p
oo
r
**Includes unrelated individuals under age 15.Source: Current Population Survey, 2011 Annual Social and Economic Supplement.
Next steps
• Just released public use micro-data– IPUMS will provide documentation
• Continue research on SPM– Measurement of the poverty thresholds – Geographic adjustments– Collection and valuation of necessary expenses, such as
medical and commuting expenses – Adjustments for under-reporting of benefits, expenses, and the
sources of cash income
• Release 2011 research SPM in November• Continue research on producing SPM on ACS and SIPP
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For More Information: