The Research Supplemental Poverty
Measure
David S Johnson
US 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
Supplemental
• All related individuals who • All related individuals who
live at the same address
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
Supplemental Measure
•
•
•
•
•
•
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 “threeparameter” equivalence scale
Consumer Expenditure Interview
Survey (CE)
Most recent 5 years of CE data
Updated each year with most
recent 5 years of data
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Threshold Adjustments: by tenure and geography
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 and Research SPM Thresholds for
2 Adults and 2 Children Economic Units
$30,000
Supplemental Poverty Thresholds
$25,000
$23,854
$21,756
$24,343
$24,450
$25,018
$23,874
$24,391
$22,113
$20,298 $20,590
$20,000
2009
$15,000
2010
$10,000
$5,000
$0
Official
Overall
Owners with
mortgages
Owners without
mortgages
Renters
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Official and Research SPM Thresholds for Two Adult, Two
Child Units with Geographic Adjustments: 2010
Supplemental Poverty Thresholds
40,000
$34,152
35,000
$30,733
30,000
25,000
$24,343
$22,113
20,000
$17,060
15,000
10,000
5,000
0
Official
SPM - overall
Nonmetro North
Dakota - No
mortgage
DC Metro Area Renter
San Jose, CA Homeowner with
mortgage
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Income/Resource Definition
Official
• Gross (before-tax) cash
income from all sources
Supplemental
•
•
Gross money income:
PLUS value of near-money
federal in-kind benefits for FCSU
–
–
–
–
•
SNAP, school lunch, WIC
Housing subsidies
LIHEAP
Tax credits (EITC).
MINUS income and payroll
taxes and other nondiscretionary
expenses
– child care, work-related expenses;
– child support payments;
– out-of-pocket medical care
expenses, including health
insurance premiums
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Comparison of benefits included in the SPM vs. the
official poverty measure
• Cash benefits in the official measure and SPM
–
–
–
–
Temporary Assistance to Needy Families (TANF)
Social Security
Supplemental Security Income
Unemployment Insurance
• In-kind benefits only in the SPM
– Supplemental Nutritional Assistance Program (SNAP)
– National School Lunch Program
– Special Supplemental Nutrition Program for Women Infants and
Children (WIC)
– Low Income Energy Assistance Program (LIHEAP)
– Housing subsidies
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Aggregate Additions and Subtractions for Poor SPM Groups:
2009 and 2010
35.0
30.0
billions$
25.0
20.0
15.0
2009
2010
10.0
5.0
0.0
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Poverty rates for all people and by age group:
2010
25.0
20.0
Percent
15.0
10.0
5.0
0.0
Official**
SPM
All People
15.2
16.0
Under 18 years
22.5
18.2
18 to 64 years
13.7
15.2
65 years and older
9.0
15.9
**Includes unrelated individuals under age 15.
Source: Current Population Survey, 2011 Annual Social and Economic Supplement.
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SPM rates for all people and by age group: 2009
and 2010
20.0
18.0
16.0
percent poor
14.0
12.0
10.0
8.0
6.0
4.0
2.0
0.0
SPM 2009
SPM 2010
All People
15.3
16.0
Under 18 years
17.3
18.2
18 to 64 years
14.4
15.2
65 years and older
15.5
15.9
**Includes unrelated individuals under age 15.
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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:
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