A Different Look at How to Measure Poverty

Most of us know what poverty “looks like”—such as being homeless or hungry. But what we may not realize is that poverty is a specific income line defined by the federal government. The line differs depending on how big your family is and is based the cost of food for a family of four in the 1950’s. That formula is updated annually for inflation, but has basically stayed the same for nearly 50 years.

Researchers familiar with the poverty measure tend to agree that it is out of date and leaves out some vital information. It does not tell us whether our anti-poverty programs like the Supplemental Nutrition Assistance Program (SNAP, formerly known as food stamps) are helping lift families out of poverty. It also doesn’t take into account other expenses that can dramatically affect a family’s financial well-being, like child care or medical expenses.

In response to these concerns, the Census Bureau developed an experimental measure intended to provide a more complete picture of what contributes to poverty. The Supplemental Poverty Measure differs from the Official Poverty Measure in many ways, such as including a broader range of expenses necessary to make ends meet (e.g., food, shelter, medical expenses, payroll taxes) and accounting for a broader range of resources such as income from tax credits and federal in-kind benefits (e.g., food stamps and housing subsidies).

When comparing the Supplemental Poverty Measure to the Official Poverty Measure, national data show that child poverty rates are lower with the SPM, while poverty rates for working-age adults and seniors are higher. The new measure shows poverty among the elderly to be more of a problem, primarily due to expenses such as rising out-of-pocket medical costs. In contrast, Supplemental Poverty Measure’s rate for children is lower, largely due to the success of nutrition, EITC, and child care subsidy programs that protect children from poverty.

US supplemental pov rates

And for the first time in 2011, we now have state-level data for the Supplemental Poverty Measure. Twenty-six states, including Texas, had lower poverty rates under the SPM than the Official Measure. While they do not interpret Texas’ data specifically, the Census Bureau explains that across these states, lower rates may reflect lower housing costs, more renters versus home owners, or more generous non-cash benefits (the latter being rather unlikely for Texas).
Texas supplemental pov rates

The benefit of including the supplemental measure in the national poverty conversation is that it shows both the impact of rising costs such as medical out of pocket expenses (particularly for seniors) and the success of our safety net programs (e.g., food stamps and housing subsidies) in helping lift families out of poverty (particularly for children). For more information, see Figure 3 in the Census Bureau’s report.

As lawmakers tackle federal and state budget challenges, it is essential that they keep in mind how many people depend on these programs to protect them from poverty.

It is important to note, however, that the supplemental measure is considered an “experimental measure” and will not replace the official poverty measure and will not be used to determine eligibility for federal programs. For now, it is a tool that provides context to the national conversation about family deprivation.

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