A Look at the New Supplemental Poverty Measure

November 15, 2011
Jenny Clary
Social Impact Research Center

On November 7, 2011, the U.S. Census Bureau released the Research Supplemental Poverty Measure (SPM), developed based on recommendations from the National Academy of Sciences (NAS) Panel on Poverty and Family Assistance. The Supplemental Poverty Measure is an effort to build on the current federal poverty measure—which many experts agree is outdated and underestimates poverty—and take into account the impact of government benefit programs and tax credits. Though the SPM will not replace the current official poverty measure or be used to determine resource allocation or program eligibility, this release marks an important development in how we measure poverty and understand the impacts of programs designed to alleviate poverty.

The current official poverty measure was developed in the 1960s and consists of a set of thresholds for families of different compositions and sizes which are compared to before-tax cash income to determine poverty status.  The new SPM counts more income sources beyond cash income, including tax credits and non-cash benefits such as SNAP assistance; subtracts certain expenses, such as payroll taxes and medical out-of-pocket expenditures, that reduce disposable income; and uses slightly revised poverty thresholds that vary with family composition and local housing costs. The new SPM thresholds have received criticism for being too low a measure of what it really takes to minimally make ends meet, and for being lower for some states than those of the traditional measure.

The SPM remains a work in progress, and the report from the U.S. Census Bureau identifies areas for ongoing refinement of the measure. For most groups, the 2010 SPM poverty rates are higher than official rates; though the SPM does find lower poverty rates for some groups, including children, renters, individuals living outside of metropolitan areas, and individuals covered by only public health insurance. Beyond providing new estimates of poverty and hardship, the SPM shows us the impact of government help in keeping millions of families above poverty, and highlights the swelling ranks of the “near poor” – those who are living with incomes between 100 and 150 percent of the poverty line. Analysis of 2010 Census data using the Supplemental Poverty Measure highlights the following:

  • Without government income assistance of any kind, including benefits that are counted in the traditional measure, the poverty rates in 2010 would have been nearly double what they were actually were – 28.6 percent rather than 15.5 percent.
  • SNAP benefits, if counted as income in the traditional measure, would have kept over 3 million out of poverty in 2010 – an increase from 2.2 million in 2007. Temporary expansions in maximum SNAP benefits in the 2009 Recovery Act kept 1 million people out of poverty in 2010.
  • Unemployment insurance kept 4.6 million people out of poverty in 2010.  Temporary expansions in level and duration of unemployment insurance benefits in the 2009 Recovery Act kept 3.4 million people above the poverty line.

Read the report, The Research Supplemental Poverty Measure: 2010, from the U.S. Census Bureau.

This blog was written by our guest blogger, Jenny Clary. Jenny is a Research Associate with the Social IMPACT Research Center at Heartland Alliance.

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