The Census Bureau, with support from the Bureau of Labor Statistics, released its second annual report, The Research Supplemental Poverty Measure: 2011, describing research on a new supplemental poverty measure. This measure extends information provided by the official poverty measure, released Sept. 12, by explicitly including benefits from many of the government programs designed to assist low-income families and individuals.
Today’s report compares 2011 supplemental poverty estimates to 2011 official poverty estimates for numerous demographic groups at the national level. In addition, for the first time, the report presents supplemental poverty estimates for states, using three-year averages. At the national level, the report also compares 2010 supplemental poverty estimates with 2011 estimates and examines the effect of excluding individual resource or expenditure elements.
According to the report, the supplemental poverty measure rate was 16.1 percent last year, which was higher than the official measure of 15.0 percent. Neither the supplemental measure nor the official poverty rate was significantly different from the corresponding rate in 2010.
There has been a continuing debate about the best approach to measure income and poverty in the United States since the publication of the first official U.S. poverty estimates in 1964. In 2009, an interagency group asked the Census Bureau, in cooperation with the Bureau of Labor Statistics, to develop a new, supplemental measure to allow for an improved understanding of the economic well-being of American families and how federal policies affect those living in poverty.
“There are several important differences between the official and supplemental poverty measures,” said Kathleen Short, a U.S. Census Bureau economist and the report’s author. “For instance, the supplemental measure uses new poverty thresholds that represent a dollar amount spent on a basic set of goods adjusted to reflect geographic differences in housing costs. The official poverty thresholds are the same no matter where you live.”
There are two other major differences as well. The official measure includes only pre-tax money income. Income for the supplemental measure adds the value of in-kind benefits such as the Supplemental Nutrition Assistance Program, school lunches, housing assistance and refundable tax credits like the earned income tax credit. Additionally, supplemental poverty measure resources deduct from income necessary expenses for critical goods and services such as taxes, child care and other work-related expenses, and contributions toward the cost of medical care and health insurance premiums or medical out-of-pocket costs.
Estimates for States
Using three-year averages (2009-2011), the U.S. poverty rate was 15.8 percent using the supplemental poverty measure and 15.0 percent using the official measure. However, the picture in individual states varied considerably.
There are 15 states or equivalents for which the supplemental rates were higher than the official statewide poverty rates: California, Colorado, Connecticut, Delaware, the District of Columbia, Florida, Hawaii, Illinois, Maryland, Massachusetts, Nevada, New Hampshire, New Jersey, New York and Virginia.
For another 26 states, supplemental rates were lower than the official statewide poverty rates: Alabama, Arkansas, Idaho, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Michigan, Mississippi, Missouri, Montana, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma, South Carolina, South Dakota, Tennessee, Texas, Vermont, West Virginia, Wisconsin and Wyoming. Rates in the remaining 10 states were not statistically different using the two measures.
Comparing Poverty Rates for Different Demographic Groups
Unlike the current official poverty measure, the supplemental poverty measure can show the effects of tax and transfer policies on various subgroups. According to the report:
--Including in-kind benefits results in lower poverty rates for some groups. For instance, the supplemental poverty rate was lower for children than the official rate: 18.1 percent compared with 22.3 percent.
--Subtracting necessary expenses from income results in higher poverty rates for other groups. The supplemental poverty rate for those 65 and older was 15.1 percent compared with only 8.7 percent using the official measure. Medical out-of-pocket expenses were an important element for this group.
--Even though supplemental poverty rates were lower for children and higher for those 65 and older than under the official measure, the rates for children were still higher than the rates for 18- to 64-year-olds and people 65 and older. The 15.5 percent supplemental rates for 18- to 64-year-olds was not statistically different from the 15.1 percent rate for people 65 and older.
--Supplemental poverty rates were higher than the official measure for all race groups and for Hispanics, with one exception: blacks, who had a supplemental poverty rate of 25.7 percent and an official rate of 27.8 percent.
--Primarily because of geographically adjusted poverty thresholds, supplemental poverty rates differed by region. Supplemental poverty rates were higher than official rates for the Northeast and West, lower in the Midwest and not statistically different from the official measure in the South. These results reflect differences in housing costs.
The measures presented in this report used the 2012 Current Population Survey Annual Social and Economic Supplement with income information that referred to calendar year 2011 to estimate supplemental poverty measure resources.