U.S. Census Bureau
The current poverty thresholds do not adjust for geographic differences in the cost-of-living across the nation.
The panelnoted that there are signiicantvariations across geographicareas in the cost o basic goodsand services and, in particular,or housing.To address these weaknesses, theNAS panel recommended changingthe deinition o both the povertythresholds and amily resourcesthat are compared with thosethresholds to determine povertystatus. One o the goals o the NASpanel was to produce a measure o poverty that explicitly accountedor government spending aimed atalleviating the hardship o low-income amilies. Thus, by takingaccount o tax and transer policies,such as the ood stamp program/SNAP and the earned income taxcredit (EITC), the measure wouldshow the eects o these policieson various targeted subgroups, orexample, amilies with children.The current oicial measure, whichdoes not include these beneits,yields poverty statistics that do notrelect the eects o changes inthese policies.In 1999 and 2001, the CensusBureau released reports thatpresented a set o experimentalpoverty measures based on therecommendations o the 1995 NASpanel report (Short et al., 1999;Short, 2001). Some additionalvariations on that measure wereincluded in order to shed light andgenerate discussion on the variousdimensions included in the pro-posed revision. Comparisons weremade across various demographicsubgroups in order to illustrate howtheir poverty rates were aectedby the dierent measures. Thatwork suggested that these newmeasures would identiy as poor asomewhat dierent population thanis typically described by the oicialpoverty measure. This new povertypopulation would consist o a largerproportion o elderly people, work-ing amilies, and married-coupleamilies than are identiied by theoicial poverty measure.
In March o 2010, the InteragencyTechnical Working Group onDeveloping a Supplemental PovertyMeasure (ITWG) listed suggestionsor research on the SPM. The ITWGwas charged with developing a seto initial starting points to permitthe Census Bureau, in cooperationwith the Bureau o Labor Statistics(BLS), to produce a report on theSPM that would be released alongwith the oicial measure each year.Their suggestions included:
shouldrepresent a dollar amount spenton a basic set o goods thatincludes ood, clothing, shelter,and utilities (FCSU) and a smalladditional amount to allow orother needs (e.g., householdsupplies, personal care, non-work-related transportation).This threshold should be calcu-lated with ive years o expen-diture data or amilies withtwo children using ConsumerExpenditure Survey (CE) data,and it should be adjusted (usinga speciied equivalence scale)to relect the needs o dierentamily types and geographicdierences in housing costs.Adjustments to thresholdsshould be made over time torelect real change in expendi-tures on this basic bundle o goods at the 33rd percentile o the expenditure distribution.
SPM family resources
shouldbe deined as the value o cashincome rom all sources, plus
These experimental poverty measureshave been updated regularly and are availableat <www.census.gov/hhes/povmeas/methodology/nas/index.html>, accessedSeptember 2012.
the value o in-kind beneitsthat are available to buy thebasic bundle o goods (FCSU)minus necessary expenses orcritical goods and services notincluded in the thresholds. In-kind beneits include nutritionassistance, subsidized housing,and home energy assistance.Necessary expenses that mustbe subtracted include incometaxes, Social Security payrolltaxes, childcare and other work-related expenses, child supportpayments to another household,and contributions toward thecost o medical care and healthinsurance premiums, or medicalout-o-pocket costs (MOOP).
This report presents a povertymeasure that is based largely onthe NAS Panel’s recommendations,with deviations relecting morerecent research and suggestionsrom the ITWG. Particular emphasisis on internal consistency betweenthe thresholds and resources. TheNAS Panel noted: “It is importantthat amily resources are deinedconsistently with the thresholdconcept in any poverty measure.”
The SPM, as deined by the ITWG,is an internally consistent povertymeasure that is based on spending“outlows” and money “inlows.”Spending outlows, or outlays
arethose or basic needs only: ood,clothing, shelter, utilities, andother basic necessary goods andservices. Resources include moneyincome rom all sources plus thevalue o near-money beneits thathelp the amily meet spendingneeds, less necessary expenses,like work-related expenses and
For inormation, see ITWG,
Observa- tions from the Interagency Technical Working Group on Developing a Supplemental Poverty Measure (Interagency)
, March 2010, availableat <www.census.gov/hhes/www/poverty/SPM_TWGObservations.pd>, accessedSeptember 2012.
Citro and Michael, 1995, p. 9.
For the BLS denition o expenditureoutlays, see Rogers and Gray, 1994.