Special blog post by Lewis Warne, an NCPA research associate.
In 2011 Congress
defunded the Supplemental Poverty Measure (SPM, an). The SPM is an alternative to the Official Poverty Measure (OPM) that has been used since the 1960s. The goal of the SPM is to provide a more comprehensive picture of poverty by including factors left out of the official measure.
The two major components of any poverty measure are the Poverty Threshold and the Resource Measure.
Poverty Threshold. The threshold is meant to establish the minimum resources that a family requires. The official poverty measure that most are familiar with bases its threshold on a basket of food goods called the “Economy Food Plan.” Prices are adjusted yearly, multiplied by three, and adjusted for family size to determine the threshold. The 2011 weighted average poverty threshold was $23,021 for a family of four.
The threshold for the Supplemental Poverty Measure is based on the 33rd percentile of spending on food, clothing, shelter, and utilities by families with two children as determined by the Census. This major change considers the population’s spending on basic goods instead of relying on a set basket of goods. The adjustments also include more sophisticated measures of family composition and new location based considerations. Overall the Supplemental Poverty Measure thresholds are more scientific and better reflect the needs of families.
Resource Measure. The Resource Measure aims to include all resources available for a family to obtain basic needs, including in-kind benefits provided by the government. It also excludes and ignores necessary expenses and taxes that cannot buy basic goods (FCSU). The SPM seeks to consider all resources available to families (see chart):
The graph below shows the difference between the Official Poverty Measure and the Supplemental Poverty Measure:
- The SPM considers about 3.3 million fewer children under 18 years in poverty, about 18.1 percent of the population compared to 22.3 percent in the OPM
- About 3.5 million more 18- to -64 year olds would be impoverished, an increase from 13.7 percent to 15.5 percent.
- The percentage of seniors in poverty would increase from 8.7 to 15.1; more than 2.5 million seniors would now be “in poverty”
The living situation of these populations might not change if the Supplemental Poverty Measure replaces the Official Poverty Measure, but it does provide a clearer picture of poverty in America.