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The Research Supplemental Poverty Measure David S Johnson US Census Bureau And Visiting Scholar, Russell Sage Foundation April 2012.

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Presentation on theme: "The Research Supplemental Poverty Measure David S Johnson US Census Bureau And Visiting Scholar, Russell Sage Foundation April 2012."— Presentation transcript:

1 The Research Supplemental Poverty Measure David S Johnson US Census Bureau And Visiting Scholar, Russell Sage Foundation April 2012

2 What is Poverty?

3 National Academy of Science Panel on Poverty and Family Assistance We define poverty as economic deprivation. A way of expressing this concept is that it pertains to peoples lack of economic resources (e.g., money or near money income) for consumption of economic goods and services (e.g., food, housing, clothing, transportation). Thus, a poverty standard is based on a level of family resources (or, alternatively, of families actual consumption) deemed necessary to obtain a minimally adequate standard of living, defined appropriately for the United States today. 3

4 Supplemental Poverty Measure (SPM) Observations from the Interagency Technical Working Group - March 2, 2010 Based on NAS panel 1995 recommendations is necessarily a more complex measure than the official poverty measure, requiring more complex estimates of both poverty thresholds and household resources. Will not replace the official poverty measure Will not be used for resource allocation or program eligibility Census Bureau and BLS responsible for improving and updating the measure, and continuing research Census Report by Kathleen Short released November 7,

5 Poverty Threshold and Resources 5

6 6 Economic Unit of Analysis Official All related individuals who live at the same address Supplemental All related individuals who live at the same address Cohabitors and their relatives Coresident unrelated children who are cared for by the family (such as foster children)

7 7 Thresholds Official Measure Cost of a minimum food basket Food expenditures as a percentage of after-tax money income: 1/3 rd Families of three or more persons Separate thresholds developed for different family types 1955 Food Consumption Survey 1963 as base Updated each year with the CPI 33 rd percentile of sum of expenditures for food, clothing, and shelter, and utilities (FCSU) Consumer units with 2 children and any number of adults Adjust for differences in number of adults and children using three- parameter equivalence scale Consumer Expenditure Interview Survey (CE) Most recent 5 years of CE data Updated each year with most recent 5 years of data Supplemental Measure

8 Threshold Adjustments: by tenure and geography 8 Official No adjustments Supplemental Tenure –Renters –Owners with a mortgage –Owners without a mortgage Housing cost differences –Make adjustments by MSA and non-MSAs in each state –Five years of ACS data on rental costs for 2 bedroom units

9 Official and Research SPM Thresholds for 2 Adults and 2 Children Economic Units 9

10 Official and Research SPM Thresholds for Two Adult, Two Child Units with Geographic Adjustments:

11 Income/Resource Definition Official Gross (before-tax) cash income from all sources Supplemental Gross money income: PLUS value of near-money federal in-kind benefits for FCSU –SNAP, school lunch, WIC –Housing subsidies –LIHEAP –Tax credits (EITC). MINUS income and payroll taxes and other nondiscretionary expenses –child care, work-related expenses; –child support payments; –out-of-pocket medical care expenses, including health insurance premiums 11

12 Comparison of benefits included in the SPM vs. the official poverty measure Cash benefits in the official measure and SPM –Temporary Assistance to Needy Families (TANF) –Social Security –Supplemental Security Income –Unemployment Insurance In-kind benefits only in the SPM –Supplemental Nutritional Assistance Program (SNAP) –National School Lunch Program –Special Supplemental Nutrition Program for Women Infants and Children (WIC) –Low Income Energy Assistance Program (LIHEAP) –Housing subsidies 12

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16 Next steps Just released public use micro-data –IPUMS will provide documentation Continue research on SPM –Measurement of the poverty thresholds –Geographic adjustments –Collection and valuation of necessary expenses, such as medical and commuting expenses –Adjustments for under-reporting of benefits, expenses, and the sources of cash income Release 2011 research SPM in November Continue research on producing SPM on ACS and SIPP 16

17 For More Information: 17


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