The U.S. Census Bureau recently announced plans to publish a new poverty measure in conjunction with the traditional measure, a move that can shed additional light on vulnerable populations and how current policies are serving them. While the new measure will not replace the current one in policies and determining program eligibility and funding, it will reveal a more nuanced view of the experience of lower-income Americans.
The standard measure, first published in 1964 as part of Lyndon B. Johnson’s War on Poverty, calculates a federal poverty threshold based on food expenditures as determined by the “thrifty food plan” developed by the U.S. Department of Agriculture. The measure is quite simple; it presumes that food expenditures should make up a third a household’s budget, so it simply multiplies the amount allowed under the thrifty food plan by three. Families are considered poor if their household income falls below this level. While the threshold has been continually adjusted to account for inflation, it does not account for regional differences. Even more problematic is that over the past half-century food prices have dropped relative to expenses such as housing; given that housing costs have soared since the 1960’s, the current measure does not accurately capture the financial strain of some families.
The new measure is based on different calculations of necessary spending and family resources. Household spending includes the costs of food, housing, utilities, and clothing, as well as a little bit extra. Family resources include not only income, but also in-kind benefits such as food stamps. The resource measure also subtracts taxes and tax credits, work expenses such as commuting costs and childcare, and out-of-pocket medical expenses to represent the family’s actual ability to cover the expenses listed above. This more accurate and thorough measure acknowledges the complexity of resources and spending, and it allows for geographic adjustment such as greater costs in places with more expensive housing.
Scheduled to be released annually starting in fall 2011, this new measure will help policy evaluation in three major ways. First, it will help determine if all vulnerable populations are being reached. Second, by including additional measures of needs and resources, researchers and policy makers can better analyze whether assistance programs are mitigating families’ experiences of poverty, such as the difference food stamps make to a family. Third, the measure will show how much necessary expenses add to a family’s burden. By extending beyond food costs to include housing, out-of-pocket medical expenses, and utilities, policy makers can identify areas where the poor need the most help to fulfill their families’ needs.
As explored in an issue of The Future of Children that focuses on antipoverty policies, these types of governmental assistance for child care, health care, and education are critical for needy families. The Census’s new poverty measure allows a new insight into these issues and interventions and can provide a powerful new tool for analysis in the coming years.
For more details, see the federal government’s working group report from March 2010: http://www.census.gov/hhes/www/povmeas/SPM_TWGObservations.pdf