This week the federal government released a new “Supplemental Poverty Measure.” It doesn’t replace the current calculation, but it “provides us a different angle on who is in economic need,” according to Rebecca Blank, U.S. Commerce Department undersecretary for economic affairs.
The official poverty measure – developed nearly 50 years ago – took one analyst’s guess at a family’s cost for food and multiplied it by three. Simple, right? Maybe…too simple? Even if it was true in 1964, today’s American families spend less of their income on food and more on necessary services.
The new number includes the cost of child care, clothing, utilities, housing, health care, and transportation.
The official measurement of a family’s income only counts income and cash benefits (like social security). The new number includes other safety net services – food stamps, school lunches, tax credits, housing, and home energy subsidies.
Finally, the new measurement takes some regional cost-of-living differences into account, whereas the official measure does not.
What does the revamped poverty measure tell us?
More Americans – 46.6 million – are living in poverty.
Specifically, the new measure counts 16 percent of the country as impoverished compared to 15.2 percent under the official measure. But these 46.6 million aren’t the same families as before plus a few more – many of them are different people.
More elderly Americans are living in poverty. The inclusion of medical expenses helps grow the percentage of impoverished seniors from 9 percent to 15.9 percent.
However, fewer children are living in poverty – because of the inclusion of household resources, particularly subsidies from government programs and tax credits. Childhood poverty drops to 18.2 percent from 22.5 percent. Although – regardless of which measure you use – childhood poverty is still on the rise. Childhood poverty dips in the supplemental measure in large part because families are receiving safety net services intended to keep them out of poverty.
Among ethnic groups, the recalculation decreases poverty measurements in African-American households, but reveals higher rates of poverty among white, Asian, and Latino households.
The poverty rates also reveal geographic differences – both between urban and rural and regions of the U.S. Poverty rates are higher for households in metropolitan areas and in the Northeast and West – which have higher housing costs. Poverty rates in rural areas and the Midwest and South decline.
The number of people living in poverty has vast implications for distributing funding for a number of federally funded programs and could reshuffle funding allocations amongst states. However, the new supplemental measure will be used solely for research, at least for now. Many have been critical of the antiquated formula used to calculate the official measure. Only time will tell if the supplemental measure will spur further conversation about poverty and how to better track poverty rates and provide services in this country.