The Supplemental Poverty Measure Kathleen S. Short Session: S upplemental Poverty Measure and Differential Metrics to Strengthen the Effectiveness of TANF Programs Tuesday, September 13, 2011 The 51 st Annual Workshop of the National Association for Welfare Research and Statistics Vail, Colorado
The views expressed in this research, including those related to statistical, methodological, technical, or operational issues, are solely those of the authors and do not necessarily reflect the official positions or policies of the Census Bureau. The author accepts responsibility for all errors. This paper is released to inform interested parties of ongoing research and to encourage discussion of work in progress. This paper reports the results of research and analysis undertaken by Census Bureau staff. It has undergone more limited review than official publications. 2
Measuring Poverty in the U.S. • Current Official Poverty Measure – First adopted in 1965 – Now under Office of Management and Budget (OMB) Statistical Policy Directive No. 14. – Poverty thresholds updated each year by change in Consumer Price Index (CPI) – Compares before-tax money income to thresholds – Uses Current Population Survey (CPS ASEC) • Does not account for – Provision of near-money benefits – Necessary expenses (taxes, health care, work) – Higher standards and levels of living since 1965 – Geographic price differences among regions 3
Supplemental Poverty Measure (SPM) • Observations from the Interagency Technical Working Group - March 2, 2010 • 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 • October 2011 Report with detailed estimates • Based on NAS panel on measuring poverty 1995 recommendations 4
Comparing the Official measure and SPM Threshold Concept Supplemental Measure Official Measure • Expenditures over the most recent 5 years on food, clothing, and shelter (including utilities and all • Cost of minimum food diet for a mortgage expenses) (FCSU) from two adult/two child family in 1963 the Consumer Expenditure times three to cover all other Surveys expenses 33 rd percentile – – all family units with exactly 2 children (adjusted, when needed, to be equivalent to 2 adult/2 child family unit) – plus 20 percent to cover all other expenses. 5
Threshold Adjustments: by shelter type Official Supplemental • No adjustments • Adjust by distinguishing differences in shelter expenditures by renters, owners with a mortgage, and owners without a mortgage 6
Threshold Adjustments: family size and composition Official Supplemental • Separately developed • Reference family thresholds by family type; threshold adjusted by use lower thresholds for of a three parameter elderly singles and equivalence scale, which couples assumes children need less than adults and economies of scale for larger families 7
Economic Unit of Analysis Official Supplemental • Families or unrelated • All related individuals who individuals live at the same address, any co-resident unrelated children who are cared for by the family (such as foster children), and any co-habitors and their relatives 8
Threshold Adjustments: by geographic area Official Supplemental • No adjustments • Adjust for housing cost differences using five years of ACS data on rental costs • Make adjustments by MSA and non-MSAs in each state • Continue to research inter-area price indices 9
Family Resource Definition Official Supplemental Gross money income: • Gross (before-tax) money • PLUS value of near-money federal in- income from all sources kind benefits for FCSU (e.g., SNAP, housing subsidies) and 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 ) 10
Nondiscretionary Expenses Payroll and state and federal Medical Out of Pocket income taxes Expenditures (MOOP) • Use current methods, • Use data from new CPS ASEC incorporate new CPS ASEC questions questions • investigate the pros and cons of making an adjustment for the uninsured Child care and other work related expenses Child Support Paid • Use data from new CPS ASEC • Use data from new CPS ASEC questions on child care questions to subtract child support paid from income expenses paid 11
Supplemental Poverty Measure (SPM) differs from Census experimental measures • Separate thresholds for homeowners with mortgage, homeowners without a mortgage and renters • Estimation sample for thresholds – families with two children rather than two adult/two child families at 33 rd percentile of FCSU • Use the new CPS ASEC questions to adjust income – Child support paid – Child care paid – Medical out of pocket expenditures • Geographic adjustments based on ACS and using specific metropolitan areas • New method for valuing housing subsidies 12
Additions and Subtractions: All SPM Family Groups 200.0 0.0 -200.0 $ lion -400.0 Bil -600.0 -800.0 -1,000.0 Taxes Work Child School Housing SNAP WIC before EITC FICA expense Childcar MOOP support lunch subsidy/c LIHEAP credits s e paid ap Series1 33.1 9.2 1.9 19.4 1.6 -891.9 33.7 -471.2 -193.5 -34.9 -436.6 -16.4
Additions and Subtractions: Poor* 30.0 20.0 10.0 $ Billion 0.0 -10.0 -20.0 -30.0 Taxes Work Child School Housing SNAP WIC before EITC FICA expense MOOP support lunch subsidy/c LIHEAP Childcare credits s paid ap Series1 22.3 3.6 1.0 14.9 0.8 -4.4 13.1 -8.9 -10.9 -1.3 -26.9 -1.0 18
Third Poverty Measure • Relative poverty measure (OECD) • Unit of analysis = household • Equivalence scale = square root of household size • Disposable income = Y - t • Threshold = 50% of median equivalised household disposable income 15
25.0 Poverty rates: OECD Social Indicators 20.0 15.0 10.0 5.0 0.0
Thresholds Two Adult and Two Child Unit • Official $21,756 • Relative $28,901 • SPM – Owner with mortgage $24,695 – Owner free and clear $20,481 – Renter $24,364 17
Poverty Rates Using Three Measures Total and by Age Group: 2009 30.0 25.9 25.0 21.2 19.6 19.5 20.0 17.9 Percent Poor 16.9 15.7 15.3 14.9 Official* 14.5 15.0 13.0 Research SPM Relative Poverty 10.0 8.9 5.0 0.0 All People Children Nonelderly Adults Elderly 18
Difference in Percent Below SPM Threshold After Including Each Element 4.0 3.4 3.0 Percentage point difference 1.8 2.0 1.5 1.0 0.2 0.0 0.0 -0.1 -0.3 -1.0 -0.8 -1.4 -2.0 -1.9 -3.0 Work Hsg School Child EITC SNAP WIC LIHEAP FICA expens MOOP subsidy lunch support e Series1 -1.9 -1.4 -0.8 -0.3 -0.1 0.0 0.2 1.5 1.8 3.4 19
Difference in Percent Below SPM Threshold After Including Each Element: CHILDREN AND ELDERLY 8.0 6.0 Percentage point difference 4.0 2.0 0.0 -2.0 -4.0 -6.0 Work Hsg School Child EITC SNAP WIC LIHEAP FICA expens MOOP subsidy lunch support e Children -4.0 -2.8 -1.3 -0.8 -0.2 0.0 0.2 2.0 2.4 3.0 Elderly -0.2 -0.7 -1.1 -0.1 0.0 -0.1 0.0 0.3 0.3 6.9 20
Composition of Total and Poverty Population by Age Relative 32.8 54.4 12.8 Poverty Children Research 28.1 59.5 12.4 Nonelderly SPM Adults Elderly Official* 36.1 56.1 7.8 Total 24.7 62.6 12.7 Population 0% 20% 40% 60% 80% 100% 21
Distribution of People by Income/Resources to Poverty Thresholds Ratio 100% 14.0 17.7 90% 36.2 80% 70% 36.0 4 or more 35.2 2.0 to 3.99 60% 1.0 to 1.99 50% 30.7 0.5 to 0.99 40% 30.5 31.5 30% 18.7 20% 12.6 10% 8.1 10.5 6.4 6.8 5.2 0% Official* SPM Relative 22
Distribution of Children by Income/Resources to Poverty Thresholds Ratio 100% 9.6 11.6 90% 27.2 80% 31.6 32.5 70% 4 or more 2.0 to 3.99 60% 30.3 1.0 to 1.99 50% 0.5 to 0.99 32.8 less than 0.5 40% 38.1 21.4 30% 20% 15.5 11.4 12.8 10% 10.4 9.8 5.1 0% Official* SPM Relative 23
Distribution of Elderly by Income/Resources to Poverty Thresholds Ratio 100% 11.6 90% 19.1 31.2 80% 31.3 70% 4 or more 33.7 60% 2.0 to 3.99 1.0 to 1.99 35.1 50% 0.5 to 0.99 less than 0.5 40% 37.4 31.9 30% 24.8 20% 15.7 10% 10.2 6.3 5.2 4.0 2.6 0% Official* SPM Relative 24
Mean amounts for one adult $16,000 $14,450 $13,651 $14,000 $12,000 $11,161 $10,934 $10,289 $10,000 $8,000 $6,000 $4,000 $2,000 $- Social Security Official threshold Official threshold SPM threshold one Relative threshold one adult lt 65 one adult 65+ adult adult equivalent 25
Contact: Kathleen Short U.S. Census Bureau kathleen.s.short@census.gov 26
Recommend
More recommend
