America's Children in Poverty: A New Look at Who's Poor Under the Supplemental Poverty Measure. The “Core Poor”

12/01/2013

Looking only at differences between all OPM and all SPM poor children tends to mask important differences between subgroups of children. In particular, poor children can be categorized into one of three mutually exclusive groups when one moves from examining child poverty under the official measure to looking at it under the supplemental measure. The “Core Poor” are the core group of children who are poor no matter what measure is used. The “Lifted Out” are classified as poor under the official measure, but are “lifted out” of poverty under the new SPM methodology. The “Thrown In” are not classified as poor under the OPM, but are newly classified as poor under the SPM methodology1. Note that these descriptors do not refer to dynamics of poverty status over time, but rather characterize where children fall under one or both of the poverty measures in a single year (2010).

When using this categorization, these three groups are very distinct. The estimates comparing OPM and SPM poor children presented in the previous section are similar because both groups are dominated by a core group of poor children, the 11.2 million children who are poor under both the OPM and the SPM. These “core-poor” children constitute a substantial majority of all children who are poor under each measure.

Figure 2. Percentage of Children Living in Families with Any Labor Market Income During the Calendar Year

Figure 2. Percentage of Children Living in Families with Any Labor Market Income During the Calendar Year

 

Figure 3. Family Income and Resources of Children by Poverty Status and Type

Figure 3. Family Income and Resources of Children by Poverty Status and Type

What are the characteristics of this core group of children? This group is the most disadvantaged of poor children by most measures. Only 58.2 percent of these children are in families with any labor market income (see Figure 2), and the families have median earnings of only $3,000 (see Figure 3). Note that this figure includes many children from families with no earnings; the median earnings for children in core-poor families that have earnings is $12,000 (not shown here). Overall family median cash income (which includes unemployment insurance, social security and SSI, cash welfare assistance, and various other sources of cash income) is higher ($10,900 in cash income vs. $3,000 in earnings) but still relatively low for these children compared to the two other groups of children. Family median SPM resources, which includes not just cash income, but also in-kind benefits, after-tax income, and the subtraction of necessary expenses, is higher still ($15,803), yet remains below the family median SPM resource estimates for the other groups.

On average, children in the core-poor group have an OPM income-to-needs ratio of 0.43, meaning that the average poor child’s family in this group has cash resources equal to about 43 percent of the official poverty threshold (see Figure 4). Under the SPM, this group’s average total SPM resources equal 65 percent of the SPM threshold. Thus, even for this group of children who are very poor no matter what measure is chosen, making the adjustments under the SPM, and in particular the counting of various safety net benefits, brings them considerably closer to the poverty threshold than they were under the OPM. Given that falling under 50 percent of the poverty threshold is often considered a marker of “deep” poverty, the adjustments made under the SPM identify fewer children falling not just into poverty overall, but fewer children falling into deep poverty as well. These estimates also show that applying the SPM measure provides an indication of the impact of safety net resources in improving the relative material well-being of children in poor families. An increase in the income-to-needs ratio from 0.43 to 0.65 indicates an improvement of approximately 50 percent.

The core group of children poor under both measures often are connected to the safety net (though as shown in Figure 5, less so than children who are lifted out of poverty under the SPM measure and more so than children thrown into poverty under the SPM). Over half (56.9 percent) of core-poor children’s families have some EITC income, and 51.7 percent of core-poor children live in families with some SNAP income. In addition, 13.8 percent live in families with some cash welfare assistance, 13.8 receive government housing assistance, and 7.9 percent receive some SSI income. Across ten safety net programs (EITC, SNAP, housing subsidies, Unemployment Insurance, cash welfare, SSI, WIC, school lunch, LIHEAP, and Medicaid), the average child’s family in the core-poor group is receiving benefits from 3.3 programs (see Table A-2).

How much are families receiving in benefits? Figures 6a and 6b show the median amounts of various safety net benefits for the families of the three groups of children, if they receive the given benefit. The median SNAP benefit for this group is $4,416 over the year if the family receives SNAP, which is equal to about $368 per month. But only 51.7 percent of the core-poor children live in families that receive SNAP benefits. The median EITC benefit amount for core-poor children is $3,341 in 2010, though as noted above only 56.9 percent of the core-poor children’s families receive the EITC. The median housing subsidy value for those in families who receive a housing subsidy is $8,481. This reflects the fact that core-poor children live in families with low incomes that likely pay very low rents, and this increases the estimated value of having a housing subsidy (defined as the difference between one’s rent and the market rate of the housing unit). The median SSI benefit for this group, when SSI is received, is $8,088 for the year, but again only 7.9 percent of children in the core-poor group live in families that receive any SSI income.

Figure 4. Income-to-Needs Ratios by Poverty Measure and Child Poverty Status

Figure 4. Income-to-Needs Ratios by Poverty Measure and Child Poverty Status

 

Figure 5. Incidence of Safety Net Receipt by Child Poverty Status (Percent of ANY Receipt from Each Source)

Figure 5. Incidence of Safety Net Receipt by Child Poverty Status (Percent of ANY Receipt from Each Source)

 

Figure 6a. Median Safety Net Benefits (For Beneficiaries) by Child Poverty Status: SNAP, EITC, and Housing Subsidies

Figure 6a. Median Safety Net Benefits (For Beneficiaries) by Child Poverty Status: SNAP, EITC, and Housing Subsidies

 

Figure 6b. Median Safety Net Benefits (For Beneficiaries) by Child Poverty Status: SSI, Unemployment Insurance, Cash Welfare

Figure 6b. Median Safety Net Benefits (For Beneficiaries) by Child Poverty Status: SSI, Unemployment Insurance, Cash Welfare

For expenses, children in the core-poor group tend to have fairly low family medical expenses (see Figure 7). The median value of medical expenses paid out-of-pocket (MOOP, which include insurance premiums, co-pays and deductibles) for this group is $385; this value rises to only $540 if those with no MOOP expenses are excluded (see Table A-3). Median work and child care expenses for these families are somewhat higher ($904), but as shown below, this is substantially lower than the amounts found for other groups, primarily because the adults in these children’s families are substantially less likely to be working.


1 See Appendix Tables A1-A4 for additional statistics on the three groups of children analyzed in this brief.

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