In 2011, the Census Bureau released its first Research Supplemental Poverty Measure (SPM), the culmination of nearly two decades of work experimenting with new, and many would argue better, ways of calculating how many Americans have insufficient resources to provide for the basic needs of themselves and their families. Though the technical details and differences between the SPM and the OPM are numerous, the advancements embodied by the SPM can roughly be categorized along four key dimensions.
First, the SPM poverty threshold accounts for a set of basic goods including food, clothing, shelter and other basic necessary goods and services. The OPM poverty threshold was initially set based only on the cost of a minimally adequate or “economy” food budget in 1963 and the relationship between that budget and overall household spending for other necessities around that same time. Since then, it has been adjusted to reflect overall changes in prices but not for any changes in the relationship between the food budget and overall household expenditures. The SPM poverty threshold, on the other hand, explicitly accounts for not only food but also for clothing, shelter, utilities, and a small multiplier for assorted other necessities. Also, unlike the OPM poverty threshold, the SPM poverty threshold is adjusted over time to reflect changing patterns of consumption.
Second, the SPM threshold varies geographically, recognizing the fact that more resources are needed to live in some areas of the country than in others. Whereas the official poverty threshold is the same in both high-cost areas like San Francisco or New York City and in lower-cost areas like rural Kansas or the Mississippi Delta, the SPM sets higher (or lower) poverty thresholds in different areas based on differences in housing costs across areas. The SPM also defines a separate poverty threshold for people in different types of housing arrangements, letting the poverty threshold vary by whether one is a renter, a homeowner who is paying a mortgage, or a homeowner without a mortgage. This feature of the SPM acknowledges that the ongoing costs of meeting basic needs like shelter typically are lower for homeowners who own a home without a mortgage.
Third, the SPM changes the definition of the family unit that essentially broadens both who is considered to be sharing resources within a household and whose needs and resources are to be considered in measuring poverty. In particular, the SPM includes cohabiters and their families in this broader family unit, affecting both the thresholds (by increasing the number of individuals in the family unit), as well as resources (which, under the SPM, include any income sources from cohabiting partners). In addition, the broader SPM family unit includes most foster children and children who are unrelated to anyone else in the household, ensuring that the needs of these children are represented in SPM poverty thresholds. In contrast, the OPM considers only related individuals in defining family units.
Fourth, and perhaps most importantly for understanding the impacts of the safety net, the SPM considers a broader set of resources beyond pretax cash income in its definition of income. The SPM counts a variety of other resources that are often used to support individuals’ and families’ basic needs that are delivered either as in-kind benefits (such as food or housing assistance) or as net benefits delivered through the tax system (e.g., the EITC). The SPM also subtracts necessary expenditures (payroll and income taxes, work-related expenses, child care, and medical expenses) from these resources.
Primarily because of the last set of changes to the definition of resources, the SPM allows for a much greater consideration of the impact of the social safety net and other public resources that are designed to alleviate poverty in the United States. For example, the Supplemental Nutrition Assistance Program (SNAP, formerly known as the Food Stamp program) is explicitly designed to help poor families improve their levels of nutrition. However, without counting the benefit in the definition of family resources (following OPM methodology) it is impossible to know to what extent the program actually changes the picture of poverty in both its level and trend.
When the SPM methodology is used, a different portrait of who is poor in America emerges. While children are still the poorest age group in the country, relatively fewer children are impoverished under the SPM than under the OPM (see Short, 2011 for details). Under the OPM, 16.8 million children are poor, while under the SPM 13.6 million are poor. The net difference in the numbers of poor children results from a combination of all the changes to the measure described above including both changes to the thresholds and changes to the measurement of resources. These differences raise the question: What are the defining characteristics of poor children under each measure, and how does the new SPM alter the picture of poor children in America?
This brief addresses the question. It first provides a short description of all OPM poor children and all SPM poor children in 2010. Next, the brief examines each of the three key subgroups: the core poor, the lifted out, and the thrown in. When looking at children in each group, the brief considers: (a) their families’ income from various sources; (b) their families’ receipt of safety net benefits; (c) the amount of safety net benefits received; and (d) the expenses faced by the children’s families. A brief conclusion follows.