work (e.g., child care, parking, training subsidies, or free uniforms or tools) should not be included because the definition of disposable income excludes out-of-pocket costs for child care and other work-related expenses, net of any employer subsidy.16 Also, employer contributions for pensions should not be included. The National Income and Product Accounts (NIPA) include such contributions as income and, conversely, exclude actual pension income. However, the contrasting approach that has traditionally been followed for poverty measurement, namely, counting pension income as received and excluding pension contributions, makes much more sense for a measure of current economic poverty. Other kinds of employer benefits, such as contributions for life or accident insurance, are more problematic. To the extent they free up resources for consumption, they should be counted as income. However, there are measurement problems. Also, such benefits are difficult to value because of the likelihood that recipients would place a lower value on the benefit than its cost to employers. (This problem affects other in-kind benefits as well, but perhaps not to the same extent; see below.)

Census Bureau Valuation Procedures

The Census Bureau's procedures for assigning values for food stamps, school lunches, and public housing rely on the market value approach, in which the full private market value of the benefit (minus contributions by the recipient) is assigned as income.17 For food stamps, the procedure is very simple, counting as income the full face (market) value of food stamp benefits that are reported for the year by respondents to the March CPS. For "regular price" school lunches, the procedure for determining the subsidy value uses information from the U.S. Department of Agriculture (USDA) on subsidies per meal for lunches that are provided at the "full established price." (Because of USDA assistance to the states, the full price represents less than the total cost of the meal.) The annualized subsidy value is added to family income for children ages 5-18 whose families reported in the March CPS that they "usually" ate hot lunches at school during the year and did not receive these meals free or at a reduced price. For those children who are reported to have received free or reduced-price school lunches, an additional subsidy value is assigned, also using information from the Department of Agriculture. Unlike food stamps, which function virtually like money, the approach of counting school

16  

The alternative approach of adjusting the thresholds would involve adding child care and other work expenses to the thresholds for working families, and then adding the value of employer subsidies to income (see Renwick and Bergmann, 1993, for an example). The net effect would be about the same as under our approach but actually more data-intensive to implement (data would be needed to estimate the threshold amounts and the subsidies).

17  

See Chapter 5 for a description of the effects on poverty rates of adding values to disposable income for these programs with the current valuation methods.



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