developed, medical care costs have escalated greatly, so that the effect of including insurance values without also raising the thresholds is to ignore the added costs of staying out of poverty.

RECOMMENDATION 4.1. In developing poverty statistics, any significant change in the definition of family resources should be accompanied by a consistent adjustment of the poverty thresholds.

To achieve consistency with the proposed poverty budget, the definition of family resources (or income) must represent disposable money and near-money resources: it should include the value of in-kind resources that are available for consumption, and, conversely, it should deduct from income required expenditures that are not available for consumption. We note that the major public assistance programs, such as food stamps and AFDC, currently use a similar definition of disposable or ''countable" income to determine eligibility and benefits.

RECOMMENDATION 4.2. The definition of family resources for comparison with the appropriate poverty threshold should be disposable money and near-money income. Specifically, resources should be calculated as follows:

  • estimate gross money income from all public and private sources for a family or unrelated individual (which is income as defined in the current measure);

  • add the value of near-money nonmedical in-kind benefits, such as food stamps, subsidized housing, school lunches, and home energy assistance;

  • deduct out-of-pocket medical care expenditures, including health insurance premiums;

  • deduct income taxes and Social Security payroll taxes;

  • for families in which there is no nonworking parent, deduct actual child care costs, per week worked, not to exceed the earnings of the parent with the lower earnings or a cap that is adjusted annually for inflation;

  • for each working adult, deduct a flat amount per week worked (adjusted annually for inflation and not to exceed earnings) to account for work-related transportation and miscellaneous expenses; and

  • deduct child support payments from the income of the payer.

In-Kind Benefits—Nonmedical

The official poverty thresholds, as originally conceived, and the panel's proposed thresholds, although developed in somewhat different ways, reflect the

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