An Updated Measure of Poverty (Re)Drawing the Line (2023) / Chapter Skim
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2 Conceptual Basis of the Supplemental Poverty Measure
2 Conceptual Basis of the Supplemental Poverty Measure
Pages 17-39
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From page 17... ...
The SPM threshold amount was originally estimated as the 33rd percentile of spending for families (or, more accurately, SPM resource units) with two children sampled in the Consumer Expenditure Survey (CE)
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From page 18... ...
5 Census Bureau documentation (Fox, 2020) includes the full specification of the "three-parameter" equivalence scale -- to account for units with one and two adults, with single parents, and for all other families.
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, the justification for limiting the geographic adjustment to housing expenditures is that it is the most likely threshold category to differ substantially in terms of costs by area and, thus, to affect the level of resources needed to live in an area. The best way to estimate commuting and other transportation costs and factor them into geographic adjustments is an important issue for future research.
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. 11 The CPS-ASEC asks about energy assistance received for the entire year through the Low Income Home Energy Assistance Program. 12 Full specification of the SPM resource unit resource calculation is detailed in Appendix A, Table A-2.
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Instead, the Census Bureau estimates taxes using a model (for details of the model, see O'Hara, 2006)
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For example, using data from the first two waves of the Census Bureau's Household Pulse Survey (April 23 and May 7, 2020) , Schanzenbach and Pitts (2020)
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Indeed, the Census Bureau pilot project involved developing methods by which ACS data could be used to support historical, sub-annual estimates of health insurance coverage or other elements of interest (Albright and Asiala, 2015)
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The decision of the Census Bureau and BLS to include internet in the basic bundle beginning with the 2020 thresholds recognized important changes in the goods and services needed to participate in society and the economy. In general, the panel weighs accuracy more heavily than avoiding series breaks.
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To date, the Census Bureau has taken steps in this direction, including dropping or masking variables deemed too disclosive and, for its 2020 data products, adopting protection algorithms that satisfy differential privacy concepts.25 These algorithms introduce noise into virtually every data point. For the ACS, the Census Bureau is researching construction of a synthetic public-use microdata file; this would likely require a validation server for analysts to ascertain whether their estimates from public-file data are sufficiently accurate or are too distorted for use.26 For poverty measurement, these methods could, in some cases, reduce the accuracy of estimates requiring subnational geographic detail or details of certain populations, such as smaller racial groups.
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. For example, administrative data are often perceived to be more accurate than self-reported information on income or safety net program receipt amounts.
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14 For the years 1959–1968 the statistics on poverty contained in the Census Bureau's Current Population Reports, Series P-60, No. 68, shall be used by all executive departments and establishments for statistical purposes.
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14 is ambiguous, it appears that the Census Bureau could simply shift the emphasis in the way the OPM and PPM feature in its P-60 reports.31 RECOMMENDATION 2.1: Due to its vital role in tracking the effects of public policies and programs on the size and composition of the population living in or near poverty, and its resulting status as the preferred measure of many researchers and policy makers, the Supplemental Poverty Measure should be elevated to the nation's headline poverty statistic and renamed accordingly (e.g., to the Principal Poverty Measure)
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From page 29... ...
A good case can be made for further expansion of threshold categories, as the basic needs of most families today extend beyond FCSUti. Explicit inclusion of high-expenditure family budget items in the threshold equation arguably makes a poverty measure more transparent.32 Currently, major household budget items -- most notably medical care and workrelated needs such as childcare and commuting -- are accounted for by subtracting expenditures from estimates of resources available to the SPM resource unit to cover FCSUti expenses.
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RECOMMENDATION 2.4: The Census Bureau should recognize and initiate research on how to incor porate childcare needs -- which are a basic and regular expense for many families -- into the Principal Poverty Measure as an explicit threshold category for families with children. Rather than being deducted from resources as a work expense as done currently, childcare would, under the PPM, ideally be treated more analogously to other threshold categories, particularly the new medical care component.
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, times a multiplier, utilities (telephone and internet) , plus housing needs based on Fair Market multiplied by 1.2; using CUs with Rents, health insurance needs based on basic children insurance, and childcare based on service costs Threshold Vary by family size, Vary by resource unit size, Vary by household size and composition; Adjustments composition, and age of composition, and housing tenure; geographic adjustments are built into housing, householder with geographic adjustments for medical care, and childcare needs differences in housing costs Updating Consumer Price Index for 5-year moving average of Update health, housing, and childcare with Thresholds All Urban Consumers: expenditures on FCSUti, lagged available data; spending updated using 3-year all items 1 year and adjusted by a FCSUti moving average of expenditures on FCti lagged CPI-U price index 1 year and adjusted by a FCti CPI-U price index Resource Gross before-tax regular Sum of cash income, plus noncash Sum of cash income plus noncash benefits that Measure cash income benefits that resource units can use households can use to meet their FCti needs, to meet their FCSUti needs, minus plus childcare subsidies, health insurance tax payments net of refundable tax benefits and subsidies, and imputed rental credits, work expenses, childcare income flow for homeowners; minus tax expenses, nonpremium MOOP payments net of refundable tax credits, work expenses, and child support paid to expenses, nonpremium MOOP expenses, another household homeowner costs, and child support paid to another household SOURCE: Extended from Fox (2020)
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RECOMMENDATION 2.5: The Census Bureau and Bureau of Labor Statistics should conduct a review of the basis for the 20-percent multiplier. This review should include: • Assessing whether a multiplier set at a different level better matches current spending patterns on the basket of goods currently included in the Supplemental Poverty Measure threshold; • Evaluating the spending categories included in the threshold multiplier, specifically whether transportation should be a larger share and should vary by metropolitan and nonmetropolitan residence status; • Recalculating the multiplier based on the new basic needs bundle; and • Developing a plan for updating the multiplier for future changes in spending patterns.
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The deduction is calculated from Survey of Income and Program Participation (SIPP) data on commuting expenses and other miscellaneous work expenses.
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Incorporating a medical care need into PPM thresholds -- as recommended above and detailed in Chapter 3 -- moves the approach further toward a hybrid model wherein a mix of survey-reported spending levels and nonsurvey information is used to estimate and set the cost of basic needs. The proposed PPM would reflect the cost of a basic health insurance plan in the threshold (see Chapter 3)
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Nonetheless, the Census Bureau could consider estimating the "F" in "FCSU" 39 The proposed PPM would ideally subtract net childcare costs from resources -- the actual price minus any subsidy received by the family.
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The recently reevaluated TFP addresses many shortcomings of the previous TFP, reflecting the food consumption patterns of a broader set of Americans and taking some time-saving substitutions of prepared foods into account.42 While using the TFP to represent food needs for PPM thresholds is appealing due to its consistency with the approaches for measuring housing, health insurance, and childcare needs, there are potential drawbacks to this approach. Unlike the other needs-based approaches, the cost of the TFP is the same across the 48 contiguous states, and the only region-specific plans are for Alaska and Hawaii.
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From page 37... ...
The Census Bureau could perform research on measures of assets and debt that would, for example, elucidate hardships related to education loans, a topic currently of great interest to policy makers. The SPM and the OPM do not consider education loans as income, either as an addition when received or a subtraction when repaid.45 Using data from their Consumer Credit Panel, a recent report by the Federal Reserve Bank of New York (Mills et al., 2022)
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From page 38... ...
Sharing residences lowered official poverty rates through the pooling of resources.49 2.6.2. Consumer Units versus Household Units In revisiting the unit of analysis issue, the central question facing the Census Bureau is whether to maintain the current SPM approach or to switch to the household and to include additional unrelated people therein.
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From page 39... ...
Since the CPS-ASEC collects income information for every household member age 15 and older, the poverty status of these older unrelated children can, in principle, be determined. However, when these children live in multi-SPM households, they likely share income and expenditures with the other SPM resource units.
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