National Poverty in America Awareness Month: Measuring Poverty

The official poverty measure has remained mostly unchanged since the mid-1960s, but the SPM was designed to keep pace with changes in data, methods, and new research.

The table below shows a detailed comparison of major concepts between the two measures. (The history of poverty measures in the United States infographic, “How the U.S. Census Bureau Measures Poverty,” and this blog on the difference between SPM and official poverty measures provide more details.)

The official poverty measure compares an individual’s or family’s pretax cash income to a set of thresholds that vary by family size and the ages of family members.

These official poverty calculations do not account for the value of in-kind benefits such as nutritional assistance, housing and energy programs, or tax credits like the earned income tax credit or stimulus payments.

They also do not consider regional differences in living costs or expenses such as housing.

On the other hand, the SPM does consider family resources and expenses not included in the official measure as well as geographic variation.

First, it adds the value of refundable tax credits and in-kind benefits available to buy basic goods to cash income. In-kind benefits include nutritional assistance, subsidized housing, and home energy assistance.

Then, it subtracts necessary expenses for critical goods and services not included in the thresholds from resources.

Necessary expenses subtracted include income taxes, Social Security payroll taxes, child care and other work-related expenses, child support payments to another household and medical care and health insurance premium contributions.

The Bureau of Labor Statistics’ Division of Price and Index Number Research produces the SPM income thresholds based on Consumer Expenditure Survey data that show how much people spend on basic necessities (food, clothing, shelter and utilities) and are adjusted for geographic differences in housing costs.

The SPM thresholds are not intended to assess eligibility for government assistance.

In September 2021, the Census Bureau released the 11th SPM report for 2020. The report presented estimates of both the official and Supplemental Poverty measures and outlined differences between the two.

From 2009 through 2019, the SPM ranged from 0.6 to 1.6 percentage points higher than the official measure (Figure 1).

In contrast, the 2020 SPM was 2.3 percentage points lower than the official measure. This was the first time in the history of the SPM that its poverty rate was lower than the official poverty rate. SPM rates in 2020, which included stimulus payments, were at their lowest level since the first-published SPM estimates.

A recent America Counts story, “Who Was Lifted Out of Poverty by Stimulus Payments?”, showed that without stimulus payments, the supplemental poverty rate would have increased by approximately 3.6 percentage points.

Figure 2 provides state-level supplemental poverty statistics using three years of Current Population Survey Annual Social and Economic Supplement data and compares official poverty and SPM estimates.

In 2020, SPM rates were:

• Higher than official poverty rates in 11 states plus the District of Columbia.
• Lower than official poverty rates in 30 states.
• Not statistically different in nine states.

While the SPM rate for children declined between 2019 and 2020, the official poverty rate increased over the same period, widening the gap between the two measures from 1.8 percentage points in 2019 to 6.3 percentage points in 2020 (Figure 3).

SPM rates for individuals ages 18 to 64 were also lower than official poverty rates in 2020, for the first time in the history of the SPM.

The gap between the official and SPM rates for individuals 65 and older declined from 3.9 percentage points in 2019 to 0.5 percentage points in 2020. SPM rates for each major age group in 2020 were at their lowest level since 2009.

Estimates in this story were calculated using the SPM universe, which includes unrelated individuals under age 15.

More details on the impact of policies and programs on the SPM rate are available in the 2020 SPM Report. Additionally, more information on confidentiality protection, methodology, sampling and nonsampling error and definitions is available.