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Today, the Census Bureau, with support from the Bureau of Labor Statistics, released its fifth annual report, The Supplemental Poverty Measure: 2014. This measure extends information provided by the official poverty measure by explicitly including benefits from many of the government programs designed to assist low-income families and individuals.
According to the report, the supplemental poverty measure rate was 15.3 percent last year, which was higher than the official measure of 14.9 percent for 2014. Both the supplemental measure rate and the official poverty rate were not significantly different from the corresponding rates in 2013.
There has been a continuing discussion about the best approach to measure income and poverty in the United States since the publication of the first official U.S. poverty estimates in 1964. In 2009, an interagency group asked the Census Bureau, in cooperation with the Bureau of Labor Statistics, to develop a supplemental measure to allow for an improved understanding of the economic well-being of American families and the way that federal policies affect those living in poverty.
The official measure only looks at pre-tax money income. Income for the supplemental measure adds the value of noncash benefits such as the Supplemental Nutrition Assistance Program, school lunches, housing assistance and refundable tax credits like the earned income tax credit. Additionally, supplemental poverty measure resources deduct from income necessary expenses for critical goods and services such as taxes, childcare and commuting expenses, and contributions toward the cost of medical care and health insurance premiums.
The important contribution that the supplemental poverty measure provides is allowing us to gauge the effectiveness of tax credits and transfers in reducing poverty. It can also show the effect of necessary expenses that families face such as paying taxes, or work-related, and medical out-of-pocket expenses on their ability to meet basic needs. For example, the SPM report shows that:
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