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How the Census Bureau Measures Income and Poverty

Thu Sep 06 2018
Written by: Trudi Renwick, Social, Economic and Housing Statistics Division
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Income, poverty and health insurance statistics from the Current Population Survey Annual Social and Economic Supplement, known as CPS ASEC are released every year in September. One-year statistics from the American Community Survey (ACS) are also released at this time.

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Due to differences in how the CPS and the ACS collect income data, the national statistics from these two sources will not be identical.

The CPS is the longest-running survey conducted by the U.S. Census Bureau. It is conducted every month and serves as the nation’s primary source of statistics on labor force characteristics. Supplemental surveys are added in most months. The CPS ASEC provides statistics on income, poverty, age, sex, race, marital status, educational attainment, employee benefits, work schedules, school enrollment, health insurance, noncash benefits and migration. Data for this supplement are collected primarily in March of each year.

The CPS ASEC asks detailed questions categorizing income into over 50 sources. The key purpose of the CPS ASEC is to provide timely and detailed estimates of income and poverty and to measure change in these national-level estimates. The CPS ASEC is the official source of the national poverty estimates calculated in accordance with Office of Management and Budget’s Statistical Policy Directive 14. For more information on the CPS ASEC, visit <www.census.gov/programs-surveys/cps.html>.

The ACS, on the other hand, is the only source of small-area statistics available on a wide range of important social and economic characteristics for all communities in the country. In addition to income, poverty and health insurance, other topics include education, language ability, the foreign-born population, marital status, migration, homeownership, the cost and value of homes, and many more.

The ACS has an annual sample size of about 3.5 million addresses across the United States and Puerto Rico and includes both housing units and group quarters (e.g., nursing homes and prisons). This survey is conducted in every county throughout the nation, and every municipio in Puerto Rico, where it is called the Puerto Rico Community Survey. Beginning in 2006 (2005 data year), the survey data were released annually for geographic areas with populations of 65,000 and greater. For information on the ACS sample design and other topics, visit <www.census.gov/programs-surveys/acs>.

Statistics from these two surveys may differ for multiple reasons. First, income questions on the CPS ASEC are much more detailed than the summary questions asked on the ACS. Second, interviewers administer the CPS ASEC survey in person or over the phone, while people primarily respond to ACS questions over the internet or by mail. Interviewers follow up with households who do not respond to the ACS online or by mail.

The reference periods for the two surveys are very different. The CPS ASEC asks respondents to report on their income in the previous calendar year. The ACS asks about income in the prior 12 months. 

These differences often result in different national statistics for such key indicators as poverty, median income and income inequality. Despite any differences in the “levels” of these indicators between the two surveys, the trends over time resemble each other. The following graphs show median household income and poverty rates from the ACS compared with statistics from the CPS ASEC for previous years. The red line adjusts the CPS ASEC for the differences in reference periods by averaging two years of estimates.

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Many people contact us each year asking which estimate to use for a particular purpose. For national statistics, we recommend the CPS ASEC because it provides a consistent historical time series at the national level back to, in some cases, more than half a century. Because of the larger sample size and smaller sampling errors, we recommend using the ACS for subnational geographies.

If you are interested in a longer time series than is available from the ACS, generally we have recommended using two- or three-year averages from the CPS ASEC.

Note:  The CPS 2-year estimate is a rolling two-year average of the median income and poverty rates from the CPS ASEC. This adjustment reflects the differences in the reference period of the two surveys.  Median household income estimates are in 2014 dollars.

For more information on the surveys, see www.census.gov/programs-surveys/acs  or www.census.gov/programs-surveys/cps.html.

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