Users should note that monthly poverty rates at the start of the 2021 SIPP were higher than poverty rates observed during the last month of the 2020 SIPP. To this point, monthly poverty rates increased by approximately one percentage point in January 2020 compared to December 2019 (the first and last months of the 2021 and 2020 SIPP, respectively), which predated the large effects of COVID-19 on the US economy that were generally first observed in March of 2020. Much of this early increase was caused by a relatively small number of income sources that are not measured monthly.    

While most SIPP income sources are available for each reference month, some income sources by nature are rarely calculated monthly or would significantly increase respondent burden to ask about at a monthly frequency. The largest such income sources are business profits/losses (not paid as wages to oneself) and asset income. For income sources reported annually, such as asset income, income is distributed evenly across reference months for the respondent by dividing the annual amount by 12. For business profits/losses, which are collected at the job spell level, profits/losses are evenly distributed across the weeks a business operated during the year. This means that business losses and reductions in income caused by the COVID-19 pandemic are also observed in earlier months of 2020 that were largely unaffected by COVID-19. This can lead to higher poverty rates for these months.  

For example, a business that was open at the start of 2020 and closed at the end of May 2020 with a reported annual loss of $100,000 in 2020, would lead to the business owner having approximately negative $20,000 added to any other income the business owner had, when calculating earnings used in poverty estimates (TPEARN_ALT) for each of the five months the business was operating during 2020. In the absence of sufficient other resources, this can lead individuals and their families to be classified as in monthly poverty for months where such business losses are observed. More information about the differences between TPEARN_ALT and TPEARN are available at https://www.census.gov/programs-surveys/sipp/tech-documentation/user-notes/2018-usernotes/2018-TPEARN-hist-comp.html

Considering other methods for distributing business income not paid as wages is complicated by many firms only calculating either quarterly or annual income, which is a more aggregated measure than monthly income. Ongoing research at the Census Bureau is examining different ways that annual income sources could be distributed.