Abstract: Improving the Measurement of Poverty: New Estimates Using an Anchored Historical Supplemental Poverty Measure (Society for Social Work and Research 20th Annual Conference - Grand Challenges for Social Work: Setting a Research Agenda for the Future)

Schedule:

Friday, January 15, 2016: 8:00 AM

Meeting Room Level-Meeting Room 15 (Renaissance Washington, DC Downtown Hotel)

* noted as presenting author

Jane Waldfogel, PhD, Compton Foundation Centennial Professor of Social Work for the Prevention of Children's and Youth Problems, Columbia University, New York, NY

Irwin Garfinkel, PhD, Mitchell I. Ginsberg Professor of Contemporary Urban Problems, Columbia University, New York, NY

Neeraj Kaushal, PhD, Associate Professor, Columbia University, New York, NY

Jaehyun Nam, MSW, Student, Columbia University, New York, NY

Christopher Wimer, PhD, Co-Director, Columbia University, New York, NY

Background and Purpose:The official poverty measure in the U.S. has long been criticized as inadequate for capturing the extent of poverty and the role of government programs in addressing it. Recently, the Census Bureau implemented an improved poverty measure, the supplemental poverty measure (SPM), which is now released alongside the official one. However, the Census Bureau has not released SPM estimates historically. In this paper, we provide new estimates of historical trends in poverty and deep poverty from 1967 to the present, using a historical version of the SPM. We focus in particular on the role that government programs have played over this time period, for the population overall and for particularly vulnerable sub-groups such as children and young adults.

Methods: This study relies on augmented Current Population Survey data covering the time period 1967 to 2012. We calculate poverty thresholds in 2012 using five years of consumer expenditure survey data on spending on food, clothing, shelter, and utilities following Census and BLS methodology. We estimate thresholds back to 1967 using changes in inflation based on the CPI-U-RS, the Census’ preferred inflation index. These thresholds differ from Census’ and BLS’ published SPM thresholds in that those thresholds are relative in nature and change over time with changes in people’s expenditures. Using our anchored thresholds provides a fixed target against which to measure change net of changes in living standards. As in the Census SPM, we use an expanded definition of resources that includes after-tax income and in-kind benefits (SNAP, school lunch, WIC, LIHEAP, and government housing assistance), and excludes some necessary expenses (medical out-of-pocket expenses and work and child care expenses).

Results:Results show that poverty has fallen by about 40% since 1967, when poverty is examined using our improved historical poverty time series. This contrasts with the picture that would be provided using the official poverty measure, which would show no progress against poverty over time. We also find that the majority of the poverty reduction since 1967 is due to government taxes and transfers, which again would be obscured using the official measure. Of particular importance, the two most important anti-poverty programs today – tax credits and food stamps – are not counted as income in the official poverty measure. We also find that trends differ for particularly vulnerable sub-groups, in particular children and young adults.

Conclusions and Implications: Having an accurate measure of poverty is important to understand who is at risk of poverty, and also to understand to what extent existing government programs are or are not effective in tackling poverty. Contrary to received wisdom, our estimates show that the U.S. has made some progress in tackling poverty and that government programs play an important role. This in turn has implications for programs that might be expanded to further reduce poverty in future.