2012 Supplemental Poverty Measure Thresholds Based on Consumer Expenditure Survey Data

On September 10, 2013, the U.S. Bureau of Labor Statistics (BLS) released Supplemental Poverty Measure (SPM) thresholds for 2012 that are based on Consumer Expenditure Survey data. The U.S. Census Bureau will release poverty statistics based on these SPM thresholds around October 30, 2013.1 The SPM thresholds are produced as part of a joint research project of the BLS and the U.S. Census Bureau. The SPM is not intended to replace the official poverty measure, but rather to provide other perspectives for examining poverty, and is expected to be improved over time.

The official poverty measure was developed in the early 1960s and adopted as "official" in 1969. The official poverty threshold was first determined to be the dollar value of a minimum adequate diet times three. The multiplier of three was used because 1955 Food Consumption Survey data showed that food expenditures accounted for one-third of after-tax income for the average family with children. An annual threshold of about $3,100 for a family with two adults and two children was set for 1963 as the standard of needs and has been fixed in inflation-adjusted terms since then. The 2012 official poverty threshold (XLS) for a family of two adults and two children is $23,283. Official poverty thresholds, which account for differences in the number of adults and children in families, are updated annually to reflect changes in prices only. The U.S. Census Bureau is responsible for publishing official annual poverty thresholds, rates, and other statistics. The most recent official poverty statistics were released by the U.S. Census Bureau on September 17, 2013.

In response to concerns about the adequacy of the current official measure, a National Academy of Sciences (NAS) panel convened from 1992 to 1995 to evaluate the official poverty measure and recommend a new measure. The panel published a report of their findings and recommendations in 1995: Measuring Poverty, A New Approach. Shortly thereafter, BLS and U.S. Census Bureau researchers began working with the NAS recommendations.2 In 2010, an Interagency Working Group on Developing a Supplemental Poverty Measure released guidelines for a supplemental poverty measure (PDF). The working group based their guidelines on the NAS recommendations and research conducted since the NAS report was released. One of the NAS panel recommendations was that thresholds would be based solely on expenditures and derived from Consumer Expenditure Survey data. The working group adopted this recommendation; they acknowledged that the BLS had produced the NAS thresholds in the past and expected the BLS would continue to play this role for the SPM. Introduced with the SPM is a guideline that thresholds should be adjusted to account for housing status, distinguishing owners with mortgages, owners without mortgages, and renters.

SPM thresholds are derived from the sum of expenditures for food, clothing, shelter, utilities, and a "little bit more." This last group includes other basic goods and services, such as those for household supplies, personal care, and non-work related transportation. The SPM thresholds are based on expenditures of consumer units with two children. Adjustments are made to convert these expenditures to represent consumer units that include exactly two adults and two children.

Annual SPM thresholds are based on 5 years of quarterly Consumer Expenditure Survey data. The quarterly expenditure levels are adjusted to the most recent year’s purchasing power of dollars using the Consumer Price Index for All Urban Consumers (CPI-U). By using the most recent expenditure data, thresholds reflect changes in standards of living. BLS provides the thresholds to the U.S. Census Bureau, where they are adjusted to reflect the spending needs of other family types and geographic differences in prices. The Census Bureau uses the adjusted thresholds to produce SPM poverty rates and related statistics.

As seen in the chart below, the 2012 SPM thresholds are $25,784 for owners with mortgages, $25,105 for renters, and $21,400 for owners without mortgages, as compared to the official poverty threshold of $23,283. SPM thresholds for owners with mortgages as compared to those for owners without mortgages are statistically significantly different at the 0.01 level; the same result holds when thresholds for renters and those for owners without mortgages are compared. SPM thresholds for owners with mortgages and those for renters are not statistically different.

For comparison from year to year, chart 2 includes SPM thresholds for 2011 and 2012. Based on statistical tests, the 2012 SPM thresholds are higher than those for 2011 for owners but are lower for renters; however, these differences are not statistically significant. SPM thresholds for 2005 through 2012 and standard errors, along with details regarding the derivation of the housing tenure-specific thresholds, are available at http://www.bls.gov/pir/spmhome.htm.

Official and Supplemental Poverty Measure (SPM) Thresholds for Two Adults and Two Children, 2012
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Official and Supplemental Poverty Measure (SPM) Thresholds for Two Adults and Two Children, 2011 and 2012
[Chart data]

1 See the 2011 SPM statistics at http://www.census.gov/hhes/povmeas/methodology/supplemental/research/Short_ResearchSPM2011.pdf. .

2 BLS staff members produced their first NAS (expenditure-based) thresholds in 1997 for the years 1989-95 (Johnson et al. 1997) (PDF).
These researchers joined with U.S. Census Bureau researchers in 1998 to produce thresholds and poverty statistics for 1990-95 (Garner et al MLR 1998) (PDF).

 

Last Modified Date: April 10, 2014