Poverty's New Definition

Poverty's New Definition

New poverty standards paint a new picture of poverty and the programs poor people use.

Published December 7, 2011

Poverty means something different than it used to. The Census Bureau’s newest poverty numbers use a new approach meant to give added context to the condition of the nation’s poor.


At a forum held by the Urban Institute, experts explained that there are now two prevailing measures used to describe poverty: the old Official Poverty Measure (OPM) which was devised in the 1960’s, and the new Supplemental Poverty Measure (SPM).


Officials complained that the old method is replete with shortcomings and does not provide a comprehensive picture of poverty. But the new SPM offers a glimpse into how families are faring and how well government safety measures are doing in reducing poverty. 


The SPM takes into account the effects of government benefits like food stamps, housing assistance, tax credits and makes deductions in expenditures like medical costs.


As a result of the new method, children appear to be fairing slightly better and the elderly don’t seem to be doing as well. The child poverty rate declined 19 percent, but the elderly rate increased 35 percent.


Shiela Zedlewski, a fellow with the Urban Institute, said, “There are 14 million poor kids in the country. And over half of the children in the country live in low-income households. Sixteen percent of adults over the age of 65 are poor. That’s way more than we thought using the old standard.”


Jason DeParle, a New York Times correspondent, explains further, “You see eight percent fewer Blacks in poverty but eight percent more whites in poverty. And for the near poor, people at or just above the poverty level, there are 50 million people on top of the 49 million people already living in poverty.”


The reason behind the poverty increase for seniors is the thresholds are higher using the new method so more elderly are considered to be poor. On the other hand the poverty rate for kids is lower because benefits like the earned income tax credit, school lunches and WIC are counted as income under the new method.


When it comes to measuring poverty, it also matters where you live. The new index adjusts for differences in costs of living from state to state. Linda Giannarelli, senior fellow, Urban Institute, said, “We all know it costs different amounts to live different places. In a state with low housing costs, the SPM poverty rate is lower when you adjust for geography. “


The importance of the new threshold cannot be overstated. As in the case of the child poverty rate, the SPM demonstrates how government benefits directly reduce child poverty.


Giannarelli said, “The new way factors in the earned income child credit for example. And as a result, the national poverty rate is 13 percent higher.”


In an era of budget showdowns and limited coffers, the SPM may be a vital tool to quantitatively assess the policies and programs that will have the biggest impact on reducing poverty.


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(Photo: Lucy Nicholson/Reuters)

Written by Andre Showell


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