11/08/2011 04:26 pm ET Updated Jan 08, 2012

New Supplemental Poverty Measure Doesn't Change Reality

The new Supplemental Poverty Measure (SPM) released yesterday morning by the Census Bureau tells us that millions more are poor than what the standard poverty measure shows, but without government intervention poverty would be much worse.

The Supplemental Poverty Measure finds 49.1 million people in the United States are poor, compared to 46.6 million by the official measure. However, for some groups, including children, the poverty rate is lower using the new measure.

What does this mean, and why should we care? First, it is important to recognize that this is only a change in the measurement, and not a change in the underlying reality. Regardless of the numbers, people's everyday reality is the same. No senior citizen finds it easier to pay for medicine, and not one child is less hungry, as a result of this new report.

Nonetheless, the new measure is an important step forward. The SPM takes into account facts that are obvious on the ground but have previously not been reflected in poverty measurement: A family receiving a housing subsidy or SNAP benefits to pay for food has more money to spend on other necessities. Going to work increases a family's income, but payroll and income taxes and the cost of child care and other work-related expenses eat into that family's ability to afford other necessities. Even for people with health insurance, out-of-pocket medical costs such as premiums, deductibles and copayments add up and may leave low-income people without the money needed to pay other bills.

The new report's most striking fact is how much difference the Earned Income Tax Credit (EITC) and in-kind benefits make in reducing poverty, particularly among children. The Supplemental Poverty Measure report finds that the EITC reduced poverty among children by 4.2 percentage points, SNAP benefits by 3 percentage points, housing subsidies by 1.3 percentage points, and school lunch by 0.8 percentage points. These programs have been among the most responsive parts of the safety net during the recent recession, and have made the difference between desperation and getting by for millions of families.

The new measure also shows that 47.8 percent of people are poor or low-income, compared to 33.9 percent under the conventional measure. Examining the number of people living at 200 percent or less of the poverty level more accurately captures the large number of individuals and families that are just scraping by and barely making ends meet. Many of these families are only one crisis -- one divorce, one hospitalization, one job loss -- away from financial disaster. Absent such a crisis, they may not be officially poor, but they can't seem to get ahead and can't save for a rainy day or to send their kids to college. Low-income families may benefit from the EITC, but they probably don't receive other benefits, and if they have modest savings, that can disqualify them from receiving help in times of crisis.

The new measure is not perfect, and the Census report highlights several areas where it continues to refine the measure and seeks new data sources to provide additional detail. But the new measure does a better job of capturing the full range of resources available to families to meet their basic needs and determining the impact of programs on reducing poverty. The Supplemental Poverty Measure thus provides an indicator of where we are, and where we need to go. However we measure it, poverty is unacceptably high and hardship is unacceptably widespread, and no focus on technical issues can obscure that fact.