A Decennial Anchoring Approach to SPM Poverty Thresholds

• In Event: Why'd We Have to Make Things So Complicated? The Case for a Simpler, More Transparent SPM

Abstract

Since 2022, Supplemental Poverty Measure (SPM) and official poverty measure estimates have diverged. During this time, SPM rates have either increased or were not statistically different from the year prior while the official poverty rate has fallen. Research at the Bureau of Labor Statistics (BLS) and the Census Bureau has identified the annual updating procedure of SPM poverty thresholds — for both living standards and price changes — as the primary driver of this divergence (Schild 2023; Creamer 2024, 2025). That is, it is difficult to pin down whether the divergence in the two measures reflects changes in economic growth, public policy, price levels, or standards of living.

Building on this research, this paper outlines a potential methodology for simplifying the production of SPM poverty thresholds. The methodology combines two advantages of each of the existing thresholds: the consistency provided by the official poverty measure over time to ease year-to-year comparisons and the regular updating of the standard of living in the SPM to make the poverty thresholds more relevant to current experience. The potential method anchors the standard of living captured by the threshold on 10-year increments (2010, 2020, etc.) adjusting for changes in prices in the intervening years. Two anchored SPM estimates are provided for 2019, bridging the historical time series from the Base 2010 standard of living to the Base 2020 standard. For price adjustments, the paper explores estimates using the Consumer Price Index for all Urban Consumers (CPI-U), the Chained Consumer Price Index for All Urban Consumers (C-CPI-U), and the CPI which is limited to food, clothing, shelter, utilities, telephone and internet (FCSUti) that is used in the creation of the SPM thresholds.

This research is part of ongoing work at the Census Bureau which studies changes and improvements to the SPM and does not represent a planned change in methodology.

Author

• John Creamer, U.S. Census Bureau
  Presenting Author