Progress on Poverty? New Estimates of Historical Trends Using an Anchored Supplemental Poverty Measure

Abstract

This study examines historical trends in poverty using an anchored version of the U.S. Census Bureau’s recently developed Research Supplemental Poverty Measure (SPM) estimated back to 1967. Although the SPM is estimated each year using a quasi-relative poverty threshold that varies over time with changes in families’ expenditures on a core basket of goods and services, this study explores trends in poverty using an absolute, or anchored, SPM threshold. We believe the anchored measure offers two advantages. First, setting the threshold at the SPM’s 2012 levels and estimating it back to 1967, adjusted only for changes in prices, is more directly comparable to the approach taken in official poverty statistics. Second, it allows for a better accounting of the roles that social policy, the labor market, and changing demographics play in trends in poverty rates over time, given that changes in the threshold are held constant. Results indicate that unlike official statistics that have shown poverty rates to be fairly flat since the 1960s, poverty rates have dropped by 40 % when measured using a historical anchored SPM over the same period. Results obtained from comparing poverty rates using a pretax/pretransfer measure of resources versus a posttax/posttransfer measure of resources further show that government policies, not market incomes, are driving the declines observed over time.

Young child poverty in the United States: Analyzing trends in poverty and the role of anti-poverty programs using the Supplemental Poverty Measure

“…For this reason, the SPM has been used to generate more accurate estimates of trends in poverty over time as well as estimates of current poverty today (Fox et al, 2015; Renwick & Fox, 2016; Wimer, Fox, Garfinkel, Kaushal, & Waldfogel, 2016). We detail our construction of the SPM below.…”

“…We detail our construction of the SPM below. For the most part, we follow Census procedures for the SPM but like Wimer et al (2016), we differ from Census in using an “anchored” SPM measure, as detailed below.…”

“…The Census’ and BLS’ SPM uses a relative poverty threshold, which changes over time with underlying consumer expenditures on the basic bundle of goods in the FCSU basket. See (Wimer, Fox, et al, 2016)for a more extended discussion of the virtues of an anchored versus a relative threshold for analyzing trends over time. For the present study, we prefer the anchored measure over the relative measure because the relative threshold makes it more difficult to identify whether changes in poverty over time are the result of changes in income/resources or changes in underlying spending patterns, while the anchored threshold can provide for a much clearer identification of poverty trends stemming solely from changes in income/resources.…”

“…For the present study, we prefer the anchored measure over the relative measure because the relative threshold makes it more difficult to identify whether changes in poverty over time are the result of changes in income/resources or changes in underlying spending patterns, while the anchored threshold can provide for a much clearer identification of poverty trends stemming solely from changes in income/resources. Full details of our methodological procedures for the anchored threshold can be found in (Wimer, et al, 2016). …”

How Johnson Fought the War on Poverty: The Economics and Politics of Funding at the Office of Economic Opportunity

“…Some of this effect was immediate. Recent work extending the supplemental poverty measure (which takes a fuller accounting of changes in noncash transfers and those through the tax code) backwards in time shows that poverty rates fell from almost 26 percent in 1967 to 16 percent today, a fall greatly aided by programs begun under the War on Poverty (Wimer et al 2013). A complementary, consumption-based measure of poverty registers a 26 percentage point decline from 1960 to 2010, with just over two-thirds of this decline occurring before 1980 (Meyer and Sullivan 2012).…”