In response to concerns that the official poverty measure is outdated and does not accurately reflect people’s financial resources or liabilities, the Census Bureau has developed an alternative measure of poverty, known as the Supplemental Poverty Measure (SPM). The SPM differs from the official measure in several ways, thereby producing different estimates of poverty (see Appendix for details). Two primary differences are how poverty thresholds are measured and how financial resources are measured:
- Measuring poverty thresholds. The SPM bases poverty thresholds on patterns of expenditures on basic necessities that are more recent than 1963, and adjusts thresholds to reflect homeownership status and regional differences in housing prices. The SPM thresholds vary by household size, but not by age. For example, under the SPM, the poverty threshold in 2017 was about $10,400 for a single homeowner without a mortgage living in Charlotte, North Carolina (about $1,400 less than the official poverty threshold for an individual age 65 or older), and about $18,400 for a single adult with a mortgage in San Jose, California (about $6,600 more than the official poverty threshold for an older adult).
- Measuring resources. In addition to monetary income, the SPM incorporates certain information about a household’s financial resources and liabilities. Resources include the monetary value of tax credits and in-kind government benefits received for food, clothing, shelter, and utilities (e.g., food stamps). Liabilities include job-related expenses, taxes paid, and out-of-pocket expenses on health care, including premiums.