The U.S. Federal Government Adds New Way to Measure Poverty

The U.S. Commerce Department this week announced that the Census Bureau will develop a Supplemental Poverty Measure to improve understanding of the economic status of U.S. families. The measure is based on recommendations from the 1995 National Research Council report Measuring Poverty: A New Approach, along with subsequent research.

The Census Bureau’s official method for gauging the number of U.S. families in poverty is based mainly on a family's cash income. The new alternative measure will be more complex, factoring in other types of income and expenses -- tax credits, for example, and money spent on out-of-pocket medical expenses. It also takes into account the varying cost of housing in different areas of the country.

Federal agencies will continue to use the official measure to determine eligibility for government programs, the Commerce Department said, while the supplemental measure will be used to provide deeper understanding of economic conditions and trends. Poverty estimates based on the supplemental measure will be released in the fall of 2011, at the same time as the official estimates.