Press Release Health and Social Programs Poverty United States

Census Poverty Estimates Should Come with Warning Labels, says CEPR Policy Expert

September 13, 2021

Contact: Karen Conner, 202-281-4159Mail_Outline

Washington DC — In response to tomorrow’s release of income, poverty, and health insurance estimates for 2020 from the Census Bureau, CEPR senior policy fellow Shawn Fremstad issued the following statement:

“As it has in past years, Census will report two poverty measures: 

“1) an official poverty measure (OPM) limited to money income that uses a poverty line that was developed in the early 1960s and has only been adjusted for inflation since then; 

“2) a supplemental poverty measure (SPM) that has been in development since the early 1990s and takes tax payments, tax credits, some work expenses, and certain in-kind benefits (including housing assistance and nutrition assistance) into account.

“The OPM is widely regarded by experts as the federal government’s worst statistical indicator. It combines an anachronistic poverty line, which has defined poverty down over the last half century, with an income definition that fails to take account of major benefits like Supplemental Nutrition Assistance Program (SNAP), housing assistance, and the Earned Income Tax Credit (EITC). The Census Bureau should stop using the OPM as a statistical indicator in official reports. Failing that, the Census Bureau should clearly warn the public that the OPM is not an accurate measure. 

“The SPM improves in nearly all respects on the OPM. However, the SPM does not provide a reasonable measure of the income needed not to live in poverty today. As CEPR and other experts recently recommended: “The SPM thresholds should be updated to reflect the current costs of a basket of goods and services representing a modest, basic standard of living. They should be based on the assumption that the maintenance of health and social well-being, the nurture of children, and participation in community activi­ties are desirable and necessary social goals.” 

“Finally, it is worth noting that past annual Census reports on poverty have not included poverty estimates that use a conventional “relative poverty” indicator. Poverty is typically measured in other wealthy countries using a poverty line set at 50 or 60 percent of median disposable income adjusted for family size. According to the LIS Cross-National Data Center, the US poverty rate using a relative poverty measure set at 50 percent of median income would have been 17.3 percent in 2019, compared to 10.5 percent using the OPM and 11.7 percent using the SPM. The Census Bureau should include this kind of relative poverty measure in future annual reports on poverty.” 

PRESS: CEPR’s Shawn Fremstad is available to discuss the US Census Bureau’s 2020 report on poverty and income statistics.

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