REPORT InequalityPoverty

The Defining Down of Economic Deprivation: Why We Need to Reset the Poverty Line


The way the federal government measures poverty, rooted in the economic assumptions of the 1960s and 1990s, is woefully out of date, resulting in a drastic underreporting of families in poverty. This report is a joint project of the Center for Economic and Policy Research and The Century Foundation’s Bernard L. Schwartz Rediscovering Government Initiative. The report is published in full here and as a PDF, downloadable from this page.

The poverty line has needed a reset for a long time. Until that happens, the federal government should discontinue the use of the Official Poverty Measure (OPM) for public statistical purposes. As a statistical measure, the Supplemental Poverty Measure (SPM) is a significant improvement on the OPM in most ways, but it doesn’t provide a reasonable reset of the antiquated poverty line. The federal government should report poverty statistics using both a conventional (relative) poverty measure like those used in Canada and the United Kingdom, as well as an improved, more inclusive market-basket measure that builds on the SPM.

Will resetting the poverty line in a reasonable fashion mean that more Americans will be counted as having resources below it? Yes, but that’s only because a reasonable reset will provide a more accurate picture of who is economically deprived by today’s standards of housing, child development, child care, transportation, and other basics, and not those of 1963.

What follows in this report is an analysis of the current crisis in poverty measurement, with a particular focus on the poverty lines established by the OPM and SPM, and on households that include children. This report makes five recommendations that, if adopted, would improve the relevance, credibility, accuracy of federal poverty measurement. 

What You Should Know:

  • The Official Poverty Measure (OPM), developed in the 1960s and adopted as the federal government standard by President Nixon in 1969, has remained the same for over half a century, only updated for inflation.
  • The Supplemental Poverty Measure (SPM), which was developed by President Obama’s Office of Management and Budget and has been in use since 2011, is an improvement over the OPM, but still, was largely based on conservative interpretations of recommendations made by a panel of the National Academy of Sciences that was convened in 1992.
  • These two measures of poverty set the “poverty line” much lower than what the public perceives as what it means to be poor and lower than the poverty line of other similar economically developed countries.
  • This report recommends immediately discontinuing use of the OPM for statistical purposes, updating the SPM to better reflect what it truly means to be poor in the United States, and using a conventional “relative” poverty measure as an additional measure of poverty.

Join us online on Thursday, October 1, 2:00–3:00 PM EST as we discuss the report’s findings on why the OPM is woefully out of date, the changes needed to the Supplemental Poverty Measure (SPM), and how the federal government can more accurately measure poverty in America, especially during the COVID-19 pandemic.
Please register to obtain the Zoom link.

This report was published by the Bernard L. Schwartz Rediscovering Government Initiative, and is a joint project of The Century Foundation and the Center for Economic and Policy Research.


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