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Supplemental Measure of Poverty Remains Unchanged

Census news release: “The nation’s poverty rate was 16.0 percent in 2012, unchanged from 2011, according to the supplemental poverty measure released today by the U.S. Census Bureau. The 2012 rate was higher than the official measure of 15.0 percent. The official poverty rate in 2012 was also not significantly different from the corresponding rate in 2011. Unlike the official poverty rate, the supplemental poverty measure takes into account the impact of different benefits and necessary expenses on the resources available to families, as well as geographic differences in housing costs. For example, the measure adds refundable tax credits (the Earned Income Tax Credit and the refundable portion of the child tax credit) to cash income, which reduces the supplemental poverty rate for all people by three percentage points (19.0 percent to 16.0 percent). For children, the supplemental poverty rate of 18.0 percent would rise to 24.7 percent if refundable tax credits were excluded. The supplemental poverty measure deducts various necessary expenses from income; these include medical out-of-pocket expenses, income and payroll taxes, child care expenses and work-related expenses. These expenses reduce income available for necessary basic goods purchases including food, clothing, shelter and utilities (FCSU) and a small additional amount to allow for other needs. Deducting medical out-of-pocket expenses increases the supplemental poverty rate by 3.4 percentage points. Without accounting for medical out-of-pocket expenses, the number of people living below the poverty line would have been 39.2 million rather than the 49.7 million people classified as poor with the supplemental poverty measure. Without adding Social Security benefits to income, the supplemental poverty rate overall would have been 8.6 percentage points higher (or 24.5 percent rather than 16.0 percent). People 65 and older had a supplemental poverty rate of 14.8 percent, equating to 6.4 million. Excluding Social Security would leave the majority of this population (54.7 percent or 23.7 million) in poverty. The supplemental poverty measure’s poverty thresholds vary by geography, family size and whether a family pays a mortgage, rents or owns their home free and clear. For example, the 2012 thresholds for families with two adults and two children were around $18,000 for homeowners without a mortgage living outside metropolitan areas in North Dakota, Kentucky, West Virginia, Alabama, Arkansas, South Dakota, Tennessee and Missouri, but around $35,500 for homeowners with a mortgage in the San Jose-Sunnyvale-Santa Clara, Calif., and San Francisco-Oakland-Fremont, Calif., metro areas. The $23,283 official poverty threshold for a family of four was the same no matter where a family lives. These findings are contained in the Census Bureau’s annual report, The Research Supplemental Poverty Measure, released with support from the Bureau of Labor Statistics and describing research showing different ways of measuring poverty in the United States.”

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