A poverty rate whose computation takes into account tax payments, noncash government transfers, geographic variation in the cost of living, and other important factors not contemplated in the computation of the Official Poverty Rate.
U.S. Census Bureau, Supplemental Poverty Measure.
The Official Poverty Rate was originally developed as a temporary measure, but with only a few minor changes it has been used as the country’s official poverty measure since it was introduced in 1969. The official measure estimates poverty rates by comparing a family’s or individual’s before-tax cash income to a set of poverty thresholds that vary by family size and composition, and the householder’s age. The thresholds were originally set at three times the cost of a minimum food diet in 1963, and have been updated annually using the Consumer Price Index.
The Supplemental Poverty Measure is a more complex statistic incorporating additional items such as noncash benefits, tax payments and credits, out-of-pocket medical expenses, and work expenses in the computation of family income. Thresholds used in the new measure are derived from expenditure data on basic necessities (food, shelter, clothing, and utilities), and are adjusted for geographic differences in the cost of housing. These thresholds are updated using a five-year moving average of expenditures on basic necessities.
In 2002, there were substantial changes in the racial categories used by the Census Bureau. Time series by race that include data from both racial classifications should be interpreted with care. More details on the changes in racial categories.