Supplemental Poverty Measure Shows that Federal Benefits are Critical to Children

As we recover from an election cycle where candidates spent $6 billion and prepare for an upcoming holiday season where we will spend an estimated $586 billion, a new report released by the U.S. Census Bureau – The Research Supplemental Poverty Measure: 2011 reminds us all that nearly 50 million people live in poverty across the richest nation on earth.

The supplemental poverty measure (SPM) takes into account essential expenditures like clothing, food, shelter and utilities. It also controls for geographic differences in housing costs and considers benefits such as food stamps, school meals, WIC, and the Earned Income Tax Credit, and out-of-pocket medical expenses and child care. Thus, it serves as a more comprehensive measure of poverty compared to the official poverty measure. The official poverty measure was developed in the early 1960s and has not changed much since. The measure controls for family size but does not factor in geographical differences in housing costs, utilizes an antiquated expenditure formula and only uses before-tax cash income as the primary resource measure in determining poverty status.

According to the report, in 2011 in the U.S. the supplemental poverty rate was 16.1 percent compared to the official poverty rate of 15.0 percent. For the first time, statewide supplemental poverty rates were calculated using 3-year averages. In Kentucky in 2009-2011, the supplemental poverty rate was 13.4 percent compared to the official poverty rate of 17.1 percent. The lower rate is likely attributed to factors such as lower housing costs, lower rates of expenses and benefits that work.

One major finding of the report is that the supplemental poverty measure shows that the rate of children living in poverty in the U.S. is lower than the official child poverty rate, 18.1 percent compared to 22.4 percent. If key supports such as refundable tax credits, SNAP, social security, housing subsidies, and unemployment insurance were excluded, then the SPM rate would be higher for children.

As Kentuckians shop this holiday season and are bombarded with various campaigns to buy children living in poor families the latest over-hyped plastic toy, we need to step back and think about what these children really need. What they need are policies that help their families overcome poverty and give them access to opportunity. One such policy is a state Earned Income Tax Credit. Without refundable tax credits, like the EITC in 2011, the poverty rate would have been 24.4% instead of 18.1%. Kentucky can piggyback on the federal benefits of the EITC by enacting one at the state level.

It is time we transform the status quo regarding how we tend to think about giving during this time of year, it must change from short-term satisfaction to empowering people for long term success!

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