Comparing Trends in Poverty and Material Hardship Over the Past Two Decades

March 14, 2018

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Updated July 2018

H. Luke Shaefer, University of Michigan
Joshua Rivera, University of Michigan

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Abstract

The U.S. Census Bureau releases two poverty metrics annually: 1) the official poverty measure (OPM), which divides family pre-tax money income by inflation-adjusted thresholds; and 2) the supplemental poverty measure (SPM), which incorporates taxes and in-kind government transfers and adjusts for geographic cost of living differences. Meyer and Sullivan (2017) offer an alternative poverty measure using consumption rather than income data and utilizing an inflation adjustment the slows the growth of the poverty threshold over time. In sharp contrast to the OPM and SPM, the Meyer and Sullivan consumption poverty series finds that poverty has fallen dramatically over the past two decades.

To arbitrate between these conflicting trends, we compare annual poverty rates by these measures to a set of material hardship and labor market outcomes for years in which data are available. We use official food insecurity rates, a series of non-food material hardship outcomes taken from the Survey of Income and Program Participation (SIPP), and official unemployment rates released by the Bureau of Labor Statistics.

In the most recent year for which all measures are available, the rate of consumption poverty indicated by Meyer and Sullivan’s baseline rate is two to four times lower than the rates of food insecurity and the primary SIPP material hardship outcomes.

In terms of trends in poverty and hardship over the past two decades, OPM and SPM income poverty rates both follow trajectories in close alignment with a series commonly-utilized material hardship and labor market outcomes. In contrast, the Meyer and Sullivan consumption poverty series follows a path that is dissimilar to all of the other metrics during the past two decades, and yields very different conclusions about trends in poverty and hardship. For instance, the Meyer and Sullivan consumption series would lead to the conclusion that poverty was markedly lower during the Great Recession than in the early 2000s, even as income poverty, food insecurity, non-food material hardship, and medical hardship were markedly higher.