Many experts consider the measure of poverty currently being used as the "official measure" as flawed and outmoded. A congressionally commissioned study conducted by the National Academy of Sciences (NAS) National Research Council (NRC) panel provided a wide range of specific recommendations to revamp the statistical measure of poverty used in the United States in its 1995 report, Measuring Poverty: A New Approach. More recently, the Department of Commerce Economic and Statistics Administration, under an OMB sponsored initiative, announced that the Census Bureau, in coordination with the Bureau of Labor Statistics (BLS), will develop a Supplemental Poverty Measure (SPM), using NAS panel recommendations and subsequent research as a framework. The proposed measure will supplement, rather than replace, the current poverty measure, which will continue to be deemed the "official" statistical measure of poverty in the United States. Finally, recent House and Senate legislative proposals to create a new "modern" poverty measure, and more recent developments initiated by the Office of Management and Budget (OMB) proposing a new Supplemental Poverty Measure, are reviewed in the context of the current "official" measure and the NAS panel recommendations. The panel's major recommendations focused on setting, updating, and adjusting poverty thresholds, and defining family resources to be counted against poverty thresholds for determining families' and individuals' poverty status. NAS-based poverty thresholds are likely to be more sensitive to the effects of price changes of necessities on family consumption than are the official poverty thresholds, even though the NAS-based thresholds would not directly be adjusted for price changes. Work-Related Expenses

The NAS panel recommended that work-related expenses and work-related child care expenses be subtracted from family resources for purposes of estimating poverty. The two alternative poverty thresholds result in substantial increases in measured poverty among persons age 65 and older. Inclusion of medical expenses into a poverty measure especially affects the aged, particularly when compared to children. Under either measure that includes MOOP, the elderly poverty rate is higher than that of children and is more than double the current official rate of 9.7%. Effect of Area Cost-of-Living Adjustments on State Poverty Rates

 Table 6 depicts poverty rates by state under the current "official" poverty measure compared to NAS-based poverty rates with and without geographic adjustments for area cost-of-living differences using the Census Bureau's current experimental methods based on FMR. Recent Efforts to Adopt a NAS-Based Poverty Measure in the United States

As noted earlier, since the NAS panel issued its recommendations for a new U.S. poverty measure some 15 years ago, extensive research has been undertaken by federal statistical agencies, academics, and other researchers to devise and test methods, and to evaluate the results of implementing the NAS panel's recommendations. Estimates of poverty under the various "experimental" NAS-based measures may vary markedly from one another and from the current "official" poverty measure, both in terms of the total numbers of persons estimated as having income below poverty, but also in terms of their demographic composition of the poor, and where they live. In part, as a consequence, none of the "experimental" NAS-based measures has emerged as a preferred alternative or supplemental measure to the "official" poverty measure. The legislation, if adopted, would result in a new "modern" poverty measure that would coexist with the current "official" poverty measure, and redesignate the current "official" measure as the "traditional" poverty measure. According to the Working Group, the SPM should be considered a "work in progress," as improvements in data and methods are made over time.
Nearly a half-century has passed since poverty emerged as a major policy issue in the United States, taking form as a "War on Poverty." As precursors, statistical studies sought to define the scope, depth, and breadth of the poverty problem in the United States, as well as the composition of the population affected, and poverty's social and economic causes and effects. Ultimately, the federal government adopted an "official" U.S. statistical poverty measure, which was to serve as the official benchmark for evaluating progress towards eliminating poverty in the United States.
Many experts consider the "official" poverty measure currently in use as flawed and outmoded. A National Academy of Sciences (NAS) expert panel provided a wide range of specific recommendations to revamp the statistical measure of poverty in its congressionally commissioned 1995 study—Measuring Poverty: A New Approach. Now, after some 15 years of study, efforts are being undertaken to incorporate NAS panel recommendations into a new statistical poverty measure to accompany the current "official" measure. House and Senate legislative proposals introduced in both the 110th and 111th Congress (H.R. 2909, S. 1625), if adopted, would instruct the Census Bureau to create a new "modern" poverty measure, following many of the NAS panel's recommendations. More recent developments initiated by the Office of Management and Budget (OMB) propose that the Census Bureau, in coordination with the Bureau of Labor Statistics (BLS), develop a new Supplemental Poverty Measure (SPM), using NAS panel recommendations as a starting point.
A NAS-based poverty measure, like the current "official" measure, would count families' and unrelated individuals' incomes against poverty income cutoffs (i.e., poverty income thresholds) in determining whether they, and their members, are considered poor. Under a NAS-based poverty measure, poverty income thresholds would be higher than under the current measure, and more sources of income (e.g., nutrition assistance and refundable tax credits) would be counted against the thresholds than under the current measure; and, unlike the current measure, work-related expenses, taxes, and out-of-pocket medical expenses would be subtracted from income. NAS-based poverty thresholds, unlike the current "official" thresholds, would adjust for changes in the overall basic standard of living in the society over time. In addition, the NAS panel recommended that adjusting poverty thresholds for area cost-of-living differences should be considered. All in all, a NAS-based poverty measure would be more sensitive than the current poverty measure in assessing the effects of government policy on poverty.
Estimates of the number and composition of the population that would be counted as poor under a NAS-based poverty measure, compared to the current "official" measure, in part depend upon the specific details and methodologies used to construct the alternative measure. However, a NAS-based poverty measure generally results in a greater number of persons being counted as poor than under the current "official" measure. Additionally, persons in working families are more likely to be counted as poor than under the current measure (largely due to the subtraction of taxes and work-related expenses from income), as are older persons (largely due to subtraction of medical expenses from income). Whereas under the current "official" poverty measure, the poverty rate of children is about twice that of persons age 65 and older (19.0% compared to 9.7%, respectively, in 2008), under a NAS-based measure, the age 65 and older poverty rate exceeds the child poverty rate (21.0% compared to 20.2%, respectively). Based on current methodologies, geographic adjustments for area cost-of-living differences result in markedly different poverty rates for some states.