T he official measure provides a consistent historical view of poverty in the United States , but t he SPM may be better suited to help ing c ongress ional policymakers and other experts understand how taxes and government programs affect the poor . Also, it may better illustrate how medical expenses and work-related expenses such as child care can affect a family's economic well-being . Like the official poverty measure, it is a measure of economic deprivation. Measures of need are used to establish poverty thresholds that are valued in dollars. The SPM poverty thresholds measure a standard of living based on expenditures for food, clothing, shelter, and utilities (FCSU), and "a little more" for other expenses. Broadly Comparing the Official Poverty Measure to the SPM

Both the SPM and the official measure determine the poverty status of people and families by comparing their financial resources against poverty thresholds. For both measures, poverty thresholds vary by family size and composition, and families whose resources are lower than the thresholds are considered to be poor. The measures differ in their definitions of the following: 
N eed , as it is used in the thresholds (the dollar amounts used to determine poverty status). F inancial resources that are considered relevant for comparing against the measure of need as specified in the thresholds. Financial resources to meet needs, whether in the SPM or the official measure, are based on the sum of income of all family members. While the official measure uses money income before taxes, the SPM makes additional adjustments and considers a wider range of resources. F amily , for the purpose of assigning thresholds and counting resources. These include unmarried partners and their children (if any are present) and foster children not legally adopted. First, the measure of need is defined differently in the SPM's poverty thresholds. According to a 1955 USDA food consumption survey, families spent approximately one-third of their income on food, on average; therefore, the costs of the food plans were multiplied by three to produce family income amounts. To obtain the dollar amount used as a starting point for computing the complete set of thresholds, an average is taken among consumer units whose out-of-pocket expenditures on FCSU rank in the 30 th to the 36 th percentiles, among units with exactly two children, according to the Consumer Expenditure Survey. In contrast, the SPM uses mathematical formulas to adjust the thresholds by family size. Estimated Value of In-Kind Benefits

Unlike the official measure, the SPM includes estimates of the monetary value of in-kind benefits, such as for food and subsidized housing, in the measure of income. The SPM includes WIC in its resource definition. When computing resources for the SPM, the sum of child care expenses and other work-related expenses are capped at the income of the lower-earning parent (so that for determining poverty status, expenses cannot exceed the amount brought in by working). However, in terms of programs targeted to lower income people and families, the official measure excludes noncash medical, food, and housing benefits as well as benefits paid through the tax code. After it, the components with the most impact are MOOP (with 10.5 million persons added to the poverty population once those expenses are taken into account); refundable tax credits (with 8.1 million kept out of the estimated poor population because they or a family member received the credits), work expenses, including child care (6.0 million added to the poverty population, on the margin); FICA (4.7 million added to the poverty population, on the margin); and SNAP (3.6 million kept out of the poor population, on the margin). Differences in the Demographic Profile of the Poor

As seen above, people can be affected by multiple resource components considered in the SPM. While MOOP can be high for the aged, their effect on poverty rates is mitigated by the fact that homeowners without a mortgage (such as aged persons who have paid off their mortgages and still live in that house) have lower housing expenses—and in turn lower poverty thresholds—than do mortgage-paying homeowners and renters. Poverty rates in the Northeast and West tend to be higher under the SPM than under the official measure, in part because of the relatively higher thresholds in those regions, compared with the Midwest and the South. Regional differences in income, noncash benefits, and items subtracted from SPM resources (such as MOOP or work expenses) also drive differences in regional poverty rates. Limitations of the SPM and Outstanding Issues

			Data Considerations

Because it is based mainly on survey data, the SPM warrants the same caveats as do any estimates based on surveys (including the official poverty measure): the data are estimates based on a sample of the population and, as a result, have margins of error. That is, it does not count the "value" of health insurance as a resource, and subtracts from resources health insurance premium payments, deductibles, copayments, and other out-of-pocket health expenses made by the family. Medical needs are not included in the SPM poverty thresholds. The SPM thresholds were defined to include the recurring needs of food, clothing, shelter, utilities, and a little more for miscellaneous expenses; MOOP are subtracted from family income because they cannot be used to meet the needs identified in the threshold. There has been some debate about whether the SPM is closer to a relative or an absolute poverty measure. Poverty Thresholds under the SPM and the Official Poverty Measure

Unlike the official poverty measure, which uses 48 poverty thresholds that are updated annually for inflation and applied nationwide, the SPM thresholds are computed using additional variables, resulting in thousands of thresholds once they are geographically adjusted. The SPM thresholds are based on Consumer Expenditure Survey (CE) data for food, clothing, shelter, and utilities (FCSU), and adjustments are made thereafter by housing tenure (that is, for homeowners with mortgages, homeowners without mortgages, and renters), by geographic variations in housing costs for each housing tenure group, and by family composition.
The Supplemental Poverty Measure (SPM) is a measure of economic deprivation—having insufficient financial resources to achieve a specified standard of living. The SPM addresses some of the limitations of the official poverty measure, without supplanting it outright.
Both the SPM and the official measure determine the poverty status of people and families by comparing their financial resources against poverty thresholds that are valued in dollars. For both measures, poverty thresholds vary by family size and composition, and families whose resources are lower than the thresholds are considered to be poor.
The measures differ in their definitions of
need, as it is used in the thresholds (the dollar amounts used to determine poverty status), financial resources that are considered relevant for comparing against the measure of need as specified in the thresholds, and family, for the purpose of assigning thresholds and counting resources.
Need
The official poverty thresholds measure needs derived from the cost of an austere food budget. The food budget was multiplied by three, based on the finding that food accounted for about one-third of total family expenditures in 1955. Since their original computation, these thresholds have been adjusted annually for price inflation. In contrast, the SPM's thresholds are based on consumer expenditures for food, clothing, shelter, and utilities, and it uses five years of data from the Consumer Expenditure Survey in calculating needs and thresholds. Developing the SPM thresholds starts with spending data for families with exactly two children. These data are refined by using approximately the 33rd percentile of families' expenditures on food, clothing, shelter, and utilities. Next, an extra 20% is figured into the thresholds for miscellaneous expenses such as cleaning supplies and personal care items. The thresholds then undergo further adjustment to reflect that
housing costs differ between homeowners with mortgages, homeowners without mortgages, and renters; housing costs differ geographically; and costs differ by family size and composition.
Financial Resources
Financial resources to meet needs, whether in the SPM or the official measure, are based on the sum of income of all family members. While the official measure uses money income before taxes, the SPM makes additional adjustments and considers a wider range of resources. The SPM includes the value of certain in-kind benefits (such as food and housing subsidies), uses income after estimated federal and state taxes, and subtracts some expenses from income. These expenses include medical out-of-pocket costs, such as health insurance premiums, physician co-pays, and over-the-counter medications; child support paid outside of the household; and work expenses, such as child care and the cost of commuting, tools, uniforms, or licensing fees related to a person's employment. Work expenses, including child care, are capped at the amount of earnings from work of the lowest-earning family member. These expenses are subtracted from family income because they cannot be used to obtain the needs defined in the SPM thresholds. Unlike the official poverty measure, the range of financial resources included in the SPM is defined to be consistent with the types of needs used to compute the SPM poverty thresholds.
Family
Like the official measure, the SPM family unit definition includes people related by birth, marriage, or adoption living in the same housing unit. However, the SPM additionally includes cohabiting couples and their children, and foster children below age 22.
How Does Poverty Look through the Lens of the SPM?
The demographic profile of the poverty population is different under the SPM than under the official measure. Children have a comparatively lower poverty rate (percentage in poverty) under the SPM, and the aged (65 and older) and working-age persons (18 to 64) have comparatively higher poverty rates. These differences can be explained by the SPM's resource definition. The SPM includes tax credits and in-kind benefits that help families with children (in effect, boosting the measure of family income). It subtracts medical out-of-pocket expenses, which disproportionately affects the aged (lowering their measure of income), and subtracts work-related expenses, which disproportionately affects the working-age population (lowering their measure of income).
Uses and Limits
The SPM can give policymakers the tools to understand how taxes and government programs, including the noncash programs, affect the poor. It also illustrates how medical expenses and work-related expenses such as child care can affect a family's economic well-being. However, the SPM poverty estimates are derived from household survey data, and hence are affected by issues such as underreporting of income from government benefit programs, limitations on how tax liabilities and tax benefits can be estimated based on survey data, and differences in how noncash benefits and lump-sum tax refunds are "valued" by program recipients versus how they are valued for the purposes of poverty measurement. Additionally, the SPM does not directly value health insurance provided publicly or privately. Further, poverty has historically been measured in the United States as an "absolute" measure, based on how many people fall below a set standard of living. Questions have been raised about whether the SPM continues to measure poverty in that way, or represents a "relative" measure of poverty, based on how the population ranks in terms of well-being relative to each other.