By Stephanie Richards, Kari Williams, and Sarah Flood
The Annual Social and Economic Supplement (ASEC) of the Current Population Survey is the official source of information about poverty in the United States. Since 1968, the ASEC has been used to create the Official Poverty Measure (OPM) and has included the variables needed to create that measure. The Supplemental Poverty Measure (SPM) and the variables needed to create it were first released by the Census Bureau in 2010, reporting the SPM for 20091. In contrast to the OPM, the SPM provides a more complete picture of the economic wellbeing of American households.
The value of the SPM is apparent – it is a comprehensive and nuanced measure that accounts for the diversity of living arrangements, variability in cost of living, and a wider array of available financial resources and demands. However, the temporal coverage of SPM is limited; the Census Bureau only has data back to 2010. Over the last ten years, researchers at Columbia University’s Center on Poverty and Social Policy (CPSP) have eliminated this constraint by compiling the data necessary to create SPM and make it available back to 1968, and have shared the data with the research community via the CPSP Historical SPM Data Portal.
CPSP researchers have also partnered with IPUMS to disseminate their historical SPM data via IPUMS CPS. This includes the poverty status variables (i.e., SPMPOV and SPMPOVANC12) as well as the inputs and thresholds for creating them. If you know IPUMS, you know that we loooooove the chance to extend a valuable measure back in time. We are incredibly grateful to CPSP for the important work they have done and are thrilled to make it even easier for IPUMS CPS users to access the historical SPM data.
In this blog post, we briefly describe differences between the components – family, resources, and needs – used to create OPM and (historical) SPM, preview CPSP’s “anchored” poverty variables that facilitate comparisons over time that reference a set cost-of-living standard, and share suggestions for further reading (because we know you are going to want to learn even more about this!).
Defining Poverty
In broadest terms, the definition of poverty is whether a family has sufficient resources to meet their basic needs. To determine if a family’s resources can meet their needs, one must first define family, resources, and needs. For each of these, historical SPM extends the logic of the SPM back in time, with creative solutions for adapting the measure to constraints of historical data.
Family
The official Census definition of a family – which is used in the OPM – is “a group of two people or more (one of whom is the householder) related by birth, marriage, or adoption.” The SPM family, or resource sharing unit, is more inclusive than the OPM family definition. It includes unmarried cohabiting partners and their children, foster children under the age of 22, and any unrelated children under the age of 15 who share resources and expenses together.
Historical SPM is faced with two main limitations in identifying families or resource sharing units in early years of the CPS:
- Cohabiting couples: unmarried partners of the householder are first identified in 1995; with any coresident unmarried partners within a household identified in 2007-forward. Prior to 1995, CPSP uses the adjusted POSSLQ method to capture unmarried partners and create SPM families.
- Foster children: “foster child” is not an available response for the variable that reports a person’s relationship to householder (i.e., RELATE) prior to 1988, meaning some foster children in these years will not be incorporated into their historical SPM families. There is no way to address this limitation.
Resources
OPM resources include a family’s total pre-tax cash income from all sources, including wages, retirement, interest and dividends, social security, and veteran’s benefits (FTOTVAL). For the SPM (see SPMTOTRES), OPM cash income is adjusted to account for both additional resources (post-tax income; non-cash benefits) and non-discretionary expenses. Resources added to cash income include the estimated value of food and nutrition program benefits, housing and utility supplements, and tax credits such as the Earned Income Tax Credit (EITC) and Child Tax Credit (CTC). Subtractions from cash income (i.e., non-discretionary expenses) include the cost of federal, state, and payroll taxes, child support paid, childcare and unreimbursed work expenses, and out-of-pocket medical costs.
One challenge for the creation of SPMTOTRES in the ASEC prior to 2010 is that the necessary variables for estimating SPM resources are not always collected. In these instances, CPSP imputes values as described in Tables 1 & 2.
Table 1: Imputed Resources in Historical SPM
| Resource | Imputed Years | Notes | Imputation Source |
|---|---|---|---|
| Supplemental Nutrition Assistance Program (SNAP) | 1968-1979 | SNAP was established in 1964 and the program grew over the course of the 1970s; data first gathered in the CPS in 1980 | Receipt of benefits imputed with Consumer Expenditure Survey (CE) data; Value of benefits imputed using administrative data on SNAP/Food Stamps caseloads and benefit levels |
| School Lunch Subsidy | 1968-1979 | Program launched in 1946; participation first measured in the CPS in 1980 | Similar to SNAP imputation |
| Women, Infants, and Children (WIC)* | 1976-2009 | WIC pilot program established in 1972 and became permanent in 1974; beginning in 2001, CPS reports number of WIC recipients per household (receipt of benefits imputed by CPSP prior to 2001) | Receipt of benefits inferred by identifying income-eligible households then constraining number of individual recipients based on participation in 2001-2010 administrative data; value of benefits imputed using administrative data on average per person WIC expenditures |
| Housing assistance | 1968-1975 | Versions of federal housing assistance programs date back to at least the New Deal; CPS first asks about reduced price rentals and rental assistance in 1976 | First estimate rental payments as 30% of household income and subtract from shelter portion of the threshold, then apply correction factor based on administrative data |
| After-tax income | 1968-1979 | Census Bureau imputes tax estimates, releasing standalone files for 1980-1990 and incorporating these data directly into the CPS beginning in 1992; imputations in earlier years account for Earned Income Tax Credit (EITC), which was implemented in 1975 | National Bureau of Economic Research (NBER) Taxsim model |
Table 2: Imputed Expenses in Historical SPM
| Expense | Imputed Years | Notes | Imputation Source |
|---|---|---|---|
| Taxes | 1968-1979 | Census Bureau imputes tax estimates, releasing standalone files for 1980-1990, and incorporates these data directly into the CPS beginning in 1992 | NBER Taxsim model |
| Medical out-of-pocket expenses | 1968-2010 | First included in CPS in 2011 | Hot-deck imputation strategy to assign households to MOOP expenditure deciles based on Consumer Expenditure Survey (CE) |
| Childcare expenses | 1968-2009 | First included in CPS in 2010 | Use CE to both predict likelihood of using paid childcare and then apply hot deck imputation to assign households to expenditure deciles |
| Work expenses | 1968-2010 | Work expenses are not directly collected in the CPS. Census Bureau estimates these from theSurvey of Income and Program Participation (SIPP) | SIPP (annual data for 1998-forward; inflation-adjusted value of median work expenditures years before 1998) |
Thresholds
The poverty threshold in both the OPM and SPM are based on the composition of the family unit. The OPM threshold is determined by the number of adults and children in the household and the age of the householder. The original threshold matrix, set in 1963, is adjusted for inflation each year but not otherwise modified. By contrast, SPM thresholds are calculated by the Bureau of Labor Statistics using the Consumer Expenditure Survey (CE) and based on a rolling five-year average of the out-of-pocket costs of living. The original SPM methodology, which CPSP applies to construct historical SPM, specifically accounts for the costs of food, clothing, shelter, and utilities (FCSU2) with adjustment for miscellaneous household expenses. The shelter portion of the threshold varies by household tenure, differentiating between renters and between owners with or without a mortgage, and is adjusted for family composition and geographic differences in the cost of living.
There are two areas in which CPSP must address limited data availability for early years of the CPS to create historical SPM thresholds.
- Expenditures: CPSP uses CE data to impute both expenditures and household tenure (as well as mortgage for 1975-2010) status in early years of the data. Annual CE data are available for 1980-forward, with two additional surveys from 1960/1961 and 1972/1973. For the earliest years, CPSP constructs thresholds using the 1961 and 1972/1973 CE data, then interpolates values for interim years (i.e., 1962-1971 and 1974-1979). For 1980-1983, thresholds are based on one to four years of data instead of the full five-year average.
- Geographic adjustments: The basic geographic adjustment formula is the median rent for a given geographical area divided by the average national rent. Without a singular source of sufficiently detailed rent information dating back to reference year 1967, CPSP uses the Department of Housing and Urban Development’s Fair Market Rents for the 1985-2010 period and decennial census data (from IPUMS USA!) for earlier years.
Anchored Variables
By design, the SPM is a “quasi-relative” measure of poverty. This means that changes in the SPM poverty rate over time reflect both changes resulting from the resources that families have and differences in living standards across time. An alternative, which is more similar to the OPM, is a more absolute-style measure of the historical SPM that “anchors” the cost-of-living standard to a given year. CPSP uses the SPM methodology to generate poverty thresholds for a focal year (the anchor year), and then derives thresholds for other years by adjusting the anchor year thresholds for inflation only. The anchored SPM threshold and accompanying variables addresses the question, “what would poverty rates have been across this period when considered against the anchor year’s living standards?”
- SPMTHRESHANC12 uses the 2012 SPM thresholds and adjusts for inflation
- SPMPOVANC12 is a dichotomous measure that indicates a household’s poverty status using the 2012 anchored thresholds
- SPMGEOADJANC12 offers an anchored geographic adjustment factor, which can be used to calculate anchored thresholds that are not adjusted for geographic location.
Remember to Cite CPSP
If you use IPUMS CPS to access and use these valuable historical SPM data for the 1968 to 2009 period or the anchored SPM measure (for any year!), please acknowledge via citation the substantial efforts of CPSP to create this series.
Christopher Wimer, Liana Fox, Sophie Collyer, Irwin Garfinkel, Neeraj Kaushal, Jennifer Laird, Jaehyun Nam, Laura Nolan, Jessica Pac, Ryan Vinh, and Jane Waldfogel. Historical Supplemental Poverty Measure Data. Center on Poverty and Social Policy at Columbia University and Columbia Population Research Center. 2023. www.povertycenter.columbia.edu
Learn More
Poverty measurement – including the creation of the historical SPM – is a big topic. Check out these resources to learn more.
- Understand the differences between OPM and SPM by reading this Census Bureau Random Samplings Blog
- Learn about the history of the SPM and updates to the methodology over time from the BLS page on Research Poverty Thresholds
- Get more details about Historical SPM data in IPUMS CPS in our user note.
- Read the paper that introduces the historical SPM (Fox et al., 2015)
- Understand the geographic cost of living adjustments in historical SPM (Nolan, et al., 2016).
- Learn about the creation and implication of anchored SPM measures (Wilmer et al., 2016; Fox, 2017)
Footnotes
- This blog post will use survey years for describing availability of SPM variables unless otherwise specified. The Census Bureau collects data to create the SPM via the Annual Social and Economic supplement, or ASEC. The reference period for the ASEC is the previous calendar year, meaning the reference year is the year prior to the survey year. The initial Census Bureau releases of SPM data as stand-alone files used the reference year in naming the files. Since survey year 2020, the SPM data are included in the ASEC data file when the SPM data were originally collected; ASEC files are named according to the survey year.
- In 2020, the methodology was revised to remove telephone from utilities; telephone and internet are instead treated as separate categories (FSCUti). The revised 2020 methodology also accounts for additional in-kind benefits that are similar to the Supplemental Nutrition Assistance Program (SNAP) benefits included in the original methodology and makes a number of other changes (see this BLS documentation). The 2020 SPM data were released using both the original and the revised methodology.