Trends in Child Poverty by Race/Ethnicity: New Evidence Using an Anchored Historical Supplemental Poverty Measure
Official poverty statistics have been criticized, however, for being based on an outdated measure of poverty (Blank, 2008; Citro and Michael, 1995). First put into use in the 1960s, the official poverty measure’s (OPM) concept of needs has been updated for inflation but still reflects the living standards, family budgets, and family structures of that time. Moreover, when tallying family resources, the OPM misses key government programs such as Food Stamps and tax credits that have expanded since the 1960s. For these reasons, the Census Bureau and the Bureau of Labor Statistics (BLS) implemented an improved “supplemental poverty measure” (SPM) in 2011 (Short 2011) for calendar years 2009 and 2010. This SPM is now released annually alongside the OPM (see Short 2015 for the latest data as of this writing), but the Census Bureau has no plans to produce the measure historically. However, historical data on levels and trends in poverty are essential for better understanding the progress the country has made since Lyndon B. Johnson’s famous declaration of the War on Poverty in the 1960s. Understanding what has been successful in the past is important for assessing what might be successful in the future for amelioration of economic disadvantage. What’s more, success and its sources may vary by race/ethnicity.
We use a historical version of the SPM to provide the first estimates of racial/ethnic differences in child poverty for the period 1970 to the present using this improved measure. We begin our analysis in 1970 because that is the first year we can reliably distinguish non-Hispanic whites, African-Americans, and Latinos (unfortunately, data limitations prevent us from examining other groups over the long term). We detail below our data and methods, then describe our main results, and conclude briefly.
DATA AND METHODS
We use data from multiple years of the Current Population Survey’s Annual Social and Economic Supplement (also known as the March CPS) combined with data from the Consumer Expenditure Survey (CEX) to produce SPM estimates for the period 1970 to 2014. We use a methodology similar to that used by the Census Bureau and the Bureau of Labor Statistics in producing their SPM estimates, but with adjustments for differences in available data over time.
Our methodology differs from the SPM in only one respect. Instead of using a poverty threshold that is re-calculated over time, we use today’s threshold and carry it back historically by adjusting it for inflation using the CPI-U-RS. Because this alternative measure is anchored with today’s SPM threshold, we refer to it as an anchored supplemental poverty measure, or anchored SPM for short. An advantage of an anchored SPM is that poverty trends resulting from such a measure can be explained only by changes in income and net transfer payments (cash or in kind). Trends in poverty based on a relative measure (e.g. SPM poverty), on the other hand, could be due to over time changes in thresholds. Thus, an anchored SPM arguably provides a cleaner measure of how changes in income and net transfer payments have affected poverty historically (Wimer et al., 2013).