The Supplemental Poverty Measure (SPM) is an alternative measure of poverty, developed and reported by the U.S. Census Bureau, that is intended to provide a more thorough and accurate assessment of how much income a household needs to get by. The SPM differs from the official poverty measure in two ways:
(1) Poverty Threshold: Whereas the official poverty measure was set in 1965 at three times the subsistence food budget and has only been adjusted for inflation since then, the SPM is set at the 33rd percentile of expenditures on food, clothing, shelter, and utilities (FCSU) of consumer units with exactly two children multiplied by 1.2. The thresholds are adjusted based on both family size and differences in regions’ housing costs.
(2) Income Measurement: The income measure for the SPM, like the official measure’s, includes all cash income from whatever source, but also non-cash benefits like food stamps, subsidized school lunches, housing assistance, and so forth. It then takes taxes (including both payroll taxes and refundable credits) into account, and subtracts out necessary expenses like work-related costs, child care, child support, and out-of-pocket medical expenses.
Comparing the poverty rates under the official poverty measures and the SPM reveals the effect that government transfer programs and taxes have on keeping households above or below the poverty level.
The US Census Bureau releases an annual report on poverty; for the first time, a single report incorporating both the official and supplemental poverty measures was released in 2022 reporting 2021 data. The SPM rate for 2021 was 7.8 percent, which was 3.8 percentage points lower than the official poverty rate of 11.6 percent. The SPM fell in 2021 for the third straight year and reached its lowest level since the measure was first calculated in 2009. The SPM child poverty rate plummeted from 9.7 percent in 2020 to 5.2 percent in 2021, a 46 percent drop, due especially to the substantial, but temporary, expansion of the child tax credit as part of the American Recovery Plan Act of 2021.