Giving Compass' Take:

• Angela Rachidi calls out five things that the federal government's poverty numbers can and cannot tell us about poverty in the United States. 

• How can private efforts fill the information gaps left by the government? How can this data guide anti-poverty efforts? 

• Read about the need to update the poverty line measurement standard. 

Each September, the federal government releases official statistics on income and poverty for the year prior, including the official poverty measure (OPM) and supplemental poverty measure (SPM). The flaws of both measures are well known, but they still reveal some important information about poverty and economic wellbeing in the United States. Below are five things this year’s statistics do and do not tell us about poverty.

1. A strong economy means fewer Americans in poverty. This may seem obvious, but it is worth restating. The OPM does not count all household resources, including post-tax and in-kind assistance like refundable tax credits and Supplemental Nutrition Assistance Program (SNAP) benefits, making it an inaccurate measure of poverty. But it still tells us something about the relationship between “market income” and poverty, meaning income that comes primarily from employment and cash transfers linked to employment like social security or unemployment insurance.

2. The social safety net relieves financial stress for low-income families. The SPM addresses problems with the OPM by including most post-tax and in-kind government benefits when calculating household income. In doing so, it shows that government assistance reduces poverty, particularly for children. For example, without refundable tax credits, the SPM for children would be 5.63 percentage points higher and 1.81 points higher without SNAP.

3. We still don’t know how many Americans fail to meet their basic needs, and how this has changed over time. The omission of billions of dollars of government assistance in the OPM makes it useless in assessing the material wellbeing of households, but two components of the SPM make it equally inadequate.

4. Annual poverty statistics tell us nothing about persistent poverty. Both the OPM and the SPM rely on an annual survey of households and calculates whether income exceeds a threshold of poverty for that year. This gives us a snapshot of poverty at a point in time, but tells us nothing about how long households experience poverty.

5. Policies should support a strong economy and government assistance programs that keep people connected to the labor market. A strong economy is essential to lowering poverty, making federal policies that support jobs and wage growth an anti-poverty policy priority.

Read the full article about the government’s poverty numbers by Angela Rachidi at American Enterprise Institute.