New Measurement Index Shows Decline in Child Poverty

February 25, 2015

MISSOULA – A different method of measuring child poverty has determined that 39,000 Montana children were lifted out of poverty since 2011. 

A report released today by the Annie E. Casey Foundation shows that the federal government’s official poverty measure created in the 1960s uses outdated information on how U.S. families are faring today, failing to illustrate the effects of programs designed to help them. 

The new KIDS COUNT Data Snapshot, “Measuring Access to Opportunity in the United States,” points to a better index for measuring poverty – the Supplemental Poverty Measure – which captures the effect of safety net programs and tax policies on families. 

By using the SPM, researchers have determined that the rate of children in poverty has declined nationally from 33 percent to 18 percent as a result of these programs and policies. 

“In Montana, using the SPM illustrates that the rate of children in poverty has declined from 30 percent to 13 percent,” says Jennifer Calder, communications director for Montana KIDS COUNT. “In other words, from 2011 to 2013, safety net programs and tax policies have lifted 39,000 children out of poverty in our state.”

“The official poverty measure does not provide the accurate information policymakers need to measure the success of anti-poverty programs – nationally and at the state level,” said Patrick McCarthy, president and CEO of the Annie E. Casey Foundation. “Relying on this tool alone prevents policymakers from gauging the effectiveness of government programs aimed at reducing child poverty. The SPM is an important tool that should be used to assess state-level progress in fighting poverty.”

The official poverty measure, created in the 1960s, is based on a formula that calculated the minimum cost to feed a family a nutritionally adequate diet and multiplied that by three because at that time, food costs made up about one-third of the average family budget. Much has changed since the 1960s. Today, food costs represent less than 10 percent of a typical family budget; the official measure of poverty has not been updated to reflect modern budgets. 

The Supplemental Poverty Measure, created by the U.S. Census Bureau in 2011, factors in the impact of a number of social programs such as Supplemental Nutrition Assistance Program and the Earned Income Tax Credit, and takes into account rising costs and other changes that affect a family’s budget. 

The SPM also provides a more accurate assessment of poverty levels on a state and regional basis as it helps illustrate the variations in the cost of living across states like Montana versus California, and the differences in impact of federal programs from one state to the next. 

Measuring Access to Opportunity in the United States” provides national and state-by-state data using the SPM to show the effect of a variety of federal supports to help low-income families. 

Similar to the official poverty measure, the SPM shows that poverty rates among American Indian children were approximately two-and-a-half times higher (26 percent), than that of white children (10 percent). 

In every state, anti-poverty programs tracked by the SPM have led to a reduction in the child poverty rate. Because federal benefits are not adjusted for differences in regional costs of living, they are likely to have a more significant impact in states where the cost of living is relatively low. 

States and localities also vary in their contribution to the safety net programs and tax policies that can help move children out of poverty. These federal and state programs and policies helped cut the child poverty rate by more than 20 percent in Kentucky, Mississippi and the District of Columbia. States where government intervention has had a lesser effect on decreasing child poverty include North Dakota, New Hampshire and Alaska. 

“Continued investment in the development of the SPM can ensure our resources are directed in ways that give our children the best opportunity to succeed,” said Laura Speer, the foundation’s associate director of policy reform and advocacy. “It’s critical that we look beyond just the federal poverty rate to evaluate the success of important social programs.”

“Measuring Access to Opportunity in the United States” follows the Casey Foundation’s 2014 report, “Creating Opportunities for Families: A Two-Generation Approach,” which outlined additional recommendations for helping families raise themselves out of poverty that include:

  • Expanding access to high-quality early education.
  • Changing tax credit policies to help families keep more of what they earn.
  • Expanding and streamlining food and housing subsidies.
  • Developing approaches that link programs for kids – like Head Start – with programs for their parents, such as education and job training. 

The report can be accessed online at http://www.aecf.org/. For more information on how Montana has been affected by this study, call Montana KIDS COUNT Director Thale Dillon at  406-243-5113 or email thale.dillon@business.umt.edu.

Contact: Thale Dillon, director, Montana KIDS COUNT, UM Bureau of Business and Economic Research, 406-243-5113, thale.dillon@business.umt.edu; Jennifer Calder, communications director, Montana KIDS COUNT, 406-243-2725, jennifer.calder@business.umt.edu.