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Final Report of the Interagency Technical Working Group (ITWG)

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Final Report of the Interagency Technical Working Group (ITWG) Final Report of the Interagency Technical Working Group on Evaluating Alternative Measures of Poverty Final Report ITWG on Evaluating Alternative Measures of Poverty Table of Contents Executive Summary ................................................................................................................................ 1 Background ............................................................................................................................................ 3 Creation of the Technical Working Group ......................................................................................... 3 Goals and Elements of a Poverty Measure ........................................................................................ 4 Goals of a Poverty Measure ........................................................................................................... 4 Elements of a Poverty Measure ..................................................................................................... 5 The Official Poverty Measure ................................................................................................................ 6 History of the Official Poverty Measure ............................................................................................ 6 Uses of the Official Poverty Measure ................................................................................................ 7 Concerns with the Official Poverty Measure ..................................................................................... 8 Resource Measure Does Not Account For In-Kind Transfers And Taxes ....................................... 9 Income Misreporting ...................................................................................................................... 9 The Resource Sharing Unit May Not Capture Actual Sharing Arrangements .............................. 10 The CPI-U Used to Adjust the Official Poverty Thresholds May Not Measure Inflation Accurately ..................................................................................................................................... 10 Thresholds Do Not Account for Changes in Living Standards ...................................................... 11 Thresholds Do Not Account For Geographic Price Differences ................................................... 11 The Adjustment for Family Size and Composition ....................................................................... 11 Association with Other Measures of Material Well-Being .......................................................... 11 The Supplemental Poverty Measure ................................................................................................... 12 History of the Supplemental Poverty Measure as Implemented .................................................... 12 Current Uses of the Supplemental Poverty Measure ...................................................................... 13 Concerns with the Supplemental Poverty Measure ........................................................................ 13 Resources ..................................................................................................................................... 13 Association with Other Measures of Material Well-Being .......................................................... 14 Updating Mechanism for Thresholds ........................................................................................... 15 Alternative Measures of Poverty Recommended by the Working Group .......................................... 15 Considerations and Consensus Recommendations for Income- and Consumption-based Resource Measures .......................................................................................................................... 16 Income-based Resource Measures Using the CPS ASEC and ACS ............................................... 17 Consumption-based Resource Measures Using the CE Interview Survey ................................... 46 Advantages/Disadvantages of Income- and Consumption-based Resource Measures .............. 52 Considerations and Consensus Recommendations for Thresholds ................................................ 57 Setting Thresholds in a Baseline Year .......................................................................................... 58 Page | i Final Report ITWG on Evaluating Alternative Measures of Poverty Updating Thresholds Over Time .................................................................................................. 60 Sharing and Adjusting for Different Sharing Unit Sizes ............................................................... 62 Adjusting Poverty Thresholds Across Geographic Areas ............................................................. 65 Accounting for Units With Child Support Obligations and Work And Childcare Expenditures ... 68 Other Elements of a Poverty Measure ............................................................................................ 69 Consensus Recommendations Worthy of Further Research by the Federal Statistical System ......... 69 Additional Research on Income and Consumption Poverty ............................................................ 69 Other Measures of Well-being Beyond Income and Consumption................................................. 70 Material Hardship ........................................................................................................................ 70 Multidimensional Poverty ............................................................................................................ 71 Populations Included in Poverty Measures ..................................................................................... 72 Accounting for Other Types of Services ........................................................................................... 73 Identifying Poverty Status of Individuals within a Sharing Unit ...................................................... 74 Timeliness of Income, Consumption, Poverty, and Other Well-being Measures ........................... 74 Summary of and Responses to Public Comment ................................................................................. 76 Questions Posed in Federal Register Notice for Public Comment .................................................. 76 Definitions .................................................................................................................................... 76 Resource measures ...................................................................................................................... 76 Thresholds .................................................................................................................................... 76 Summary of and Responses to Public Comments ........................................................................... 77 References ........................................................................................................................................... 87 Appendix A. Census Bureau Surveys ................................................................................................. 114 Current Population Survey Annual Social and Economic Supplement (CPS ASEC) ....................... 114 American Community Survey (ACS) ............................................................................................... 114 Survey of Income and Program Participation (SIPP) ..................................................................... 114 Appendix B. Bureau of Labor Statistics Surveys ................................................................................ 116 Consumer Expenditure Survey (CE) ............................................................................................... 116 Appendix C. Choices for Geographic Cost Adjustments .................................................................... 117 Median Rent Index (MRI) ............................................................................................................... 119 Regional Price Parities (RPP) .......................................................................................................... 119 Regional Price Parities for Food, Apparel and Rent (RPP-FAR) ..................................................... 120 Comparable Wage Index (CWI) ...................................................................................................... 120 Appendix D. List of Working Group Recommendations .................................................................... 122 Page | ii Final Report ITWG on Evaluating Alternative Measures of Poverty Executive Summary Since the establishment of the U.S. official poverty measure (OPM) more than fifty years ago, there has been continuing research on poverty measurement. Alternative estimates of poverty have been published for more than three decades by the Census Bureau, and in 2011 the Census Bureau in cooperation with the Bureau of Labor Statistics (BLS) began publishing the Supplemental Poverty Measure (SPM). Existing and previous measures of poverty produced by the Federal government are income based and rely on surveys to capture the income data. Guidance issued by the Commission on Evidence-based Policymaking, National Academy of Sciences reports, and the Office of Management and Budget (OMB) has recommended combining administrative data with survey data to improve national statistics. In recent years, evidence has shown that there is survey
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