Promising Alternatives: Other Indicators of Family Economics Success
Standard poverty measures are widely recognized as inadequate indicators of FES. Policymakers may want to consider the following alternate measures. Based on data availability and accuracy considerations, state and local policymakers may be best served using a combination of federal poverty threshold indicators and alternative poverty measures.
Federal Government Efforts. The federal government has pursued several efforts to address the shortcomings of the FPT. Key recommendations of the National Academy of Sciences include subtracting out-of-pocket medical expenses from income calculations, adjusting the poverty measure for regional cost of living differences, and more accurately accounting for inflation. Based on these recommendations, the Census Bureau calculated alternate national poverty rates for eight years (1999-2006), yielding the following comparison.[i]
The Census Bureau has developed a powerful tool—the CPS Table Creator II—that enables testing of various alternative poverty measures at the state level. The Obama Administration is pursuing development of a new Supplemental Poverty Measure for initial release in fall 2011.
Local Government Efforts. New York City has developed its own alternative poverty measure as a tool for measuring the effectiveness of anti-poverty policies. Reports detail the methodology and show how it affects who is considered poor in the city.
More Comprehensive Measures of Household Needs and Resources
Basic Family Budget. The Economic Policy Institute has attempted to develop a realistic measure of the income required to have a “safe and decent though basic standard of living." This includes costs for food, clothing, shelter, transportation, health care and child care costs, taxes, and other expenses not included in the FPT. Data is available for six family sizes; 2004 data have been developed for 400 U.S. communities, and 2007 data have been developed for 600 communities throughout the U.S.
Self-Sufficiency Standard. Wider Opportunity for Women and Dr. Diana Pierce of the University of Washington developed a method for recognizing expenses not included in the FPT. Using this method, a national network of organizations in 35 states and the District of Columbia have developed self-sufficiency standards for selected counties and family types.
Basic Needs Budget. The National Center for Children in Poverty (NCCP) has drawn on the Self-Sufficiency Standards and Basic Family Budgets models to develop unique estimates of basic family expenses. NCCP offers a family expense calculator that allows users to input certain unique expenses. This tool is part of the Family Resource Simulator, which is designed to illustrate the impact of public benefits on the budget of a hypothetical family. The tool has been populated with data for selected counties in 17 states, and the District of Columbia. Each state data set is available for one year, ranging from 2003 to 2007.
Food Security. The U.S. Department of Agriculture conducts an annual survey to estimate the percentage of households that cannot afford adequate food. These data are reported at the national level annually, but state data reporting is restricted to three-year averages for 1996-1998, 2000-2002, and 2003-2005.