The Commerce Department’s U.S. Census Bureau is preparing to develop a Supplemental Poverty Measure that will use the best new data and methodologies to obtain an improved understanding of the economic well-being of American families and of how federal policies affect those living in poverty. The initiative to create the new statistic is included in the President’s FY2011 budget proposal.

The official poverty measure, which has been in use since the 1960s, largely estimates poverty rates by looking at a family’s or an individual’s cash income. It will remain the definitive statistical measure.

The supplemental measure will be a more complex and refined statistic, including such additional items as tax payments and work expenses in estimating family resources. Unlike the official administrative measure, the supplemental measure will not be the measure used to estimate eligibility for government programs. Instead, it will be an additional macroeconomic statistic, providing further understanding of economic conditions and trends.

The Supplemental Poverty Measure will be released in the fall of 2011, at the same time that the official income and poverty measures for 2010 are released by the Census Bureau.

“The new supplemental poverty measure will provide an alternative lens to understand poverty and measure the effects of anti-poverty policies,” Department of Commerce Under Secretary for Economic Affairs Rebecca Blank said. “Moreover, it will be dynamic and will benefit from improvements over time based on new data and new methodologies.”

An Interagency Technical Working Group has provided a roadmap to the Census Bureau on how to develop the Supplemental Poverty Measure, drawing on the recommendations of a 1995 National Academy of Science report called Measuring Poverty, and the extensive research on poverty measurement that has been done over the past 15 years. Additional details can be found at http://www.census.gov/hhes/www/povmeas/SPM_TWGObservations.pdf.

The Census Bureau’s statistical experts, with assistance from the Bureau of Labor Statistics and in consultation with other appropriate agencies and outside experts, will be responsible for the measure’s technical design.