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March 29, 2006: New Census Measures Undercount Poverty

The Census Bureau recently unveiled new alternative poverty measures intended to provide a more complete measure of economic well-being. But flaws in the new measures cause them to understate the pervasiveness of poverty among American families, according to a new report authored by EPI senior economist Jared Bernstein and CBPP senior researcher Arloc Sherman.

The report by the Economic Policy Institute (EPI) and the Center on Budget and Policy Priorities (CBPP) explores in detail how the Census Bureau devised its new measures and points out their weaknesses.  For example, the new measures depart from past Census Bureau practice of accounting for child-care expenses as part of working families' work expenses.  And they treat home ownership as an income source for poor families in a manner contrary to the advice of top experts and past Census Bureau reports.

In a particularly important departure from past practices, the Bureau did not follow key recommendations made by the National Academy of Sciences to replace the outdated official poverty lines with an improved set of income thresholds. By not including or discussing the NAS-guided measures of poverty, the report finds the Bureau presents an overly positive view of the extent of poverty in America. 

"We have welcomed past efforts by the Bureau to offer alternative poverty measures.  Their most recent release, however, ignores critical innovations and omits essential costs like child care for working parents and thus represents a step backwards," Bernstein said.

"The Census Bureau is saying that the poverty rate goes down if you use a more complete measure of economic well-being, but that's largely because they use comparisons that one of their own past reports suggests are flawed," Sherman said. "The mystery is why they've stopped publicizing an even more complete set of poverty measures, guided by the National Academy of Sciences, that generally show that poverty rates are higher, not lower, than the official yardstick shows."

To view the report, click here.

For more on EPI senior economist Jared Bernstein, click here.

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