Research | Training | Policy | Practice

How are at risk children faring ?

The SPM vs. the OPM for the April 19th PAA Webinar

by Tim Smeeding Professor of Public Affairs and

EconomicsDirector, IRP

Explanation of how poor children and families are doing comparing the OPM

and SPM: an outline • Why the Supplemental Poverty Measure

(SPM) is a better measure of poverty than the official poverty measure (OPM)

• Four different sets of child poverty outcomes and trends in each

• How programs specifically designed to help the poor have changed

• Some evidence on how one program SNAP ( “food stamps” ) effects the level and trend in child poverty

• Bottom Lines

Why the SPM is a better measure of poverty than the OPM

• The SPM does a much better job of measuring the anti poverty effects of the major tax-benefit programs aimed at poor families with children , while also considering work related expenses, geographic cost of living differences and other factors which affect child poverty

• Noncash programs to help the poor have grown enormously since 20o0 and especially during the recession while major cash programs have not

• Without in kind programs and ARRA expansions in same, poor children would be MUCH worse off

Four different child poverty trends : 2000-2010

• Official (OPM) an absolute measure ‘anchored’ in 1960’s , adjusted for price changes only since then

• SPM which is available only for 2009 and 2010

Two earlier variants of the SPM which follow the same NAS principals and give us 10 year trends :• NAS-CE experimental poverty measure

adjusted according to average actual expenses for low income persons in every year

• NAS-CPI experimental poverty measure ‘anchored’ at the 2000 level of low income family expenses and adjusted for prices only since 2000

Level and Trend in Child Poverty 2000-2010

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 201010.0%

12.0%

14.0%

16.0%

18.0%

20.0%

22.0%

24.0%

Recession YearsChildren-OfficialChildren-NAS CPI updatedChildren-NAS CE updated

What do we see?• Poverty amongst children is both at its

highest level and increases the most under the OPM (which reflects before tax cash benefits only)

• Child poverty goes up more slowly, is flat, or even falling in the Great Recession under both NAS measures and for the new SPM

• The major reason for the differences between the OPM and the other measures is the growth and importance of noncash benefits and refundable tax credits as instruments for fighting child poverty

A note of caution--child poverty has not gone away

• The measures above are sensitive to where the poverty line is drawn and how it is drawn

• But under all four variants, child poverty is still above the overall national average poverty rate ,and over 18 percent using the new SPM

• But again noncash and refundable tax credit programs ,and increases in same under the American Recovery and Relief Act, have done a very good job in preventing child poverty from exploding as with the OPM

Annual Expenditures, Means-Tested Programs

(Billions of 2010 Dollars)

How programs to help poor children have changed

SNAP and deep child poverty from NPC

How SNAP has affected child poverty from USDA

Bottom Lines • The best answer to child poverty are good

jobs that pay parents well enough to maintain their economic independence and keep their families from poverty

• But the SPM shows that government programs work to reduce poverty in recessions and when full-time jobs--even bad ones-- are not available to parents

• We must continue the SPM measure to monitor how at-risk children are being affected by successful public programs aimed at reducing child poverty

Thanks to IRP’s Poverty Research Sponsors and Co-Analysts

• Department of Health and Human Services ( DHHS) - Assistant Secretary for Planning and Evaluation (ASPE)

• U.S. Bureau of Census• Russell Sage Foundation• MacArthur Foundation And the Wisconsin Poverty Measure Team : Julia Isaacs,Yiyoon Chung, Katherine Thornton