Most agree the poor deserve public help. But where should the line dividing poor from non-poor be set? The U.S. government answered this question in 1963 by by setting official poverty thresholds according to an estimate of basic need. This figure is updated every year for price changes. Today, the annual poverty level income is $12,060 for an individual, and $24,600 for a family of four.
Poverty thresholds are the same nationwide, with no separate guidance for different states or cities and the varied conditions within those areas. Poverty thresholds do not account for differences in cost of living, taxes, and government assistance programs — all of which can be different not only by state but sometimes even by city.
To help address the limitations of the official poverty threshold and to help gauge the effectiveness of anti-poverty programs, Census researchers developed the supplemental poverty measure. The SPM extends the official measure by taking assistance programs and additional cost factors into account. The SPM revealed that Social Security and refundable tax credits helped raise 26.1 million and 8.2 million people, respectively, out of poverty last year. When these factors are added to the calculation there is a reduction in poverty overall of 8.2% and 2.5%. The alternative measure also shows greater variation in poverty between states. In some states, poverty is much worse than the official measure suggests, while in others it is better.
24/7 Wall St. reviewed states where the difference between the supplemental poverty rate and the official poverty rate was the largest. We also reviewed states where the SPM was lower than the official rate. While the supplemental poverty rate is far lower than the official rate in some states like Louisiana or Mississippi, both remain among the poorest in the nation by either measure. Others, like West Virginia or Missouri have supplemental poverty rates below the nationwide rate. Using the alternative measure, high-income states like New York and California have among the highest poverty rates in the country.