Developed in 1963, the official poverty rate is based on pre-tax income thresholds related to the cost of a minimum food diet and the number of individuals who depend on that income. As federal welfare spending increased dramatically over the past 50 years, many critics point out that the official poverty rate may not provide the most accurate picture of how many Americans are struggling financially.
In 2011, the U.S. Census Bureau began to regularly publish the supplemental poverty measure, a measure of poverty that takes into account geographic variations in cost of living, expenses such as medical costs and taxes, and anti-poverty subsidies like food stamps and unemployment insurance. After adjusting for these measures, the U.S. poverty rate rises from 12.3% to 13.1% — an increase of 2.7 million people. In some states, the increase in the estimate of the prevalence of poverty is far greater.
To determine the states where poverty is worse than you think, 24/7 Wall St. ranked states by the percentage-point difference between the official poverty rate and supplemental poverty rate using data from the Census Bureau.
In an October 2019 report analyzing the effect of various anti-poverty subsidies, the Census Bureau determined that Social Security, refundable tax credits, the Supplemental Nutrition Assistance Program (SNAP), Supplemental Security Income, housing subsidies, child support payments, school lunch programs, Temporary Assistance for Needy Families (TANF), and unemployment insurance have the largest impact on the number of individuals considered to be living in poverty under the supplemental poverty measure. For more on unemployment insurance, see the best and worst states to be unemployed.
In the same report, researchers determined that medical expenses, work expenses, Federal Insurance Contributions Act (FICA) tax, and federal income tax are the biggest factors pushing Americans below the poverty line as measured by the supplemental poverty measure. For more on the supplemental poverty measure, see the states lifting the most children out of poverty.