Constructing and Benchmarking the Supplemental Poverty Measure in the Panel Study of Income Dynamics

Sara Kimberlin, University of California, Berkeley

The traditional method used to measure poverty in the United States – the official federal poverty line (FPL) – is widely recognized as inadequate, criticized for failing to account for taxes, non-cash benefits, work-related expenses, geographical differences, and modern family patterns. To address these shortcomings, the U.S. Census Bureau and Bureau of Labor Statistics recently developed a new Supplemental Poverty Measure (SPM). The SPM has not yet been implemented in the Panel Study of Income Dynamics (PSID), although the PSID is an important national dataset used to study poverty and associated outcomes. This paper describes a method for constructing SPM poverty status in the PSID, using forthcoming historical SPM thresholds, in order to facilitate better-grounded research on poverty and the impact of anti-poverty policies using PSID data. Population rates of SPM poverty using PSID data are also examined for the timeframe 1998-2008.