Census Bureau to Release Annual Reports on Income and Poverty, Health Insurance Coverage: Note to Correspondents

9/15/2003

From: Robert Bernstein of the Census Bureau Public Information Office, 301-763-3030/457-3670 (fax), 301-457-1037 (TDD), pio@census.gov

WASHINGTON, Sept. 15 -- The following Note to Correspondents was released today by the Census Bureau:

On Sept. 26, the Census Bureau will release its annual reports on income and poverty in the United States; and on Sept. 30, it will release its annual report on health insurance coverage.

With the release of the income and poverty reports, the Census Bureau will also release a report discussing consumption-based or expenditure-based poverty measures. This document will provide a context for further research that may eventually lead to development of an experimental series of consumption/expenditure measures of poverty. The Census Bureau would develop such measures in consultation with the Bureau of Labor Statistics (BLS), the Energy Information Administration (EIA) and the Office of Management and Budget (OMB); the Bureau of Economic Analysis (BEA) would provide technical support in this effort.

These experimental measures are not intended to replace the official poverty measure.(note 1) They are part of a decades-long tradition of Census Bureau and other statistical agency work on alternative approaches to measuring poverty.

The Current Population Survey's (CPS) Annual Social and Economic Supplement is the data source for the official measures of poverty and income, as well as for the report on health insurance coverage. There are two modifications to the products for 2002, which the Census Bureau would like to share with you in advance.

Racial Group Comparisons in the 2003 Current Population Survey: Income, Poverty and Health Insurance Reports

For the first time in 2003, CPS respondents were allowed to report themselves in more than one racial group (note 2); previously they had to choose one. This complicates year-to-year comparisons. Therefore, there is no perfect way to compare changes to income, poverty or health insurance by race between 2002 and the previous years.

To assist, the three new reports will compare 2001 single-race figures with two different figures for 2002: one comparison will be based on those who reported only one race, and one will be based on those who reported one or more races. For example, the poverty report for 2002 will compare the 2001 poverty figures for blacks with 2002 poverty figures for those who reported themselves as:

-- black and did not report any other race, and

-- black only or black in combination with some other race(s).

The income and poverty reports provide year-to-year comparisons for most racial groups. No data will be provided for American Indians and Alaska natives, nor for native Hawaiians and other Pacific islanders, because the sample was not sufficiently large.

Alternative Definitions of Income and Poverty

Traditionally, income and poverty data in Census Bureau reports have been based on the amount of money that people or households receive during the calendar year. This income concept is limited and does not provide a completely satisfactory measure of economic well-being. For example, it does not include the effect of taxes and, therefore, does not reflect the effect of tax law changes on economic well-being. Similarly, this traditional concept excludes the effect of noncash benefits (e.g., employer-provided group health insurance, food stamps, school lunches and housing assistance), which certainly enhance economic well-being.

In the early 1980s, the Census Bureau embarked on a research program to examine the effects of a broadened range of income measures that subtract taxes and add the value of noncash benefits. The Census Bureau published these measures in separate reports beginning in 1988 (P60-164-RD1), and they were included in the money income and poverty reports beginning in 1995 (P60-188). The 2002 income report will show year-to-year changes between calendar years 2001 and 2002 based on money income alone (the traditional income measure), as well as year-to-year changes based on four alternative definitions of income:

1) The first adds realized capital gains and subtracts taxes (federal income taxes, state income taxes, payroll taxes).

2) The second includes everything in the first definition and adds employer-provided health benefits, food stamps, rent subsidies and school lunches.

3) The third includes everything in the second definition and adds an estimate of the value of Medicare and Medicaid.

4) The fourth includes everything in the third definition and adds an estimate of the annuity value of home equity for homeowners.

The poverty report includes several alternative measures of poverty developed by the Census Bureau. Six are based on recommendations by the National Academy of Sciences. They account for benefits and taxes on income, and also use a new set of poverty thresholds based on the Consumer Expenditures Survey. Also presented are eight additional measures that use the four alternative income measures mentioned earlier, with two versions each of poverty thresholds the official thresholds and the thresholds derived by using an experimental series of inflation estimates. A final version uses the money income measure used for the official thresholds, plus the alternative method of adjusting for inflation over time.

Regarding the consumption-based measure, researchers from the Census Bureau have worked with the Interagency Working Group on Alternative Measures of Material Well-Being to produce a supplementary publication. This report, Supplemental Measures of Material Well-Being: Expenditures, Consumption, and Poverty 1998 and 2001, will discuss alternative ways of measuring economic status and poverty, including measures based on expenditures rather than income (which is the basis for the current official U.S. poverty measure). This report is another installment in our series of research reports aimed at improving our understanding of the low-income population in the United States and how best to measure it.

Note 1: The official definition for poverty is established by the Office of Management and Budget (OMB). For further information, see Statistical Policy Directive No. 14.

Note 2: OMB establishes the official guidelines for the collection and classification of data for race (including the option for respondents to mark more than one race) and Hispanic origin. Race and Hispanic origin are treated as separate and distinct concepts in accord with OMB's guidelines. For further information, see Statistical Policy Directive No. 15.