This week the Census Bureau released its latest report on poverty in the United States. Using the Official Poverty Measure (OPM), data show poverty in the United States declined slightly from 11 percent in 2023 to 10.6 percent in 2024, leaving roughly 35.4 million Americans in poverty. On the other hand, using the bureau’s Supplemental Poverty Measure (SPM)—which many experts prefer—the poverty rate remained largely unchanged at 12.9 percent.
A few things to keep in mind in evaluating this news:
- First, these numbers are for 2024. They do not reflect actions taken since President Trump took office, for good or ill. Whatever the effects of the One Big Beautiful Bill, tariffs, or budget cuts, those results will not show up until next year.
- Second, policymakers should be careful about putting too much credence in any of the numbers. Both the OPM and SPM are deeply flawed, though in different ways. Nearly everyone who studies the issue agrees that the OPM is virtually useless because it counts only cash income and thus fails to capture the value of most government benefits, particularly tax credits and in-kind benefits. Those benefits—which include the Earned Income Tax Credit, Medicaid, SNAP, housing, and other large scale social welfare programs—comprise the vast majority of benefits received by low-income Americans. The OPM, therefore, not only understates the resources available to poor Americans, it essentially ignores hundreds of billions of dollars that the government spends every year to fight poverty. Moreover, the average family budget has changed significantly since the OPM was developed. For instance, food now comprises only about one-seventh of the average family’s budget, rather than the one-third assumed by the OPM. At the same time, expenses that carried little weight in the 1960s—such as health care, child care, and housing—now consume a much higher share of family income. Nor does the OPM reflect the wide variation in cost-of-living across the country. Identical incomes mean very different things in, say, Los Angeles versus the Mississippi Delta.
- The SPM counts most government benefits and therefore does a much better job of capturing the total income that poor families receive. However, the SPM does a worse job of setting a standard with which to compare those resources. While the OPM measures resources against an absolute standard, the SPM measures resources against what most Americans—including those who are not poor—spend on a subset of goods and services. Not only is there a lack of consensus on what those goods and services should be, but Americans tend to spend more on them as incomes rise. The SPM, therefore, is a quasi-relative measure of poverty that tends to measure inequality more than absolute poverty.
- And third, both measures can be said to both overstate and understate actual poverty in the country. For instance, the Congressional Budget Office has found that, if the full range of government benefits is accounted for, the real poverty rate could be as low as 3.5 percent. On the other hand, if policymakers move beyond the purely material aspects of poverty, the number of Americans who lack the resources necessary to become self-sufficient and able to rise as far as their talents can take them is likely much higher than the poverty numbers indicate. This suggests that the government does an adequate job of meeting the material needs of low-income Americans, but a much worse job of helping people escape poverty. Indeed, the very fact that despite more than 130 federal anti-poverty programs, and more than $1.7 trillion in combined federal and state spending to combat poverty, there has been so little change in the poverty numbers, suggests that what we are doing today just isn’t working.
What does this mean for policymakers? What is really needed is a more holistic definition of and approach to fighting poverty: one based not just on an individual’s financial condition at a point in time, but on their ultimate ability to flourish in society.