The California Poverty Measure

Sarah Bohn, Caroline Danielson, Matt Levin, Beth Mattingly, Chris Wimer

A Collaboration between PPIC and the Center on Poverty and Inequality at Stanford University

SPM a Shock for California

2SOURCE: Short, 2012.

0

5

10

15

20

25

United States California U.S. outside ofCalifornia

Percent

Official

Supplemental

+2.6 million

+2.7 million

-130,000

Outline

❧Measuring Poverty

❧Data, Methodology, and Contributions

❧Preliminary Estimates and Program Effects

❧Conclusions and Next Steps

3

Measuring Poverty: The OPM

❧Official poverty statistics (“OPM”) developed in the early 1960s, officially adopted in 1969

❧Thresholds: “Economy” diet from 1955, multiplied by 3 for other necessities, indexed for inflation;

❧Resources: Pre-tax cash income; no in-kind benefits, excludes many safety net programs

❧Expenses: No accounting for non-discretionary expenses

4

OPM vs. SPM/CPM

  OPM CPM/SPM

Poverty thresholds

National thresholds 3x 1950s subsistence diet; updated for inflation.

Derived from expenditures on food, clothing, shelter and utilities (Consumer Expenditure survey). Adjusted regionally for cost of living.

Resources

Pre-tax cash income (includes earnings, investments, and cash-based government programs).

Adds in-kind government programs and net taxes.

Expenses N/A

Out-of-pocket expenses for commuting/other work expenses, medical costs, and child care subtracted from resources.

5

0

5000

10000

15000

20000

25000

30000

35000

4000036349

30785

24518 23236

Renters

Owners

Owners without mortgages

OPM threshold: $22,811

OPM VS CPM: Thresholds (2011)

6

Family of Four

Outline

❧Measuring Poverty

❧Data, Methodology, and Contributions

❧Preliminary Estimates and Program Effects

❧Conclusions and Next Steps

7

Data (1)

❧American Community Survey (ACS)– Large sample sizes (350,000 for

California)– Used for all state-level SPM research

(Census uses CPS)– County-level estimates feasible

❧ACS limitations– Fewer/less detailed resources questions– No relevant expenses questions

❧External Data Used for ACS Augmentation– Custom runs of DSS administrative data

(MEDS, RADEP)– Other Surveys: SIPP, CPS

8

CPM Contributions

– Correction for survey under-reporting for SNAP and TANF

● TANF important program for CA: 1/3 of nation’s caseload

– County-level poverty threshold adjustment; additional adjustment for homeowners without mortgages

– Identification of unauthorized immigrants

– Hugely indebted to work of other sub-national SPM researchers: Wisconsin IRP, NY CEO, Urban Institute, University of Virginia

9

Outline

❧Measuring Poverty

❧Data, Methodology, and Contributions

❧Preliminary Estimates and Program Effects

❧Conclusions and Next Steps

10

Californians in Poverty (2011)

11SOURCES: ACS, augmented; CPS/IPUMS; Census.

All persons Children Adults Elderly0

5

10

15

20

25

30

21.924.3

21.419.3

16.5

23.5

15

9.6

CPM OPM

Pe

rce

nt in

Po

vert

y

Family expenses and program benefits have substantial effect on CPM

12

Medical out of pocket

Work expense+Child care

School meals

SSI

Housing subsidies

TANF/GA

SNAP

EITC/CTC

-8 -6 -4 -2 0 2 4 6 8

Effect of excluding individual elements on CPM

Percentage Point difference compared to CPM baseline of 21.9%

Clear role for programs in reducing child poverty

13

Medical out of pocket

Work expense+Child care

School meals

SSI

Housing subsidies

TANF/GA

SNAP

EITC/CTC

-8 -6 -4 -2 0 2 4 6 8

Effect of excluding individual elements on CPM for children

Percentage Point difference compared to Child CPM baseline of 24.3%

Poverty would be much higher in the absence of major safety net programs

14

Note: safety net programs measured here include CalWORKs, GA, SSI, CalFresh, EITC, CTC, housing subsidies, school meals. Does not include social security or unemployment insurance.

All persons Children Elderly0

10

20

30

40

50

CPM with and without safety net programs

CPM Absent safety net programs

CPM

Perc

en

t in

povert

y

Outline

❧Measuring Poverty

❧Data, Methodology, and Contributions

❧Preliminary Estimates and Program Effects

❧Conclusions and Next Steps

15

Next Steps

❧Feedback from you, Census, state-SPM researchers.

❧Regional, subgroup analysis…coming soon!

❧Policy Change Simulations

16

Thank you!

17

Methods: Identifying Unauthorized Immigrants

❧Highly likely to be in poor families

❧2.8 million unauthorized in California

❧Ineligible for social safety net assistance– But children of unauthorized

immigrants are usually citizens, and are eligible

❧Important to accuracy of CPM…

❧…especially because we are aiming to create CPM by region and demographic group

18

SPARE SLIDES

19

Unauthorized immigrants in California zip codes, 2008

20Hill and Johnson (2011); based on ITIN filing

Methods: Identifying Unauthorized Immigrants

❧Goal: exclude unauthorized immigrants from eligibility for key programs

❧Challenge: ACS does not identify unauthorized

❧Approach in the ACS:– Identify a pool of “potentially

unauthorized” based on Passel and Cohn (2009) algorithm

– Select from pool to match unauthorized totals (or distribution) by county from Hill and Johnson (2011)

❧Needs to be “right” only at aggregate levels

21

“Likely Unauthorized” algorithm

22

Sequential algorithm step

Pool of likely unauthorized

Non-naturalized immigrant population 5,356,947Remove likely legalized by amnesty 4,609,894 Remove based on occupation 4,306,861 Remove likely student visa holders 4,105,900 Remove anyone with a legal spouse 3,405,064

Random assignment to match county distribution 2,800,000

Best Unauthorized in California estimate (DHS Office of Immigration Statistics) 2,830,000

20% overcount

1% undercount

Validation – county distribution

23

Unauthorized Counts Shares

Example county

(1)ACS likely unauthorized

(2)Best estimate

(3)ACS likely unauthorized

(4)Best estimate

Butte 3,968 3,938 0.1% 0.1%Colusa/Glenn/Tehama/Trinity 4,345 9,845 0.2% 0.3%

Contra Costa 74,885 77,777 2.7% 2.7%Kern 8,466 45,288 1.7% 1.6%Los Angeles 902,024 901,819 32.2% 31.9%Merced 21,731 21,659 0.8% 0.8%Orange 284,653 284,526 10.2% 10.1%San Bernardino 145,655 147,678 5.2% 5.2%San Francisco 29,616 29,536 1.1% 1.0%San Joaquin 53,860 53,164 1.9% 1.9%San Mateo 54,475 54,149 1.9% 1.9%Santa Clara 174,364 177,213 6.2% 6.3%

   

California total 2,803,643 2,829,998

Validation – demographic characteristics

24

Likely Unauthorized in CA (ACS Procedure)

Actual Unauthorized in US(Passel estimate)

Education: Less than High School 53% 47%High School Graduate 27 27

Some College 9 10

College Graduate 10 15Age: Child (<18) 14 13

Adult 86 87Birthplace: Mexico 64 59

Central America 9 11

South America 2 7

South and East Asia 14 11

How does this affect CPM estimates?

❧Exclude unauthorized immigrants from calculation of benefits in:

– SNAP– TANF– EITC/CTC– Housing subsidies

25

Outline

❧Measuring Poverty

❧Data and Overview of Methods

❧CPM Estimates

❧Methods: Unauthorized Immigrants

❧Methods: Modeling SNAP Benefits

❧Ongoing Efforts

26

Methods example: Modeling SNAP

❧ACS respondents asked:IN THE PAST 12 MONTHS, did anyone in this household receive Food Stamps or a Food Stamp benefit card?Include government benefits from the Supplemental Nutrition Assistance Program (SNAP). Do NOT include WIC or the National School Lunch Program.[ ] Yes[ ] No

❧Problems – “This household” ≠ SNAP unit– “In the past 12 months,” not how

long– No information about benefit amount– Underreporting

27

Basic procedure for modeling SNAP

❧Assign SNAP participation to ACS respondents to match administrative totals

❧Impute SNAP benefits received based on administrative survey of participants

❧Important asides:– Uses custom administrative tabulations

in order to get demographic and county distributions right

– Considers overlapping SNAP and TANF caseload

– Careful to account for CA-specific program rules

28

SNAP Underreporting in ACS

❧Best estimate of self-reported participation yields 33% undercount of SNAP recipients in ACS

29

SNAP reporting in ACS

Administrative totals  Census

householdsSplit into

SNAP units

SSI and unauthorized removed

Child only 1,251 33,082 450,080 767,348

Single adult 86,636 823,720 643,933 966,513

Multiple adults, no kids

558,893 257,057 189,659 205,101

Single parent 571,121 1,516,169 1,229,330 1,876,202

Multiple adults, kids 3,494,546 1,814,859 1,205,198 1,726,367

Total 4,712,447 4,444,887 3,718,200 5,541,531

Assigning SNAP receipt

30

SNAP assignment in ACS

Administrative totals 

Our self-reporter estimate

Income eligible non-

reporters

Our assigned

cases

Child only 450,080 545,035 736,678 767,348

Single adult 643,933 3,717,170 976,133 966,513

Multiple adults, no kids

189,659 1,069,441 246,547 205,101

Single parent 1,229,330 1,313,859 1,792,054 1,876,202

Multiple adults, kids

1,205,198 2,037,918 1,725,902 1,726,367

Total 3,718,200 8,683,423 5,477,314 5,541,531

Assigning SNAP Monthly Benefit

❧ 

31

Predicted and actual SNAP monthly benefit by unit type

Case TypeCalifornia administrative sample

Predicted in ACS

Child Only $301 $271

Adult Only 194 168

Mixed (Children and Adults)

462 433

Assigning Months on SNAP

32

Results of SNAP procedures

33

❧In dollars:● Actual SNAP $s in California: $6.4 Billion● Our estimates for self-reporters: $4.2 Billion

● Our imputed estimates: $6.1 Billion

❧In CPM rates:● Decreases by 0.6 percentage points overall

● Decreases by 1.1 percentage points for children

Correcting for underreporting matters, most for child poverty

34

All persons Children Adults Elderly0

5

10

15

20

25

30

22

24

2119

23

27

23

20

CPM before and after underreporting corrections

CPM

with self-reported SNAP

with self-reported TANF

with both self-reported

Perc

en

t

Outline

❧Measuring Poverty

❧Data and Overview of Methods

❧CPM Estimates

❧Methods: Unauthorized Immigrants

❧Methods: Modeling SNAP Benefits

❧Ongoing Efforts

35

Regional cost of living matters a lot

36

CPM LA Sacramento Fresno0

5

10

15

20

25

30

Statewide poverty rates under various thresholdsAll

Children

Elderly

Regional Thresholds

Perc

en

t in

Povert

y

Poverty Intensity (2011 CPM)

37SOURCE: Authors’ calculations from the ACS, as augmented.

All persons Children Elderly0

5

10

15

20

25

30 50-99% of poverty line

Under 50% of poverty line

Perc

en

t of

Pers

on

s

The SPM Movement

❧1994: National Academy of Sciences Panel Recommendations (Citro and Michaels, 1995)

– Augmented resources, including in-kind programs and tax liabilities/credits

– New approach to creating poverty thresholds– Accounting for child care, medical expenses,

commuting costs

❧2011: Census releases first “Research Supplemental Poverty Measure”

– First state-level estimates released last year– Other sub-national efforts: Urban Institute,

Wisconsin IRP, University of Virginia, NY CEO38

SPM vs. CPM: Family Resources

SPM (CPS)

CPM(ACS)

Earnings, retirement income, Social Security, “other” income

Self reports Self reports

SNAP, TANF Self reports Self reports + imputation

School meals Self reports Imputation

Housing subsidies

Self reports + imputation

Imputation

Taxes Imputation Imputation

Expenses Imputation Imputation

39

“Excluded” or Missing Resources in CPM

❧Major “Excluded” resources: – WIC– LIHEAP – In-Home Supportive Services– Summer school meals– Foster care payments, adoptions assistance

payments– Charitable supports

❧Resources we can’t parse out easily: – Unemployment benefits, workers comp – Veterans benefits – Child support, alimony

40

CPM vs OPM vs SPM

41

All persons Children Adults Elderly0

5

10

15

20

25

30

21.924.3

21.419.3

16.5

23.5

15

9.6

23.8

27.6

22.720.9

CPM OPM SPM

Pe

rce

nt in

Po

vert

y

Threshold County Tiers

CountiesShare of

state residents

CPM Threshold range

Renters or Owners with a

mortgage

Owners without a

mortgage

Tier 1: lowest

Colusa, Del Norte, Fresno, Glenn, Humboldt, Imperial, Kern, Kings, Lassen, Madera, Merced, Modoc, Siskiyou, Sutter, Tehama, Trinity, Tulare, Yuba

9.2% $23,200-$25,400 $19,500-$20,600

Tier 2: mid-range

Alpine, Amador, Butte, Calaveras, El Dorado, Inyo, Lake, Mariposa, Mendocino, Mono, Nevada, Plumas, Riverside, Sacramento, San Bernardino, San Joaquin, Shasta, Sierra, Stanislaus, Tuolumne, Yolo

21.8 $25,500-$29,500 $20,500-$23,200

Tier 3: highest

Alameda, Contra Costa, Los Angeles, Marin, Monterey, Napa, Orange, Placer, San Benito, San Diego, San Francisco, San Luis Obispo, San Mateo, Santa Barbara, Santa Clara, Santa Cruz, Solano, Sonoma, Ventura

69.0 $29,500-$37,400 $20,700-$25,600

42

Poverty and Deep Poverty No Safety Net

43

0

10

20

30

40

50

Absent safety net programsActual

How do safety net programs affect poverty?

44

California 2011

Program name Recipients (millions)State/local expenditures on benefits (billions)

Federal expenditures (billions)

Cash-based safety net programs

CalWORKs 1.47 $1.74 $1.70

Supplemental Security Income 1.27 $0.91 $8.23

General Assistance 0.15 $0.40 -

Additional safety net programs included in CPM

CalFresh 3.64 $0.20 $6.53

Earned Income Tax Credit 3.27 (filers) - $7.25

Refundable Child Tax Credit 2.58 (filers) - $4.14

School lunch and breakfast

2.18 (daily participation) $0.16 $1.88

Imputing and Under-reporting Correction

45

Recipients Benefits

ProgramAdmin Recipients (millions)

ACS Self-Reported Recipients (millions)

Recipients after Imputation

Admin Total Benefit (billions)

ACS Self-Reported Benefit (billions)

Benefit after Imputation (billions)

CalWORKs 2.1 0.91 2.3 $3.44 $1.3 $3.8

CalFresh 5.54 3.7 5.47 $6.73 NA $6.1

Earned Income Tax Credit

3.27 (filers) NA 3.36 $7.25 NA $6.09

Expenses have outsized effect on elderly poverty

46

Medical out of pocket

Work expense+Child care

School meals

SSI

Housing subsidies

TANF/GA

SNAP

EITC/CTC

-8 -6 -4 -2 0 2 4 6 8

Effect of excluding individual elements on CPM for the elderly

Percentage Point difference compared to Elderly CPM baseline of 19.3%