Defining Poverty

While my principal focus in this testimony is on the need to improve the poverty measure, I want to begin by emphasizing that we get much valuable information from the current one. The current measure is a useful and reliable indicator of the extent of serious deprivation, and of the extent of disparities across races, sex, and ages, workers and non-workers, and other groups. Most importantly, year-to-year changes help us understand whether more or fewer families are struggling to get by. Alternative measures—including those based on the National Academies of Sciences recommendations—show different poverty levels, but typically reflect quite similar trends because the largest sources of income and, thus, the largest “driver” of poverty rates will be cash income from sources that are included in the official measure.