the ceo poverty measure association of public data users september 2010

The CEO POVERTY MEASURE

Association of Public Data UsersSeptember 2010

CEO’s Mandate, Direction, & Key Challenge

• Create a more useful tool for policymaking

• Adopt National Academy of Sciences’ (NAS) recommendations

• Employ American Community Survey– Large annual sample for NYC

– But ACS does not include much of what is needed to measure family resources as recommended by NAS

Thresholds based on a percentage (80.5) of median annual reference family expenditures for these necessities:

– Food– Clothing– Shelter– Utilities

• Plus a little more for miscellaneous expenses (x 1.2)• Adjusted for inter-area differences in housing costs (via HUD Fair Market Rents)

Resources based on annual income available to family to obtain items in threshold including:

– Cash Income, after-taxes– Value of in-kind subsidies for

food– Adjustment for Housing

Status– Deduction for work-related

expenses (child care and transportation)

– Deduction for medical out-of-

pocket expenses (MOOP)

CEO Application of NAS Method

Creation of the CEO Poverty Threshold Reference Family (Two adults, Two children), 2008

Source: US Bureau of the Census and US Dept. of Housing and Urban Development

NAS Threshold for U.S. (FCSU-CE) $24,755

Shelter & Utility Share, 44% = $10,892

Non-Shelter & Utility Share, 56% = $13,863

Shelter & Utility Share, Adjusted for Ratio of NYC/US Fair Market Rent (1.52) =

$16,556

CEO Threshold: Adjusted Shelter &

Utility Share + Non-Shelter & Utility Share = $30,419

Alternative ThresholdsTwo Adult, Two Child Family, 2008

Source: US Bureau of the Census and US Dept. of Housing and Urban Development

$21,834$24,755

$30,419

$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

Official U.S. wide NAS NYC CEO

Measurement of Family Resources (1)

• Pre-tax cash– Source: ACS

• Taxation– Federal Payroll Taxes– Federal, State, City Income tax liabilities and credits– Source: CEO Tax Model

• Cash-Equivalent Value of Nutritional Assistance– Food Stamps– Source: ACS, Administrative records– School Lunch Program– Source: ACS, Program rules, Census valuation of

meals

Measurement of Family Resources (2)

• Adjustment for Housing Status

– Households do not require same level of expenditures to obtain housing of similar size and quality

– Adjustment: If household is living in public housing, receives a tenant-based subsidy, resides in a rent controlled apartment or owns its home free and clear, then add to family income:

Shelter and Utility portion of threshold – out-of-pocket expenditures for these items

– Source: NYC Housing and Vacancy Survey

Measurement of Family Resources (3)

• Work-Related Expenses– Cost of commuting– Source: ACS and transportation agency data– Cost of child care– Source: Survey of Income and Program

Participation

• Medical Out-of-Pocket Expenses– Source: Medical Expenditure Panel Survey

Alternative Resource MeasuresAt the 20th Percentile, 2008

Source: Tabulated from the American Community Survey PUMS as augmented by CEO.

$25,149

$29,138

$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

Pre-tax Cash CEO Income

Alternative Poverty Rates for NYC, By Age, 2008

17.6

26.3

14.617.6

22.0

26.0

19.3

28.5

0

5

10

15

20

25

30

All Persons Children under 18 Adults, 18 thru 64 Adults, 65 and older

Per

cent

OFFICIAL CEO

Source: Tabulated from the American Community Survey PUMS as augmented by CEO.

Effect of Additional Resource Measures On 2008 Poverty Rates, by Age Group

Source: Tabulated from the American Community Survey PUMS as augmented by CEO.

Percentage Point Change in Poverty Rates Due to:

All Under 18 18 thru 64 65 & olderNet Taxation -1.4 -5.5 -0.1 -0.8Nutritional Assistance -2.2 -4.1 -1.6 -1.9Housing Assistance -5.7 -9.1 -4.7 -5.0Work-related Expenses 2.4 4.0 2.2 0.6Medical Expenses 3.4 3.2 3.0 6.5

Change in NYC Poverty Rates,2005-2008

20.6 21.2 22.2 22.019.1 18.9

17.7 17.6

0

5

10

15

20

25

2005 2006 2007 2008

Perc

ent

CEO NYC OFFICIAL NYC

Source: Tabulated from the American Community Survey PUMS as augmented by CEO.

Rise in CEO Threshold OutpacesGrowth in Income

2005 2008 ChangeCEO Threshold $24,353 $30,419 24.9%CEO Income

20th percentile $24,054 $29,138 21.1%CEO Poverty Rate 20.6% 22.0% 1.4

Official Threshold $19,806 $21,834 10.2%Pre-tax Cash Income

20th percentile $21,499 $25,149 17.0%Official Poverty Rate 19.1% 17.6% -1.5

Source: Income and poverty rates are tabulated from the American Community Survey PUMSas augmented by CEO.

Rise in Poverty Thresholds Over Time

1.00

1.20

1.40

1.60

1.80

1994

=1.

00

OFFICIAL CEO-NYC

Source: US Bureau of the Census and NYC Center for Economic Opportunity.

Measuring Poverty in the Recession

• When the economy contracts:– Earned income plummets.– Increases in income from the safety net do not fully

replace this decline.– Total pre-tax cash income falls and the official poverty

rate rises.

• What will happen to CEO income?– Increased participation and benefit levels in Food

Stamp program– Expansion and creation of new tax credits– This makes change in total income harder to predict

For More Information

• CEO Poverty Measurement Reports: http://www.nyc.gov/ceo/

• Mark Levitan, Director of Poverty Research: levitanm@hra.nyc.gov