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37.9 million Americans are living in poverty, according to the U.S. Census. But the problem could be far worse.

PUBLISHED TUE, MAR 7 20238:00 AM EST

Juhohn Lee

Why the U.S. hasn’t solved poverty

KEY POINTS

• There are 37.9 million Americans living in poverty, accounting for 11.6% of the total population, according to the U.S. Census Bureau.
• The number reported by the Census Bureau is based on the official poverty measure, which has remained virtually unchanged since the mid-1960s
• As a response, the Census Bureau developed the Supplemental Poverty Measure in 2011 as an improvement over the existing measure.
• But some experts say that even the SPM falls short of accurately measuring poverty in the U.S.

As of January 2021, 37.9 million Americans lived in poverty, accounting for 11.6% of the total population, according to the latest report from the United States Census Bureau. That’s despite the fact that America ranks first as the richest nation in the world in terms of GDP.

“Poverty and economic insecurity are widely common, very commonly experienced,” said Shailly Gupta Barnes, policy director at the Kairos Center for Religions, Rights, and Social Justice. “They are as much a part of the American story as successes to the American dream.”

But the number reported by the Census Bureau is based on the official poverty measure, which has remained virtually unchanged since the mid-1960s. It’s calculated by comparing pretax income against a threshold set at three times the cost of a minimum food diet in 1963.

“The researcher whose work became the basis of that measure never intended it to be used in the way that it currently is,” said Barnes.

Grace Bonilla, president of United Way of New York City, said the official poverty measure doesn’t take very obvious indicators into consideration. To start, it looks at pretax income instead of actual take-home pay. It also doesn’t consider factors such as family composition or the cost of child care.

“It has not kept up with the way life has changed for most Americans,” said Bonilla.

As a response, the Census Bureau developed the Supplemental Poverty Measure in 2011 as an improvement over the existing measure. It incorporates into the measurement both the cost of basic needs like food, clothing and utilities, but also government transfers and programs. It also takes into account geographical differences and household size. The SPM rate for 2021 sat at 7.8%, compared with the official poverty measure rate of 11.6%, mainly due to government relief during the Covid-19 pandemic.

But some experts say that even the SPM falls short.

“It’s a step in the right direction but it falls so short of actually giving us an accurate count of poverty in the United States,” said Bonilla. “If you have a universal brush for the whole country, you’re going to miss a number of people that are either at risk of falling into poverty or are already technically living in poverty but are not counted by the measure.”

The Census Bureau told CNBC that both the official poverty measure and the supplemental poverty measure provide a consistent data of poverty measurement and that the Bureau continually strives to innovate and improve the design and measurement of their well-being statistics.