1 — U.S. BUREAU OF LABOR STATISTICS • bls.gov

Building a Consumption “Poverty” Measure at the BLS: 

Initial Results

Thesia I. Garner, Brett Matsumoto, Jake Schild, 

Grayson Armstrong, Caleb Cho, and Juan Munoz

Bureau of Labor Statistics

Session 2: Poverty and Income Measurement

2022 Society of Government Economists Annual Conference

Friday, April 1, 2022

10:30am-11:50am (paper 2)

Chair: Wenhua Di, Federal Reserve Bank of Dallas 

Discussant: David Johnson, University of Michigan Virtual presentation

An earlier version of this research was presented during the 2022 ASSA-AEA Meetings
2 — U.S. BUREAU OF LABOR STATISTICS • bls.gov

Motivation and Goal

◼Motivation

Bureau of Labor Statistics long term interest in producing a consumption 

measure

Interagency Working Group (ITWG) on Evaluating Alternative Poverty 

Measures Recommendations (report released January 14, 2021)

–Production of a consumption measure of poverty

–Not to replace OPM or SPM but to serve as an additional measure

◼ Goal of this study

To go through the process of producing a consumption measure with what is 

currently available to us at BLS

Provide initial results of “poverty” analysis based on various measures of 

spending and consumption
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Requirements for a “Poverty” Measure

◼Line to represent “poverty”

◼What is compared to that line
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Options to Define “Poverty” Line

◼ Absolute deprivation

A line that represents minimum spending or consumption needs (e.g., value of 

minimum goods and services)

Yes or no regarding possession of or access to “basic needs”

◼ Relative deprivation

One’s position in an income or consumption distribution relative to a particular 

point

◼ Subjective deprivation

Population reported minimum income, spending, consumption needs interacted 

with actual 
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Options to Define What to Compare

◼ Income

◼ Expenditures

◼ Consumption

◼ Possession or access to select goods and services (e.g., health insurance) 

or deprivation (e.g., food secure, housing secure)
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Consumption as a Well-being Outcome: A Function 

of Resources and Processes

For other outcomes: https://www.oecdbetterlifeindex.org/

Processes

Skills (e.g., education, 

financial management, 

efficiency in converting 

inputs to outcomes)

Degree of resource 

allocation (power)

Circumstances (CU 

composition, disability)

Preferences

Available Resources

Income, in-kind 

transfers

Asset (financial)

Asset (nonfinancial)

Debt (access and 

use)

Time

Outcomes (e.g.,)

1. Consumption

2. Health status

3. Material deprivation

4. Life satisfaction

5. Happiness
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New BLS Initiative to Produce a 

Comprehensive Consumption Measure

◼ Designed to reflect how consumer units (CUs) use resources (e.g., 

income, wealth, time, in-kind benefits) to meet their 

consumption/material “needs”

◼ Key data sources: Consumer Expenditure Surveys and American Time 

Use Survey

◼ In-house research: imputation of government provided in-kind benefits 

and flow of services from stock of owned vehicles 

◼ Outside research: contract on valuing home production for own 

consumption
8 — U.S. BUREAU OF LABOR STATISTICS • bls.gov

BLS Comprehensive Consumption Measure Target

◼ Expenditures

for own

consumption

◼ In-kind benefits

public and 

private

◼ Flow of services ◼ Home 

production

This Photo by Unknown Author is licensed 

◼ Health

◼ Education

T
9 — U.S. BUREAU OF LABOR STATISTICS • bls.gov

ITWG Recommendation: What to Include in Consumption

◼ Expenditures

for own

consumption

◼ In-kind benefits

public and 

private

◼ Flow of services ◼ Health insurance

Measure with

Measure without
10 — U.S. BUREAU OF LABOR STATISTICS • bls.gov

Other ITWG Recommendations for 

Consumption Poverty Measure and BLS

◼ Data source(s)

Consumer Expenditure Survey Interview

Use administrative data when available, modeling otherwise

◼ Producer: Bureau of Labor Statistics (with funding)

◼ Produce as soon as possible, with annual updates

◼ Produce at the state level
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ITWG Discussions Related to Poverty Measurement 

but No Specific Recommendations

◼ Thresholds

Determine how best to set based on research, and input from stakeholders and 

experts 

◼ Price indexes for updating thresholds 

Conduct a study regarding appropriate index

◼ Geographic adjustment of thresholds 

Consult experts on whether and, if so, how to implement

◼ Equivalence scales 

Conduct a study that will provide a recommendation regarding which are most 

appropriate 
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Initial BLS Research

◼Data

◼Measures considered

◼Thresholds

◼Results for population

“Poverty” rates

Demographic characteristics

◼Summary and conclusions

◼Future work
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Data Sources

CE Data: 2015Q2-2021Q1

◼ Quarterly out-of-pocket spending (acquisitions 

value) with the exception of the following:

Owner-occupied housing

Purchase and financing of vehicles

Cash contributions, purchases of life and other personal 

insurance, allocations to retirement plans, pensions, 

annuities, Social Security

◼ Reported rental equivalence (owned housing)

◼ Cars and trucks: make, model, year & new or used

◼ Rental unit: public housing, govt assist, rent control 

◼ Consumer unit demographic variables

Other

◼ CPS-ASEC (reference: 2015-2020): household 

data regarding receipt of government 

provided in-kind benefits

Amount of Low-Income Home Energy Assistance 

Program (LIHEAP) benefits

Receipt of National School Lunch Program (NSLP) 

benefits

Receipt of Supplementary Nutrition Program for 

Women, Infants, and Children (WIC) benefits

◼ USDA: 

NSLP per meal rate

WIC benefit

– Average monetary benefit per person

NOTE: Data collected in each of 4 quarters representative – Average infant formula rebate per infant

of a year (e.g., data collected in 2015Q2-2016Q1 represents 2015)
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Measures

◼ Total expenditures 

◼ Consumption expenditures

◼ Consumption 

◼ Income

CE defined after tax income (includes SNAP 

benefits)

In-kind transfers 

Similar to Fisher, Johnson, and Smeeding (2015) 

& Meyer and Sullivan (2012) 

with exception of LIHEAP, NSLP, & WIC, 

and differences in 

treatment of education, health care, 

vacation properties
15 — U.S. BUREAU OF LABOR STATISTICS • bls.gov

Construction of Measures

Measure Variable Name Base Does not Include Addition

Total Expenditures tot_exp

Total Expenditures CE 

Publication Definition

Consumption 

Expenditures spending_consump tot_exp

Cash contributions; allocations to and purchases of 

life insurance, endowments, annuities, and other 

personal insurance; retirement, pensions, and 

Social Security

Consumption consumption_4 spending_consump

Owner expenses for primary residence; purchases 

of stoves, refrigerator/freezer, dishwasher, clothes 

washer/dryer AC window units for owners and 

renters; shelter expenses associated with vacation 

homes 

Expenditures for: health; education; housing while 

away at school; daycare centers, nursery, preschool;

All vehicle purchases; vehicle finance charges; 

motorized vehicles for entertainment

Rental equivalence of primary 

residence

Rental equivalence of vacation 

homes (but not time shares)

Flow of services from cars and 

trucks

LIHEAP, NSLP, rental assistance, 

WIC In-kind transfers

Income

CE defined after tax 

income with in-kind 

benefits

CE defined after tax 

income

LIHEAP, NSLP, rental assistance, 

WIC In-kind transfers
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Thresholds Based on Relative Concept

◼ Thresholds defined in 3 different ways

1. Purely relative as 60% of median (i.e., threshold is a function of the same “resource”)

2. Absolute thresholds for all measures anchored to the threshold for 2015 based on consumption_4

3. Absolute thresholds for all measures set at values such that poverty rates for all measures 

anchored to be the same in 2015 as rate for consumption_4 poor (i.e., 16.8% in 2015)

◼ Absolute thresholds adjusted by Chained Consumer Price Index for All Urban 

Consumers (CPI-U) for 2015-2020 

◼ Thresholds based on ranking of adult equivalized income, spending, consumption 

based on 3-parameter equivalence scale as used to produce SPM)

◼ No geographic adjustment

➢ These thresholds DO NOT represent a level of “needs”; they represent a point in a 

distribution
17 — U.S. BUREAU OF LABOR STATISTICS • bls.gov

What Is Compared to the Thresholds

◼ Adult equivalized income, spending, and consumption (use 3-parameter equivalence 

scale)

◼ Quarterly expenditures and consumption (not annualized) 

To reflect a year, data collected in any of four quarters, e.g., 2015 represented by 2015Q2-2016Q1

Concern with seasonality so not multiplied by 4 for expenditures and consumption (unlike Meyer and 

Sullivan 2012)

Concern with representativeness if restricted to 4 complete interviews even with demographic 

reweighting: Are the results representative of the lower end of the distributions? (unlike Fisher, 

Johnson, and Smeeding 2015) 

◼ Income/4
18 — U.S. BUREAU OF LABOR STATISTICS • bls.gov

Results

◼Medians - annualized

◼Poverty rates – by year based on quarterly reference periods

◼Characteristics of the “poor”
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Annualized Medians in Real 2015 Dollars for All Consumers Units 

Equivalized to CUs with 2 Adults+2 Children (2A+2C)

$45,000

$47,000

$49,000

$51,000

$53,000

$55,000

$57,000

$59,000

$61,000

$63,000

$65,000

2015 2016 2017 2018 2019 2020

After tax income with inkind benefits

Tot_exp

Spending_consump

Consumption_4
20 — U.S. BUREAU OF LABOR STATISTICS • bls.gov

Poverty Rates Based on Purely Relative Thresholds (reproduced as 

60% of median each year): 2015-2020

Consumption_4: 16.8% to 14.2%

22.5% 22.5%

21.5%

19.3% 19.2%

16.8% 16.8%

14.2%

13.0%

15.0%

17.0%

19.0%

21.0%

23.0%

25.0%

2015 2016 2017 2018 2019 2020

After tax income with inkind benefits

Tot_exp

Spending_consump

Consumption_4
21 — U.S. BUREAU OF LABOR STATISTICS • bls.gov

Change in Poverty Rates 

Based on Purely Relative Thresholds: 2015-2020

Consumption_4: -2.6% pp

0.0%

-2.3%

-2.4%

-2.6%

-3.0%

-2.5%

-2.0%

-1.5%

-1.0%

-0.5%

0.0%

0.5%

1.0%

1.5%

2015 2016 2017 2018 2019 2020

After tax income with inkind benefits

Tot_exp

Spending_consump

Consumption_4
22 — U.S. BUREAU OF LABOR STATISTICS • bls.gov

Poverty Rates Based on Absolute Thresholds that Equal 2015 Threshold 

for Consumption_4 Updated by C-CPI-U: 2015-2020

Consumption_4: 16.8% to 11.5%

16.5%

13.5%

18.0%

13.4%

22.7%

18.4%

16.8%

11.5%

10.0%

12.0%

14.0%

16.0%

18.0%

20.0%

22.0%

24.0%

2015 2016 2017 2018 2019 2020

After tax income with

in-kind benefits

Tot_exp

Spending_consump

Consumption_4
23 — U.S. BUREAU OF LABOR STATISTICS • bls.gov

Change in Poverty Rates for Absolute Thresholds Anchored to 2015 

Threshold for Consumption_4 Updated by C-CPI-U: 2015-2020

Consumption_4: -5.3% pp

-3.0%

-4.6%

-4.3%

-5.3%

-6.0%

-5.0%

-4.0%

-3.0%

-2.0%

-1.0%

0.0%

2015 2016 2017 2018 2019 2020

After tax income with inkind benefits

Tot_exp

Spending_consump

Consumption_4
24 — U.S. BUREAU OF LABOR STATISTICS • bls.gov

Poverty Rates Based on Absolute Thresholds for 2015 Set to 

Levels that Result in Same Poverty Rates as for 2015 

Consumption_4 Rate (16.8%): 2015-2020

Consumption_4: 16.8% to 11.5%

13.6%

12.4%

12.5%

11.5%

11.0%

12.0%

13.0%

14.0%

15.0%

16.0%

17.0%

18.0%

2015 2016 2017 2018 2019 2020

After tax income with inkind benefits

Tot_exp

Spending_consump

Consumption_4
25 — U.S. BUREAU OF LABOR STATISTICS • bls.gov

Change in Poverty Rates Based on Absolute Thresholds Set to Levels 

that Result in Same Rates as 2015 Consumption_4 

Poverty Rate (16.8%): 2015-2020

Consumption_4: -5.3% pp

-3.2%

-4.3%

-4.2%

-5.3%

-6.0%

-5.0%

-4.0%

-3.0%

-2.0%

-1.0%

0.0%

2015 2016 2017 2018 2019 2020

After tax income with inkind benefits

Tot_exp

Spending_consump

Consumption_4
26 — U.S. BUREAU OF LABOR STATISTICS • bls.gov

Income Poor, Consumption Poor, or Both? 

Rates Based on Thresholds Set to Levels that Result in Same Rates 

as 2015 Consumption_4 Rate (16.8%)

2015

After Tax Income 

Poor

Yes No Consumption Poverty Rate 

Consumption_4 

Poor

Yes 7.9% 8.9% 16.8%

No 8.9% 74.3%

Income Poverty Rate 16.7%

2020

After Tax Income 

Poor

Yes No Consumption Poverty Rate 

Consumption_4 

Poor

Yes 4.7% 6.8% 11.5%

No 8.9% 79.6%

Income Poverty Rate 13.6%
27 — U.S. BUREAU OF LABOR STATISTICS • bls.gov

Demographic Characteristics of the U.S. Population 

Compared to Study-defined “Poor”: 2015

Characteristics U.S. Population Below Consumption_4 

Threshold

Below After-Tax Income 

with In-kind Benefits 

Threshold

Below Both Income and 

Consumption Thresholds

Race

White non-Hispanic 64.7% 47.7% 49.6% 45.9%

Black non-Hispanic 12.5% 20.9% 19.4% 21.7%

Hispanic 16.3% 25.5% 24.2% 26.8%

Other 6.5% 5.7% 6.9% 5.6%

Degree of Urbanization

Central City 34.4% 42.4% 41.2% 43.1%

Other Urban Areas 46.5% 33.7% 39.8% 35.3%

Rural Areas 19.2% 23.9% 19.1% 21.7%

Education

Less than High School Graduate 13.0% 31.6% 28.4% 37.2%

High School Graduate 23.4% 32.2% 29.3% 30.8%

Some College 21.6% 21.7% 23.2% 20.9%

Associates Degree or Higher 42.0% 14.5% 19.1% 11.0%
28 — U.S. BUREAU OF LABOR STATISTICS • bls.gov

Demographic Characteristics of the U.S. Population 

Compared to “Poor”: 2015

Characteristics U.S. Population Below Consumption_4 

Threshold

Below After-Tax Income 

with In-kind Benefits 

Threshold

Below Both Income and 

Consumption Thresholds

CU Member in Age Group

0-17 years old 51.2% 64.6% 53.5% 62.3%

Marital Status

Single Mother 5.8% 11.4% 13.4% 14.6%

Married Couple Only 17.8% 4.7% 8.8% 4.3%

Married Couple with Others 44.0% 42.4% 30.0% 32.5%

CU Earner Composition

Reference Person OR Spouse Only 27.9% 31.4% 37.0% 36.4%

Reference Person AND Spouse Only 26.2% 10.4% 5.7% 4.2%

No Earners 14.7% 20.6% 34.5% 33.3%
29 — U.S. BUREAU OF LABOR STATISTICS • bls.gov

Summary and Conclusions

◼ Broader consumption measure more in-line with the theoretical measurement 

objective than measures based on total expenditures or consumption spending alone

◼ Median total expenditures and consumption follow similar trends 

◼ Relative poverty, in general, decreases from total expenditures to consumption 

◼ For anchored poverty rate thresholds, “poverty” rate for the income poor decreases by 

less than the “poverty” rate for the Consumption_4 poor

Surprising result, given that median income increased faster than median Consumption_4

Possibly explained by the relative size of the poverty gaps for each measure: poverty gap for income 

poor is larger than poverty gap for consumption_4 poor

Thus, a larger level change in median income may not lead to a larger reduction in income poverty

➢ These results DO NOT reflect poverty in terms of minimum needs 
30 — U.S. BUREAU OF LABOR STATISTICS • bls.gov

Future Work

◼ Decompose poverty by demographic characteristics and by source, e.g.

Contribution of changes in of household composition

Contribution of changes in income and consumption components (e.g.: earnings versus in-kind 

benefits; food at home versus rental equivalence)

◼ Look at the potential role of debt versus changes in assets (financial and non-financial) 

on changes in poverty 

◼ For consumption measure

Produce a consumption measure that includes health insurance

Expand back to 2009 (same year for which imputed in-kind benefits are being imputed for 

production of SPM thresholds)

◼ For income measure: expand back to at least 2014 when BLS fully implemented the use of 

TAXSIM to estimate federal and state income taxes imputed with TAXSIM

◼ Compare to the consumption measures created by others
31 — U.S. BUREAU OF LABOR STATISTICS • bls.gov

Contact

Thesia I. Garner, Ph.D.

Chief Researcher for Prices and Living Conditions

Bureau of Labor Statistics

Washington, DC 20212

Garner.Thesia@BLS.gov

Office telephone: (202) 691 6576