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How the Census Bureau Measures Income and Poverty

Wed Sep 10 2014
Victoria Velkoff
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Income, poverty and health insurance statistics for 2013 from the Current Population Survey Annual Social and Economic Supplement (CPS ASEC) will be released Tuesday, Sept. 16, 2014. One-year statistics from the 2013 American Community Survey (ACS) will be released on Thursday, Sept. 18, 2014.

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In all likelihood, the national statistics from these two sources will not be identical. Why not? Which is correct? Well, it’s complicated.

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There are several reasons why the statistics from the two surveys differ. One of the most notable ways in which the two surveys differs is that one asks respondents about income in the previous calendar year while the other asks respondents about income in a rolling 12-month period throughout the year.

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The Current Population Survey is conducted every month and serves as the nation’s primary source of statistics on labor force characteristics. Supplements are added in most months; the Annual Social and Economic Supplement to the survey provides the nation’s official annual statistics on income and poverty levels as well as statistics on age, sex, race, marital status, educational attainment, employee benefits, work schedules, school enrollment, health insurance, noncash benefits and migration.

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The American Community Survey, on the other hand, is the only source of small-area statistics available on a wide range of important social and economic characteristics for all communities in the country. In addition to income, poverty and health insurance, other topics include education, language ability, the foreign-born, marital status, migration, homeownership, the cost and value of our homes and many more.

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Statistics from these two surveys differ for multiple reasons. First, income questions on the Current Population Survey Annual Social and Economic Supplement are much more detailed than the summary questions asked on the American Community Survey. For the Current Population Survey Annual Social and Economic Supplement, trained interviewers administer the survey while people primarily respond to American Community Survey questions over the Internet or by mail. (Trained interviewers follow-up with a sample of the households who do not respond to the American Community Survey online or by mail.)

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Second, the reference periods for the two surveys are very different. The Current Population Survey Annual Social and Economic Supplement asks respondents to report on their income in the previous calendar year. The American Community Survey asks about income in the prior 12 months. Since the American Community Survey is a continuous survey administered throughout the year, some respondents to the 2013 American Community Survey (those who filled out the survey in January 2013) are reporting income received between January 2012 and December 2012, while other respondents (those who filled out the survey in December 2013) are reporting income received between December 2012 and November 2013.

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These differences often result in different national statistics for such key indicators as poverty, median income and income inequality. Despite differences in the “levels” of these indicators, the trends over time tend to be very similar across the two surveys. The following graphs show median household income and poverty rates from the American Community Survey compared with statistics from the Current Population Survey Annual Social and Economic Supplement for previous years. The red line adjusts the Current Population Survey Annual Social and Economic Supplement for the differences in reference periods.

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Many people contact us each year asking which estimate to use for a particular purpose. For national statistics, we recommend the Current Population Survey Annual Social and Economic Supplement because it provides a consistent historical time series at the national level back, in some cases, more than half a century. The Current Population Survey Annual Social and Economic Supplement can also be used to look at limited state-level trends. However, because of the larger sample size and smaller sampling errors, we recommend using the American Community Survey for subnational geographic areas.

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The next two charts show the volatility of the single year Current Population Survey Annual Social and Economic Supplement statistics relative to the American Community Survey statistics for two smaller states: Arkansas and Maryland. Since the Current Population Survey Annual Social and Economic Supplement has a smaller sample size, you see more volatility in these smaller states.

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If you are interested in a longer time series for a small state than is available from the American Community Survey, we recommend using two- or three-year averages from the Current Population Survey Annual Social and Economic Supplement.

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