July 18, 2008 - Mayor Michael Bloomberg of New York City has announced the implementation of an alternative to the current poverty measure. It will be the first time any local government has reformulated the nation's 40-year-old standard for determining poverty levels, which is based primarily on food expenditures.

According to the Urban Institute, the federal government considers fewer than 1 in 10 older adults to be poor, compared with about 1 in 3 in the 1960s, despite the fact that they often spend a significant amount of their incomes on medical expenses. This difference is one example of how current poverty evaluation methods fail to take into account important factors such as out-of-pocket medical expenses. Current threshold measurements still operate under the assumption that food costs are one-third the cost of overall living expenses, even though the U.S. Census Bureau estimated in 2000 that food costs are now one-sixth of overall expenses.

The new poverty measure that New York City plans to use factors in food, clothing, shelter, and utilities expenditures; counts tax credits and benefits — such as food stamps and Section 8 housing subsidies; deducts work-related expenses (including commuting and child care) and medical out-of-pocket expenses; and adjusts for differing geographic costs in housing. The initiative is based on recommendations from the National Research Council report Measuring Poverty: A New Approach, released in 1995.

The report recommends revising the poverty measure and poverty thresholds to take into account a variety of factors that are not currently accounted for. The New York City measure closely follows the recommendations in the Research Council's report.

• Measuring Poverty: A New Approach

• The Development and History of the Poverty Thresholds
• More Older Americans are Poor than the Official Measure Suggests
• Experimental Poverty Measures