When taxes and transfers are included, poverty is much rarer than commonly reported. But what actually reduces it?

America has spent more than $20 trillion on fighting poverty since the introduction of President Johnson’s Great Society program in 1964. Sixty years later, how are we doing?

That depends, as it turns out, on how you measure it.

Last month, Senator Kennedy (R-LA) introduced a bill that would require the Census Bureau to report a new poverty metric as an alternative to the Official Poverty Measure (OPM) by including both cash and non-cash welfare benefits in its calculations.

As Kennedy points out, this is a much-needed fix. The OPM’s methodological weaknesses are well documented. Most notably, it ignores the hundreds of billions of dollars the government spends each year to assist low-income families through tax credits like the Earned Income Tax Credit and in-kind transfers such as Medicaid, food stamps, and housing subsidies. In short, the OPM paints an egregiously inaccurate picture of material poverty in America.

Kennedy’s bill would require the Census Bureau to publish the Congressional Budget Office’s more comprehensive poverty measure alongside the OPM in its annual poverty report. A similarly constructed measure was developed by economists Richard Burkhauser and Kevin Corinth in a recent paper with the National Bureau of Economic Research. After accounting for taxes and transfers, they found that the “full-income” poverty measure sat at just 3.7 percent in 2023—1.6 percent after including employer-provided health insurance—a far more optimistic look than the OPM’s 11,1 percent from the same year.



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