Poverty among working families: New insights from an improved poverty measure

Objective. This article examines poverty among working families with children using a refined experimental poverty measure based on recommendations by the National Academy of Sciences Panel on Poverty and Family Assistance. Methods. Using data from the 1998 Current Population Survey, this research constructs an experimental poverty measure that takes into account noncash government benefits as well as job-related expenses, elements not included in the current official measure of family income. Results. We find that current statistics based on the official poverty line understate the extent of economic hardship, particularly among full-time working families with children, because expenses, such as child care costs, tend to outweigh noncash benefits, such as food stamps, that these families may receive. Furthermore, without the recent expansion of the Earned Income Tax Credit, poverty among full-time working families would be even higher. Conclusions. These findings highlight challenges faced by many families, especially those with adults moving off welfare and into the labor market.