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How the Census Bureau Measures Income and Poverty

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Income, poverty and health insurance statistics for 2015 from the Current Population Survey Annual Social and Economic Supplement (CPS ASEC) will be released Tuesday, Sept. 13, 2016. One-year statistics from the 2015 American Community Survey (ACS) will be released on Thursday, Sept. 15, 2016.

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

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

The CPS 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 CPS ASEC provides the official annual statistics on the nation’s poverty levels as well as statistics on income, age, sex, race, marital status, educational attainment, employee benefits, work schedules, school enrollment, health insurance, noncash benefits and migration.

The CPS is the longest-running survey conducted by the Census Bureau. The CPS ASEC asks detailed questions categorizing income into over 50 sources. The key purpose of the CPS ASEC is to provide timely and detailed estimates of income and poverty and to measure change in these national-level estimates. The CPS ASEC is the official source of the national poverty estimates calculated in accordance with the Office of Management and Budget’s Statistical Policy Directive 14. For more information on the CPS ASEC, visit <www.census.gov/programs-surveys/cps.html>.

The ACS, 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 population, marital status, migration, homeownership, the cost and value of homes, and many more.

The ACS has an annual sample size of about 3.54 million addresses across the United States and Puerto Rico and includes both housing units and group quarters (e.g., nursing homes and prisons). The ACS is conducted in every county throughout the nation, and every municipio in Puerto Rico, where it is called the Puerto Rico Community Survey. Beginning in 2006 (2005 data year), ACS data were released annually for geographic areas with populations of 65,000 and greater. For information on the ACS sample design and other topics, visit <www.census.gov/programs-surveys/acs>.

Statistics from these two surveys may differ for multiple reasons. First, income questions on the CPS ASEC are much more detailed than the summary questions asked on the ACS. For the CPS ASEC, interviewers administer the survey to respondents while people primarily respond to ACS questions over the Internet or by mail. (Interviewers follow up with households who do not respond to the ACS online or by mail.)

Second, the reference periods for the two surveys are very different. The CPS ASEC asks respondents to report on their income in the previous calendar year. The ACS asks about income in the prior 12 months. Since the ACS is a continuous survey administered throughout the year, some respondents to the 2015 ACS (those who fill out the survey in January 2015) are reporting income received between January 2014 and December 2014, while other respondents (those who fill out the survey in December 2015) are reporting income received between December 2014 and November 2015.

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 ACS compared with statistics from the CPS ASEC for previous years. The red line adjusts the CPS ASEC for the differences in reference periods.

Many people contact us each year asking which estimate to use for a particular purpose. For national statistics, we recommend the CPS ASEC because it provides a historical time series at the national level and in some cases, back more than half a century. Because of the larger sample size and smaller sampling errors, we recommend using the ACS for subnational geographies.

If you are interested in a longer time series than is available from the ACS, generally we have recommended using two- or three-year averages from the CPS ASEC.

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