The poverty rate measures the percentage of people who live in households with cash income below what is called the poverty threshold (cash income includes wages, social security, and unemployment benefits, but excludes non-cash benefits, such as food stamps and the effect of tax payments and credits received.) For 2012, the poverty threshold was about $12,000 for a single person under the age of 65 and about $23,300 for a family of four (thresholds for individuals and couples over the age of 65 are somewhat lower).
In 2012, Massachusetts was among the twelve states with the lowest poverty rates in the country (due to sample size, and resulting margins of error, it is not possible to establish a more precise rank). The Massachusetts poverty rate was 11.9 percent, four percentage points lower than the U.S. average of 15.9 percent.
While Massachusetts compares favorably with much of the rest of the U.S., wages and incomes have either stagnated or dropped at the lower end of the economic spectrum and thus it is not surprising that poverty has increased in recent years. After remaining relatively stable for four years, the poverty rate in Massachusetts showed a statistically significant increase in 2010, and remained level in 2011 and 2012 (due to the sample size, the numerical increases noted in those years are not considered statistically significant). This means that roughly 1 of every 9 people across the state were living below the poverty line in 2012.
More than one in every seven Massachusetts children lived in poverty in 2012. Since 2006, before the start of the Great Recession, the rate of children living in poverty in Massachusetts has risen by three percentage points, and it has risen by 2.2 percentage points since 2009, the year in which the recession officially ended.
Nationwide, more than one of every five children lives in poverty.
In recent years the Census Bureau has begun to calculate a second measure of poverty, the Supplemental Poverty Measure (SPM). Unlike the official poverty measure, the SPM takes into account the cost of housing and other necessities, such as utilities. It also accounts for taxesincluding tax credits such as the Earned Income Tax Credit (EITC)and the value of non-cash benefits such as Supplemental Nutrition Assistance Program (SNAP) benefits. When measured using the SPM, Massachusetts' poverty rate rises closer to the overall U.S. rate, and Massachusetts ranks near the middle of states rather than at the low end, as under the official measure. The higher rate of poverty under the SPM is likely due in part to higher costs for housing and other living expenses in Massachusetts.
An analysis of last year's data showed that in Massachusetts an average of roughly 144,000 people were kept above the poverty line each year from 2009 to 2011 through a combination of the EITC and the Child Tax Credit (similar information for 2012 is not yet available).1
For details on the SPM see Appendix A. Note the SPM state poverty rates are based on a 3-year average of Current Population Survey data and thus vary somewhat from the rates described earlier in this section, which are based on 1-year of American Community Survey data.