Association for Public Policy Analysis & Management

Most acknowledge that the Supplemental Poverty Measure (SPM) has improved the validity of poverty measurement, but the SPM implications for rural poverty are subject to debate. Until recently, rural populations have been described as experiencing higher and deeper poverty on the basis of the Official Poverty Measure, as well as significant barriers to safety net participation (Jensen & Ely, 2017; Lichter & Schafft, 2016; Sherman, 2014). However, Nolan et al. (2017) show that, relative to urban areas, rural populations have experienced a steep decline in SPM poverty since the 1960s, lower poverty since the early 1990s, and higher participation in selected safety net programs (Nolan et al., 2017; Rothwell & Thiede, 2018). These findings “overturn conventional wisdom that rural poverty has been greater than urban poverty over the past fifty years” (Warlick, 2017, p. 389). We refer to the inconsistency between these pictures of rural poverty as the SPM face validity problem.

To examine the roots of this problem, we rely on Gornick & Smeeding’s (2018) framework that disaggregates redistribution into three “institutional arenas” (p. 21.1): predistribution, private redistribution, and public redistribution. We ask:

1. How are the contemporary US welfare state characterized across these groups?
2. How do the three institutional areas relate to SPM poverty?
3. What are the implications for rural poverty?

We pooled Current Population Survey (CPS) data across 2016 to 2018 (Flood et al., 2018), and merged them with state-level policy data from the University of Kentucky’s National Welfare Database and the National Council of State Legislature. We use descriptive statistics to depict the rural experience of the redistributive categories overall, and across metro space. We calculate static counterfactual SPM poverty rates with and without private income transfers for four market-income-to-SPM poverty categories following Moffitt (2015).

We find that Metro households were more likely to live in a state with predistributive policy conditions likely to favor redistribution: e.g., 60 % of Nonmetro households lived in states with a right-to-work law (discouraging unionization), compared to 47% in Metro. Private transfers were associated with a statistically significant reduction of over 1 pp in the SPM poverty rate. No difference was observed between Metro and Nonmetro in the proportion of households who rely on private redistribution, yet the reduction associated with private income transfers is consistently higher for Metro households. Like others, we find that a higher proportion of Nonmetro households access public sources of redistribution (61%, vs. 52% of Metro households).

We show preliminary evidence that the major redistributive levers function differently across the rural-urban continuum, and likely contribute to the SPM’s face validity problem. State-level predistributive policy variables suggest that Nonmetro households operate under considerably different policy conditions than Metro households. With lower access to private redistribution sources, rural Americans may experience a relative disadvantage compared to urban households. In the full paper, we incorporate adjustments for program participation under-reporting (Parolin 2019) and account for more diverse measures. We will also explore how this framework can be applied historically prior to welfare reform in 1996.