Why is Poverty Higher in Rural America According to the Supplemental Poverty Measure? An Investigation of the Geographic Adjustment

Abstract

Poverty is a key indicator of economic hardship. By providing a geographic adjustment for cost of living, the recently developed Supplemental Poverty Measure has upended long-held views that poverty is higher in rural compared to urban America. In this study, we unpack the geographic adjustment underlying the Supplemental Poverty Measure and find that most of the difference is explained by the median rent index component rather than the housing tenure component. Further, we find that six states (Alabama, Georgia, Kentucky, Mississippi, North Carolina, and Ohio) account for over a third of the nonmetro poverty drop due to the median rent adjustment. We demonstrate that the demographic composition of the rural poor remains relatively unaffected despite this large drop, but find that the prevalence of poverty within demographic groups varies considerably. As a result, while the SPM is largely considered a more complete measure of poverty, the use of the median rent adjustment has important implications for the demographic understanding of rural poverty.