This week, the Ohio Association of Community Action Agencies released their 2025 State of Poverty Report, their annual report on poverty in the state of Ohio. One of the points that caught my attention in the report was Ohio’s listing as the 15th-highest poverty rate in the country with 13.2% of Ohio residents living under the federal poverty line.
These numbers come from the American Community Survey, which says that Ohio’s poverty rate was 13.3% in 2023 using 2023 survey data, so within the margin of error of what the Ohio Association of Community Action Agencies reports. It seems like their numbers are correct, but using the official poverty measure does mask some important distinctions between Ohio and other states that I would like to talk about.
Each year, when the United States Census Bureau releases their American Community Survey results, they also release a report called “Poverty in the United States” that details the poverty statistics of the previous year. One of the tables they release with the report is a table that shows state-by-state statistics for poverty based on two separate measures: the official poverty measure and the supplemental poverty measure.
We have written about different poverty measures plenty in the past but I will give you a rundown of the difference between these two measures. The Official Poverty Measure is based on Mollie Orshansky’s Great Society threshold of the cost of a thrifty food plan times three. In the 1960s, the average American household spent about a third of their income on food, so Orshansky reasoned that a good measure of “poverty” would be whether the household income does not exceed the resources to pay for three times a bare-bones food plan. The federal government agreed and that measure has stood, adjusted for inflation, for the past sixty years.
In the 1990s, however, a group of researchers were convened by the National Academies of Arts and Sciences to study and improve the federal poverty measure. In their report, this group of researchers addressed problems with the Official Poverty Measure.
The three main problems were as follows. First, the cost of food had plummeted in the United States over the past thirty years due to agricultural science advances. At the same time, health care and housing costs were on the rise. This challenged the idea of “the cost of a thrifty food plan times three” as a reasonable basis for setting a poverty threshold.
Second, the Official Poverty Measure only used pre-tax income to measure household resources. With the expansion of the social safety net and the role of taxes in household budgets, resources given and taken by the government have a substantial impact on poverty rates. The Official Poverty Measure ignores this.
Third, the Official Poverty Measure sets the same poverty threshold for every household in the United States, with the exception of separate thresholds for Alaska and Hawaii. This means someone living in San Francisco is expected to need the same amount of resources as someone living in rural Oklahoma.
The researchers proposed a new measure that ties thresholds to average consumer spending rates, factors in taxes, transfers, and living expenses, and adjusts for geography. The report then sat on a shelf until 2009, when New York City started calculating the New York Poverty Measure. The Census Bureau soon followed, developing the Supplemental Poverty Measure to estimate poverty nationwide. Scioto Analysis’s Ohio Poverty Measure is a version of this measure.
When you are seeing poverty rates cited, you are almost certainly seeing Official Poverty Measure rates. Even though these numbers are not as favored by poverty researchers as the Supplemental Poverty Measure numbers, they are still the numbers that are used for federal resource allocation, so they get top billing.
And so we see this in the Ohio Association of Community Action Agencies report. Ohio is good for 15th highest poverty rate in the country…under the Official Poverty Measure. This is one-year data from the American Community Survey, but it is a little more alarming than from three-year data reported by the United States Census Bureau in their “Poverty in the United States: 2023” report–in that report, Ohio was ranked 21st in the country for poverty.
Under the Supplemental Poverty Measure, though, the story is different. After adjusting for local cost of living, tying costs to average spending, and factoring in taxes and transfers, which the Supplemental Poverty Measure does, Ohio plummets from 21st in the country in poverty to 36th, dropping it from the middle of the pack for poverty to a state with below-average poverty rates. This 15-place drop is shared with Iowa (which drops from 33rd under the Official Poverty Measure to 48th under the Supplemental Poverty Measure) for the largest drop in ranking in the country when looking at the Supplemental Poverty Measure rather than the Official Poverty Measure.
When using this measure that adjusts for local conditions, states like Iowa, Ohio, New Mexico (2nd to 16th-highest poverty) and Maine (39th to 51st-highest poverty, ending up better than all states and D.C.) drop in the rankings due to lower costs of living. Meanwhile, high-costs states like New Jersey, Maryland, and Colorado, which are 44th, 41st, and 47th respectively under the Official Poverty Measure, catapult into the middle of the pack at 20th, 18th, and 26th under the Supplemental Poverty Measure. Large, relatively high-cost states of California, Florida, and New York increase from merely above-average rankings of 19th, 15th, and 17th highest poverty in the country under the Official Poverty Measure to 1st, 4th, and 6th respectively under the Supplemental Poverty Measure.
Cost of living matters. A dollar in Southeast Ohio is not the same as a dollar in the San Francisco Bay Area. If we look at a measure like the Supplemental Poverty Measure, we will get a lot closer to understanding what true relative differences in poverty are from state to state. And that matters. Designing antipoverty policy around good data is important because it will help us bring the end of poverty more quickly and with less pain. And isn’t that what antipoverty policy is for?