From this Associated Press article that we found at Google News, writer Hope Yen tells us more about the new formula.
The new measure will not replace the official poverty rate but will be published alongside the traditional figure next year as a "supplement" for federal agencies and state governments, according to the directive announced Tuesday by the Commerce Department and White House.
Demographers say the main impact of the change will be to highlight higher numbers of Americans in poverty than previously known, particularly among Americans 65 and over. Because it will be considered a supplemental measure, however, it will not change how billions of federal dollars for the poor are distributed for health, housing, nutrition and child-care benefits.
"The new supplemental poverty measure will provide an alternative lens to understand poverty and measure the effects of anti-poverty policies," said Rebecca Blank, the Commerce Department's undersecretary of economic affairs, a frequent critic of the traditional measure.
That traditional measure, created in 1955, does not factor in rising medical care, transportation, child care or geographical variations in living costs. Nor does it consider non-cash government assistance such as food stamps when calculating income, which has surged higher in recent months due to the federal stimulus program.
The first set of supplemental figures won't be published until September 2011. But they are largely based on alternative figures previously released by the Census Bureau that put poverty rates much higher than the official rate.
For example, under the alternative measure:
_About 18.7 percent of Americans 65 and older, or nearly 7.1 million, are in poverty compared to 9.7 percent, or 3.7 million, under the traditional measure. That's due to out-of-pocket expenses from rising Medicare premiums, deductibles and a coverage gap in the prescription drug benefit.