Common sense tells us that the cost of goods and services are different in different parts of the country. For instance, the economic reality and expenditures of families living in Northern Virginia are not the same as those living in Lynchburg or those living in Wise County. The cost of housing and rent is particularly variable, but other basics such as food or transportation are surprisingly different across Virginia’s regions as well.
Despite common sense, official poverty rates do not account for this variability. The income threshold for poverty for a family living in New York City is the same for a similar family living in Fargo, North Dakota. More disturbingly, billions of dollars of government benefits and services are distributed to localities and families based on the official poverty measure. Other public and private organizations also use the official statistics to target their operations.
With so much at stake, a new poverty measure that addresses regional differences in the cost of living is needed. The Census Bureau has recently developed the Supplemental Poverty Measure (or SPM) to do this at the national level, but states and localities are at a disadvantage. Only 3-year SPM averages are available for states and none are available at the sub-state level.
Virginia, however, now has a new alternative poverty measure that accounts for regional differences in the cost of living and provides sub-state estimates of poverty rates. As elaborated in my previous post, the new “Virginia Poverty Measure” (VPM) provides some interesting insights about economic distress in the commonwealth, but perhaps the most striking results are the result of its regional adjustments.