The current administration has proposed changing the way we measure inflation when setting the federal poverty thresholds because it believes that the current measure, the Consumer Price Index for Urban Consumers (CPI-U), overstates inflation. An alternative measure the administration is considering and seeking public input on is the Chained Consumer Price Index for Urban Consumers, commonly known as “chained CPI.”
Switching the inflation measure from CPI-U to the chained CPI would result in slower inflation rates from year to year. The differences between the two inflation measures would be minimal at first but would compound over time. Fewer low-income people would be included among those living under the poverty line and fewer would qualify for programs that use federal poverty guidelines (which are based on the poverty thresholds) to determine eligibility. A program that relies on federal poverty guidelines to determine eligibility is the Supplemental Nutrition Assistance Program (SNAP), the nation’s primary food assistance program that serves roughly 40 million people per month.
In this brief, we use Urban’s Analysis of Transfer, Taxes, and Income Security microsimulation model and 2016 American Community Survey data to estimate the number of people who would ultimately lose SNAP benefits if the poverty guidelines were based on poverty thresholds adjusted for inflation using the chained CPI. We find that in 2016:
- 579,000 SNAP recipients would have been ineligible for SNAP if the chained CPI had been the inflation measure used to adjust federal poverty thresholds for the previous 15 years. Among those recipients, 242,000—or about 42 percent—would have been children.
- The number of recipients losing SNAP eligibility would grow over time. Had the chained CPI been used for five years prior to 2016, 104,000 SNAP recipients would have been ineligible, and if it had been used for ten years, 245,000 recipients would have been ineligible.
- Had the chained CPI been used for the previous 15 years, just over 240,000 SNAP households would have been ineligible in the average month in 2016, including nearly 50,000 households with a person age 60 or older, more than 20,000 households with a person with a disability, and more than 118,000 households with at least one child.
- The number households that would have been ineligible in 2016 also varies by state with more populous states experiencing the largest reductions in eligibility. Had the chained CPI been used for the previous 15 years, 24,000 households and 15,000 households in New York and California, respectively, would have been ineligible. (Author abstract)