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Poverty data masks ongoing income strains

Sometimes, the numbers don't tell the whole story.

The portion of the U.S. population that fits the government's definition of poverty fell last year for the first time since the Great Recession, when millions of Americans lost their jobs.

But the report doesn't tell the whole story about what it means to be poor in America. That's one reason the Census Department began publishing an alternative gauge—the so-called supplemental measure—beginning in 2010.

A man begs for money on a stairwell in an entrance to the Port Authority Bus Terminal in New York City.
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A man begs for money on a stairwell in an entrance to the Port Authority Bus Terminal in New York City.

The "official" poverty rate—introduced in the 1960s as part of the government's war on poverty—is still used to determine who is eligible for various government programs. That measure looks only at cash income for an individual or family.

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The more recent measure, whose latest numbers won't be released until November, tries to paint a more accurate picture of a household's economic well-being. That formula includes other noncash resources, including government benefits like food stamps, as well as spending on tax payments and work-related expenses. It also adjusts for geographical differences in the cost of housing.

Since it was introduced, the newer measure has found slightly higher poverty rates than the old one.

Given the recent improvement in the job market and overall economy, the supplemental measure will probably also show a decline in the number of people living in poverty.

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But while the official poverty rate has begun falling again, it's still about 2 percentage points higher than it was when the recession begin in 2007.

The report also showed that median household income was $51,939 in 2013—roughly unchanged from previous the year. That's about 8 percent lower that 2007 after adjusting for inflation.

Changes in the median income also mask differences in wage growth at different rungs of the economic ladder. For those at the bottom, wage growth has been slower than for those at the top.

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"Many middle class families were forced into a lower standard of living during the recession and during this anemic recovery," said Chris Christopher, an economist at IHS Global Insight. "The Great Recession was brutal to many middle and lower income households."

Given the current sluggish pace of wage gains, low income families can expect a long, slow slog back to the standard of living they enjoyed before the recession hit, according to IHS economists. The don't expect real median income to top 2007 levels until 2019.

By CNBC's John Schoen