Inside the New Poverty Measure
By Arnold Kling
Robert Lerman looks at how the sausage got made.
the SPM threshold is a relative concept. It equals what a family with two children at the 33rd percentile of spending devote to food, clothing, housing, and utilities plus another 20% of this amount. This threshold is then adjusted for family size and local housing costs.
Read the whole thing, as well as his earlier post.
I would note that to the extent you measure poverty as a relative concept, you ensure that no public policy can eliminate what you call poverty.