Measuring Poverty in the U.S.
HOW DO WE MEASURE POVERTY IN THE U.S.?
LEARNING OUTCOMES
Examine how poverty is defined and measured in the United States and critique the poverty thresholds.
Compare and contrast absolute and relative measures of poverty.
Estimate monthly expenses for a hypothetical single mother and her two children and evaluate whether the poverty threshold for a family of that size is realistic and practical.
A BRIEF HISTORY OF POVERTY MEASUREMENT
1850: Development of Standard Budgets in Europe.
1870-1895: U.S. Development of Standard Budgets.
Charles Booth introduced the concept of the line of poverty.
Poverty defined as having insufficient income to live appropriately.
1950s-60s: Introduction of the Official Poverty Measure in the U.S. as part of the War on Poverty initiatives including:
Medicare
Medicaid
Food Stamps
Job Corp
VISTA
Title I School Programs
HOW IS POVERTY MEASURED TODAY?
Absolute measure: A definitive level of basic need that remains constant over time.
Relative measure: A condition of comparative disadvantage, suggesting that poverty is experienced in relation to others in society.
ORSHANSKY’S POVERTY THRESHOLD MODEL
Orshansky’s Poverty Thresholds:
Based on an economy food plan, defined as a very low-cost food budget intended for temporary and emergency use when funds are low.
Multiplication of Economy food plan by 3 determines the poverty line.
Established by the Office of Economic Opportunity to serve as a working definition of poverty for statistical, planning, and budgetary purposes.
Later adopted by the Office of Management & Budget as the official statistical definition of poverty.
2023 POVERTY THRESHOLDS
Size of family unit:
Family Size
Related Children Under 18 Years
Poverty Threshold ()
One person (unrelated individual): Under 65 years
0
15,852
1
20,404
2
23,834
3
31,428
4
37,901
5
43,593
6
50,159
7
56,099
8 or more
67,483
2024 POVERTY GUIDELINES FOR THE 48 CONTIGUOUS STATES AND THE DISTRICT OF COLUMBIA
Persons in Family/Housing:
1: $15,060
2: $20,440
3: $25,820
4: $31,200
5: $36,580
6: $41,960
7: $47,340
8: $52,720
For families/households with more than 8 persons, add $5,380 for each additional person.
ASSESSMENT OF U.S. POVERTY MEASURES
Advantages:
Conceptually easy to understand.
Achieves a consensus among various stakeholders.
Serves as a helpful analytical tool in policy-making.
Disadvantages:
Definition of income is flawed and simplistic.
Not very refined; lacks detail and differentiation.
Perceptions of poverty can shift when standards of living change.
RELATIVE MEASURES
Relationship Dynamics:
Individuals live within a network of relationships where poverty is viewed relative to existing levels of economic, social, and cultural development.
Those significantly below others in their communities may be unable to participate adequately in society.
Example: Setting a threshold at the median household income can offer insights but may not capture the complete picture of poverty dynamics.
ASSESSMENT OF RELATIVE MEASURES
Advantages:
Aligns with historical records and changing views of poverty.
Recognizes that real need arises in wealthier countries.
Social components of poverty are critically addressed.
Disadvantages:
Conceptually challenging; can lead to misunderstanding of poverty definitions.
Statistical challenges in quantifying and validating the measurements.
QUASI-RELATIVE POVERTY MEASURE
Supplementary Poverty Measure (SPM):
Calculates poverty thresholds based on reported expenditures on basic necessities such as food, clothing, shelter, and utilities.
Adjusts for variations in housing costs by state and metropolitan area, ensuring regional accuracy.
Updated annually to reflect real expenditures, not just static thresholds.
HOW DO WE MEASURE POVERTY IN THE U.S.?
LEARNING OUTCOMES
Examine how poverty is defined and measured in the United States and critique the poverty thresholds.
Compare and contrast absolute and relative measures of poverty.
Estimate monthly expenses for a hypothetical single mother and her two children and evaluate whether the poverty threshold for a family of that size is realistic and practical.
A BRIEF HISTORY OF POVERTY MEASUREMENT
1850: Development of Standard Budgets in Europe. These budgets emerged as early attempts to quantify the minimum income required for a household to afford basic necessities like food, housing, and clothing, laying the groundwork for later poverty measures.
1870-1895: U.S. Development of Standard Budgets. During this period, pioneers like Charles Booth in the UK introduced the concept of the "line of poverty." He extensively surveyed poverty in London and defined poverty as having insufficient income to live appropriately, leading to more empirical approaches to identifying deprivation.
1950s-60s: Introduction of the Official Poverty Measure in the U.S. as part of the War on Poverty initiatives. Launched by President Lyndon B. Johnson, the "War on Poverty" aimed to combat nationwide poverty. Key programs introduced included:
Medicare: Provides health insurance for Americans aged 65 and older.
Medicaid: Offers health coverage to low-income individuals and families.
Food Stamps (now SNAP - Supplemental Nutrition Assistance Program): Assists low-income families in purchasing food.
Job Corps: A program focused on providing education and job training for disadvantaged youth.
VISTA (Volunteers in Service to America): A national service program designed to combat poverty.
Title I School Programs: Provides financial assistance to local educational agencies and schools with high percentages of children from low-income families to help ensure all children meet challenging state academic standards.
HOW IS POVERTY MEASURED TODAY?
Absolute measure: This approach defines a definitive, fixed level of basic need that remains constant over time, adjusted only for inflation. It focuses on the minimum income required to afford essential goods and services, irrespective of societal living standards. If a household's income falls below this threshold, they are considered to be in absolute poverty.
Relative measure: This method views poverty as a condition of comparative disadvantage, suggesting that poverty is experienced in relation to the prevailing economic and social standards of others in society. It often sets the poverty line as a percentage of the median or average income, acknowledging that basic needs can change with societal development.
ORSHANSKY’S POVERTY THRESHOLD MODEL
Orshansky’s Poverty Thresholds: Developed in the early 1960s by Mollie Orshansky at the Social Security Administration, these thresholds are the foundation of the U.S. Official Poverty Measure. They were based on:
An economy food plan: Defined as a very low-cost food budget intended for temporary and emergency use when funds are low, based on Department of Agriculture data.
Multiplication of Economy food plan by 3: Orshansky observed that families typically spent about one-third of their disposable income on food. Thus, multiplying the cost of the economy food plan by determined the initial poverty line.
Established by the Office of Economic Opportunity to serve as a working definition of poverty for statistical, planning, and budgetary purposes. This provided a standardized metric for tracking poverty trends and allocating resources for anti-poverty programs.
Later adopted by the Office of Management & Budget as the official statistical definition of poverty, solidifying its role in federal policy and research.
2023 POVERTY THRESHOLDS
The following tables present the 2023 poverty thresholds issued by the U.S. Census Bureau for statistical purposes and the HHS poverty guidelines, which are used for administrative purposes such as determining eligibility for federal programs.
U.S. Census Bureau Poverty Thresholds (by family size and number of related children under 18 years):
Family Size
Related Children Under 18 Years
Poverty Threshold (15,06020,44025,82031,20036,58041,96047,34052,7205,380$$ for each additional person. These figures are higher in Alaska and Hawaii to account for higher costs of living.
ASSESSMENT OF U.S. POVERTY MEASURES
Advantages:
Conceptually easy to understand: The absolute income threshold provides a clear, single number that is straightforward for policymakers and the public to grasp.
Achieves a consensus among various stakeholders: Its long-standing use and simple methodology have fostered a broad, if sometimes critical, acceptance across political and social groups.
Serves as a helpful analytical tool in policy-making: It allows for consistent year-to-year comparisons of poverty rates and the evaluation of the effectiveness of anti-poverty programs over time.
Disadvantages:
Definition of income is flawed and simplistic: The Official Poverty Measure primarily considers gross cash income, excluding non-cash benefits (like Food Stamps or Medicaid) and refundable tax credits, while also not accounting for necessary expenses like taxes, work-related costs, or healthcare premiums.
Not very refined; lacks detail and differentiation: It uses a national standard that does not adjust for significant variations in the cost of living across different regions of the country (e.g., urban vs. rural areas).
Perceptions of poverty can shift when standards of living change: The fixed nature of the absolute threshold does not account for changes in what is considered a