Poverty is defined as a state of privation and a lack of necessities. It is also defined as the state of one who lacks a usual or socially acceptable amount of money or material possessions. According to the U.S. Census Bureau data released Tuesday September 13th, 2011, the nation's poverty rate rose to 15.1% (46.2 million) in 2010, up from 14.3% (approximately 43.6 million) in 2009 and to its highest level since 1993. In 2008, 13.2% (39.8 million) Americans lived in relative poverty. In 2000, the poverty rate for individuals was 12.2% and for families was 9.3%.
The government's definition of poverty is based on total income received. For example, the poverty level for 2011 was set at $22,350 (total yearly income) for a family of four. Most Americans (58.5%) will spend at least one year below the poverty line at some point between ages 25 and 75. There remains some controversy over whether the official poverty threshold over- or understates poverty.
The most common measure of poverty in the United States is the "poverty threshold" set by the U.S. government. This measure recognizes poverty as a lack of those goods and services commonly taken for granted by members of mainstream society. The official threshold is adjusted for inflation using the consumer price index.
Relative poverty describes how income relates to the median income, and does not imply that the person is lacking anything. In general the United States has some of the highest relative poverty rates among industrialized countries. According to a 2008 report released by the Carsey Institute at the University of New Hampshire, on average, rates of poverty are persistently higher in rural and inner city parts of the country as compared to suburban areas. The number of people in the U.S. who are in poverty is increasing to record levels with the ranks of working-age poor approaching 1960s levels that led to the national war on poverty.
Measures of poverty
Measures of poverty can be either absolute or relative.
Two official measures of poverty
Percent and number below the poverty threshold. The poverty rate for selected age groups. Those under the age of 18 are most likely to fall below
There are two basic versions of the federal poverty measure: the poverty thresholds (which are the primary version) and the poverty guidelines. The Census Bureau issues the poverty thresholds, which are generally used for statistical purposes—for example, to estimate the number of people in poverty nationwide each year and classify them by type of residence, race, and other social, economic, and demographic characteristics. The Department of Health and Human Services issues the poverty guidelines for administrative purposes—for instance, to determine whether a person or family is eligible for assistance through various federal programs.
Since the 1960s, the United States Government has defined poverty in absolute terms. When the Johnson administration declared "war on poverty" in 1964, it chose an absolute measure. The "absolute poverty line" is the threshold below which families or individuals are considered to be lacking the resources to meet the basic needs for healthy living; having insufficient income to provide the food, shelter and clothing needed to preserve health.
The "Orshansky Poverty Thresholds" form the basis for the current measure of poverty in the U.S. Mollie Orshansky was an economist working for the Social Security Administration (SSA). Her work appeared at an opportune moment. Orshansky's article was published later in the same year that Johnson declared war on poverty. Since her measure was absolute (i.e., did not depend on other events), it made it possible to objectively answer whether the U.S. government was "winning" this war. The newly formed United States Office of Economic Opportunity adopted the lower of the Orshansky poverty thresholds for statistical, planning, and budgetary purposes in May 1965.
The Bureau of the Budget (now the Office of Management and Budget) adopted Orshansky's definition for statistical use in all Executive departments. The measure gave a range of income cutoffs, or thresholds, adjusted for factors such as family size, sex of the family head, number of children under 18 years old, and farm or non-farm residence. The economy food plan (the least costly of four nutritionally adequate food plans designed by the Department of Agriculture) was at the core of this definition of poverty.
The Department of Agriculture found that families of three or more persons spent about one third of their after-tax income on food. For these families, poverty thresholds were set at three times the cost of the economy food plan. Different procedures were used for calculating poverty thresholds for two-person households and persons living alone. Annual updates of the SSA poverty thresholds were based on price changes in the economy food plan.
Two changes were made to the poverty definition in 1969. Thresholds for non-farm families were tied to annual changes in the Consumer Price Index (CPI) rather than changes in the cost of the economy food plan. Farm thresholds were raised from 70 to 85% of the non-farm levels.
In 1981, further changes were made to the poverty definition. Separate thresholds for "farm" and "female-householder" families were eliminated. The largest family size category became "nine persons or more."
Apart from these changes, the U.S. government's approach to measuring poverty has remained static for the past forty years.
Recent poverty rate and guidelines
United States Department of Health and Human Services (HHS) figures for poverty in 2011
|48 Contiguous States
The poverty guideline figures are not the figures the Census Bureau uses to calculate the number of poor persons. The figures that the Census Bureau uses are the poverty thresholds. The Census Bureau provides an explanation of the difference between poverty thresholds and guidelines. The Census Bureau uses a set of money income thresholds that vary by family size and composition to determine who is in poverty. The 2010 figure for a family of 4 with no children under 18 years of age is $22,541, while the figure for a family of 4 with 2 children under 18 is $22,162. For comparison, the 2011 HHS poverty guideline for a family of 4 is $22,350.
Numbers in other countries
The official number of poor in the United States in 2008 is about 39.1 million people, greater in number but not percentage than the officially poor in Indonesia, which has a far lower Human Development Index and the next largest population after the United States. The poverty level in the United States, with 12.65% (39.1 million people in poverty, of a total of 309 million) is comparable to the one in France, where 14% of the population live with less than 880 euros per month.
Number of poor are hard to compare across countries. Absolute income may be used but does not reflect the actual number of poor, which depend on relative income and cost of living in each country. Among developed countries, each country then has its own definition and threshold of what it means to be poor, but this is not adjusted for cost of living and social benefits. For instance, despite the fact that France and US have about the same threshold in terms of dollars amount for poverty, cost of living and health benefits may differ (with universal health insurance coverage for poor people in France). In general, it might be better to use the Human Poverty Index (HPI), Human Development Index (HDI) or other global measure to compare quality of living in different countries.
Relative measures of poverty
Another way of looking at poverty is in relative terms. "Relative poverty" can be defined as having significantly less access to income and wealth than other members of society. Therefore, the relative poverty rate is a measure of income inequality. When the standard of living among those in more financially advantageous positions rises while that of those considered poor stagnates, the relative poverty rate will reflect such growing income inequality and increase. Conversely, the poverty rate can decrease, with low income people coming to have less wealth and income if wealthier people's wealth is reduced by a larger percentage than theirs. In 1959, a family at the poverty line had an income that was 42.64% of the median income. If the poverty line in 1999 was less than 42.64% of the median income, then relative poverty would have increased.
In the EU and for the OECD, "relative poverty" is defined as an income below 60% of the national median equalized disposable income after social transfers for a comparable household. In Germany, for example, the official relative poverty line for a single adult person in 2003 was 938 euros per month (11,256 euros/year, $12,382 PPP. West Germany 974 euros/month, 11,688 euros/year, $12,857 PPP). For a family of four with two children below 14 years the poverty line was 1969.8 euros per month ($2,167 PPP) or 23,640 euros ($26,004 PPP) per year. According to Eurostat the percentage of people in Germany living at risk of poverty (relative poverty) in 2004 was 16% (official national rate 13.5% in 2003). Additional definitions for poverty in Germany are "poverty" (50% median) and "strict poverty" (40% median, national rate 1.9% in 2003). Generally the percentage for "relative poverty" is much higher than the quota for "strict poverty". The U.S concept is best comparable to "strict poverty". By European standards the official (relative) poverty rate in the United States would be significantly higher than it is by the U.S. measure. A research paper from the OECD calculates the relative poverty rate for the United States at 16% for 50% median of disposable income and nearly 24% for 60% of median disposable income (OECD average: 11% for 50% median, 16% for 60% median).
Some critics argue that relying on income disparity to determine who is impoverished can be misleading. The Bureau of Labor Statistics data suggests that consumer spending varies much less than income. In 2008, the poorest one fifth of Americans households spent on average $12,955 per person for goods and services (other than taxes), the second quintile spent $14,168, the third $16,255, the fourth $19,695, while the richest fifth spent $26,644. The disparity of expenditures is much less than the disparity of income.
The income distribution and relative poverty
Although the relative approach theoretically differs largely from the Orshansky definition, crucial variables of both poverty definitions are more similar than often thought. First, the so-called standardization of income in both approaches is very similar. To make incomes comparable among households of different sizes, equivalence scales are used to standardize household income to the level of a single person household. In Europe, the modified OECD equivalence scale is used, which takes the combined value of 1 for the head of household, 0.5 for each additional household member older than 14 years and 0.3 for children. When compared to the US Census poverty lines, which is based on a defined basket of goods, for the most prevalent household types both standardization methods show to be very similar.
Furthermore, the poverty threshold in Western-European countries is not always higher than the Orshansky threshold for a single person family. The actual Orchinsky poverty line for single person households in the US ($9645 in 2004) is very comparable to the relative poverty line in many Western-European countries (Belgium 2004: 9315), while price levels are also similar. The reason why relative poverty measurement causes high poverty levels in the US, as demonstrated by F rster, is caused by distributional effects rather than real differences in well-being among EU-countries and the USA.
The median household income is much higher in the US than in Europe due to the wealth of the middle classes in the US, from which the poverty line is derived. Although the paradigm of relative poverty is most valuable, this comparison of poverty lines show that the higher prevalence of relative poverty levels in the US are not an indicator of a more severe poverty problem but an indicator of larger inequalities between rich middle classes and the low-income households. It is therefore not correct to state that the US income distribution is characterized by a large proportion of households in poverty; it is characterized by relatively large income inequality but also high levels of prosperity of the middle classes. The 2007 poverty threshold for a three member family is 17,070.
Poverty and demographics
Camden, New Jersey is one of the poorest cities in the United States. Poverty in Chester, Pennsylvania. In addition to family status, race/ethnicity and age also correlate with high poverty rates in the United States. Although data regarding race and poverty are more extensively published and cross tabulated the family status correlation is by far the strongest.
Poverty and family status
According to the US Census, in 2007 5.8% of all people in married families lived in poverty, as did 26.6% of all persons in single parent households and 19.1% of all persons living alone.
By race/ethnicity and family status, based on data from 2007
Among married couple families: 5.8% lived in poverty. This number varied by race and ethnicity as follows:
5.4% of all white persons (which includes white hispanics),
9.7% of all black persons (which includes black hispanics), and
14.9% of all Hispanic persons (of any race) living in poverty.
Among single parent (male or female) families: 26.6% lived in poverty. This number varied by race and ethnicity as follows"
22.5% of all white persons (which includes white hispanics),
44.0% of all black persons (which includes black hispanics), and
33.4% of all Hispanic persons (of any race) (of any race) living in poverty.
Among unrelated individuals living alone: 19.1% lived in poverty. This number varied by race and ethnicity as follows:
18% of white persons (which includes white hispanics)
27.9% of black persons (which includes black hispanics) and
27% of Hispanic persons (of any race) living in poverty
Poverty and race/ethnicity
The US Census declared that in 2010 15.1% of the general population lived in poverty:
9.9% of all non-Hispanic white persons
12.1% of all Asian persons
26.6% of all Hispanic persons (of any race)
27.4% of all black persons.
About half of those living in poverty are non-Hispanic white (19.6 million in 2010), but poverty rates are much higher for blacks and Hispanics. Non-Hispanic white children comprised 57% of all poor rural children.
Poverty and age
The US Census declared that in 2010 15.1% of the general population lived in poverty:
22% of all people under age 18
13.7% of all people 19-64, and
9% of all people ages 65 and older
The Organization for Economic Co-operation and Development (OECD) uses a different measure for poverty and declared in 2008 that child poverty in the US is 20% and poverty among the elderly is 23%. The non-profit advocacy group Feeding America has released a study (May 2009) based on 2005-2007 data from the U.S. Census Bureau and the Agriculture Department, which claims that 3.5 million children under the age of 5 are at risk of hunger in the United States. The study claims that in 11 states, Louisiana, which has the highest rate, followed by North Carolina, Ohio, Kentucky, Texas, New Mexico, Kansas, South Carolina, Tennessee, Idaho and Arkansas, more than 20 percent of children under 5 are allegedly at risk of going hungry.The study was paid by ConAgra Foods, a large food company.
Eighty-nine percent of the American households were food secure throughout the entire year of 2002, meaning that they had access, at all times, to enough food for an active, healthy life for all of the household members. The remaining households were food insecure at least some time during that year. The prevalence of food insecurity rose from 10.7% in 2001 to 11.1% in 2002, and the prevalence of food insecurity with hunger rose from 3.3% to 3.5%.
In 2008, eighty-five percent of American households were food secure throughout the entire year.
Factors in poverty
There are numerous factors related to poverty in the United States.
- Income has a high correlation with educational levels. In 2007, the median earnings of household headed by individuals with less than a 9th grade education was $20,805 while households headed by high school graduates received $40,456, households headed holders of bachelor s degree earned $77,605, and families headed by individuals with professional degrees earned $100,000.
- In many cases poverty is caused by job loss. In 2007, the poverty rate was 21.5% for individuals who were unemployed, but only 2.5% for individuals who were employed full time.
- In 1991, 8.3% of children in two-parent families were likely to live in poverty; 19.6% of children lived with father in single parent family; and 47.1% in single parent family headed by mother.
- Income levels vary with age. For example, the median 2009 income for households headed by individuals age 15-24 was only $30,750, but increased to $50,188 for household headed by individuals age 25-34 and $61,083 for household headed by individuals 35-44. Although the reasons are unclear, work experience and additional education may be factors.
- Income levels vary along racial/ethnic lines: 21% of all children in the United States live in poverty, about 46% of black children and 40% of Latino children live in poverty. The poverty rate is 9.9% for black married couples and only 30% of black children are born to married couples (see Marriage below). In 2007,11% of black women aged 30 44 without a high school diploma had a working spouse. The poverty rate for native born and naturalized whites is identical (9.6%). On the other hand, the poverty rate for naturalized blacks is 11.8% compared to 25.1% for native born blacks suggesting race alone does not explain income disparity. Not all minorities have low incomes. Asian families have higher incomes than all other ethnic groups. For example, the 2005 median income of Asian families was $68,957 compared to the median income of white families of $59,124. Asians, however, report discrimination occurrences more frequently than blacks. Specifically, 31% of Asians reported employment discrimination compared to 26% of blacks in 2005.
- The relationship between tax rates and poverty is disputed. A study comparing high tax Scandinavian countries with the U. S. suggests high tax rates are inversely correlated with poverty rates. The poverty rate, however, is low in some low tax countries such as Switzerland. A comparison of poverty rates between states reveals that some low tax states have low poverty rates. For example, New Hampshire has the lowest poverty rate of any state in the U. S., and has very low taxes (46th among all states).It is true however that in those instances, both Switzerland and New Hampshire have a very high household income and other measures to levy or offset the lack of taxation. For example, Switzerland has Universal Healthcare and a free system of education for children as young as four years old. New Hampshire has no state income tax or sales tax, but does have the nation's highest property taxes.
- The conservative Heritage Foundation speculates that illegal immigration increases job competition among low wage earners, both native and foreign born. Additionally many first generation immigrants, namely those without a high school diploma, are also living in poverty themselves.
Much of the debate about poverty focuses on statistical measures of poverty and the clash between advocates and opponents of welfare programs and government regulation of the free market. Since measures can be either absolute or relative, it is possible that advocates for the different sides of this debate are basing their arguments on different ways of measuring poverty. It is often claimed that poverty is understated, yet there are some who also believe it is overstated; thus the accuracy of the current poverty threshold guidelines is subject to debate and considerable concern.
Concerns regarding accuracy
In recent years, there have been a number of concerns raised about the official U.S. poverty measure. In 1995, the National Research Council's Committee on National Statistics convened a panel on measuring poverty. The findings of the panel were that "the official poverty measure in the United States is flawed and does not adequately inform policy-makers or the public about who is poor and who is not poor."
The panel was chaired by Robert Michael, former Dean of the Harris School of the University of Chicago. According to Michael, the official U.S. poverty measure "has not kept pace with far-reaching changes in society and the economy." The panel proposed a model based on disposable income:
Many sociologists and government officials have argued that poverty in the United States is understated, meaning that there are more households living in actual poverty than there are households below the poverty threshold. A recent NPR report states that as much as 30% of Americans have trouble making ends meet and other advocates have made supporting claims that the rate of actual poverty in the US is far higher than that calculated by using the poverty threshold. As far back as 1969, the Bureau of Labor Statistics put forward suggested budgets for families to live adequately on. 60% of working-class Americans lived below one of these budgets, which suggested that a far higher proportion of Americans lived in poverty than the official poverty line suggested. These findings were also used by observers on the left when questioning the long-established view that most Americans had attained an affluent standard of living in the two decades following the end of the Second World War.
As noted above, the poverty thresholds used by the US government were originally developed during the Johnson administration's War on Poverty initiative in 1963-1964. Mollie Orshansky, the government economist working at the Social Security Administration who developed the thresholds, based the threshold levels on the cost of purchasing what in the mid 1950s had been determined by the US Department of Agriculture to be the minimal nutritionally-adequate amount of food necessary to feed a family. Orshansky multiplied the cost of the food basket by a factor of three, under the assumption that the average family spent one third of its income on food.
While the poverty threshold is updated for inflation every year, the basket of food used to determine what constitutes being deprived of a socially acceptable minimum standard of living has not been updated since 1955. As a result, the current poverty line only takes into account food purchases that were common more than 50 years ago, updating their cost using the Consumer Price Index. When methods similar to Orshansky s were used to update the food basket using prices for the year 2000 instead of from nearly a half century earlier, it was found that the poverty line should actually be 200% higher than the official level being used by the government in that year. Yet even that higher level could still be considered flawed, as it would be based almost entirely on food costs and on the assumption that families still spend a third of their income on food. In fact, Americans typically spent less than one tenth of their after-tax income on food in 2000. For many families, the costs of housing, health insurance and medical care, transportation, and access to basic telecommunications take a much larger bite out of the family s income today than a half century ago; yet, as noted above, none of these costs are considered in determining the official poverty thresholds. According to John Schwarz, a political scientist at the University of Arizona:
The issue of understating poverty is especially pressing in states with both a high cost of living and a high poverty rate such as California where the median home price in May 2006 was determined to be $564,430. With half of all homes being priced above the half million dollar mark and prices in urban areas such as San Francisco, San Jose or Los Angeles being higher than the state average, it is almost impossible for not just the poor but also lower middle class worker to afford decent housing, and no possibility of home ownership. In the Monterey area, where the low-pay industry of agriculture is the largest sector in the economy and the majority of the population lacks a college education the median home price was determined to be $723,790, requiring an upper middle class income which only roughly 20% of all households in the county boast.
Such fluctuations in local markets are however not considered in the Federal poverty threshold and thus leave many who live in poverty-like conditions out of the total number of households classified as poor.
In 2011, the Census Bureau introduced a new supplementary poverty measure aimed at providing a more accurate picture of the true extent of poverty in the United States. According to this new measure, 16% of Americans lived in poverty in 2011, compared with 15.2% using the official figure. The new measure also estimated that nearly half of all Americans lived in poverty that year, defined as living within 200% of the federal poverty line.
New York]], which was subsequently demolished for new commercial development. Some critics assert that the official U.S. poverty definition is inconsistent with how it is defined by its own citizens and the rest of the world, because the U.S. government considers many citizens statistically impoverished despite their ability to sufficiently meet their basic needs. According to a 2011 paper by poverty expert Robert Rector, of the 43.6 million Americans deemed to be below the poverty level by the U.S. Census Bureau in 2009, the majority had adequate shelter, food, clothing and medical care. In addition, the paper stated that those assessed to be below the poverty line in 2011 have a much higher quality of living than those who were identified by the census 40 years ago as being in poverty.
The federal poverty line also excludes income other than cash income, especially welfare benefits. Thus, if food stamps and public housing were successfully raising the standard of living for poverty stricken individuals, then the poverty line figures would not shift since they do not consider the income equivalents of such entitlements.
A 1993 study of low income single mothers titled Making Ends Meet, by Kathryn Edin, a sociologist at the University of Pennsylvania, showed that the mothers spent more than their reported incomes because they could not "make ends meet" without such expenditures. According to Edin, they made up the difference through contributions from family members, absent boyfriends, off-the-book jobs, and church charity.
According to Edin: "No one avoided the unnecessary expenditures, such as the occasional trip to the Dairy Queen, or a pair of stylish new sneakers for the son who might otherwise sell drugs to get them, or the Cable TV subscription for the kids home alone and you are afraid they will be out on the street if they are not watching TV."
Moreover, Swedish Libertarian think tank Timbro points out that lower-income households in the U.S. tend to own more appliances and larger houses than many middle-income Western Europeans.
Some experts don't believe poverty can be accurately measured.
"There is no exact way of measuring poverty. The measures are contingent on how we conceive of and define poverty," said William "Sandy" Darity, a professor of public policy and economics at Duke University. "Efforts to develop more refined measures have been dominated by researchers who intentionally want to provide estimates that reduce the magnitude of poverty."
There have been many governmental and nongovernmental efforts to reduce poverty and its effects. These range in scope from neighborhood efforts to campaigns with a national focus. They target specific groups affected by poverty such as children, people who are autistic, immigrants, or people who are homeless. Efforts to alleviate poverty use a disparate set of methods, such as advocacy, education, social work, legislation, direct service or charity, and community organizing.
Recent debates have centered on the need for policies that focus on both "income poverty" and "asset poverty." Advocates for the approach argue that traditional governmental poverty policies focus solely on supplementing the income of the poor, through programs such as Aid to Families with Dependent Children (AFDC) and Food Stamps.
Additionally, the Earned Income Tax Credit (EITC or EIC) is a credit for people who earn low-to-moderate incomes. This credit can reduce the taxes of working families and individuals, allowing them to keep more of what they earn. The Earned Income Tax Credit is viewed as the largest poverty reduction program in the United States.
US Census report on Income, Poverty, and Health Insurance Coverage
- Income in the United States
- Income inequality in the United States
- Income deficit
- Lowest-income counties in the United States
- Homelessness in the United States
- Federal assistance in the United States
- Pathways out of Poverty (POP)
- Human Poverty Index
- Mississippi Teacher Corps
- Basic Income
- Negative Income Tax
- Tipping Point Community
- Redistributive change
- De-industrialization crisis
- The Other America
- Two Americas
- Kids Against Hunger
Can you hear their voices? (1931 play)
- Feminization of poverty
- Unintended pregnancy
- Poverty by country
- International Ranking of Household Income
- List of Average Wages per Country
- U.S. Census Bureau Poverty Definition
- U.S. Census Bureau Poverty in the United States
Why Poverty Doesn't Rate, American Enterprise Institute
Social Solutions to Poverty: America's Struggle to Build a Just Society. Scott Myers-Lipton, (2006).
- Child Poverty and Tax: a simple graph of child disposible income disparity in OECD countries against tax burdens.
- F.H.C. Ministries Charity is not Reform!
From Poverty to Prosperity: A National Strategy to Cut Poverty in Half, The Center for American Progress, April 2007.
Explanation of poverty definition by economist Ellen Frank in Dollars & Sense magazine, January/February 2006
"Deciding Who's Poor" by economist Barbara Bergmann in Dollars & Sense magazine, March/April 2000
- 37 million poor hidden in the land of plenty
- David Walls, Models of Poverty and Planned Change
- U.S. Government Does Relatively Little to Lessen Child Poverty Rates
- U.S. Department of Health & Human Services Poverty Guidelines, Research, and Measurement
Cities Tolerate Homeless Camps by Jennifer Levitz, The Wall Street Journal, August 11, 2009
The Forgotten Americans PBS series by Hector Galan about colonias.
Americans living in Third World conditions This article discusses the living conditions of people inhabiting colonias (with pictures).
- Steve Suitts, "The Worst of Times: Children in Extreme Poverty in the South and Nation," Southern Spaces, 29 June 2010.
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