Poverty in the United States
Encyclopedia
Poverty
Poverty
Poverty is the lack of a certain amount of material possessions or money. Absolute poverty or destitution is inability to afford basic human needs, which commonly includes clean and fresh water, nutrition, health care, education, clothing and shelter. About 1.7 billion people are estimated to live...

 is 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
United States Census Bureau
The United States Census Bureau is the government agency that is responsible for the United States Census. It also gathers other national demographic and economic data...

 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.

The government's definition of poverty is not tied to an absolute value of how much an individual or family can afford, but is tied to a relative level 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
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...

 is the "poverty threshold
Poverty thresholds (United States Census Bureau)
For statistical purposes , the United States Census Bureau uses a set of annual income levels, the poverty thresholds, slightly different than the federal poverty guidelines...

" set by the U.S. government
Federal government of the United States
The federal government of the United States is the national government of the constitutional republic of fifty states that is the United States of America. The federal government comprises three distinct branches of government: a legislative, an executive and a judiciary. These branches and...

. 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
Inflation
In economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time.When the general price level rises, each unit of currency buys fewer goods and services. Consequently, inflation also reflects an erosion in the purchasing power of money – a...

 using the consumer price index
Consumer price index
A consumer price index measures changes in the price level of consumer goods and services purchased by households. The CPI, in the United States is defined by the Bureau of Labor Statistics as "a measure of the average change over time in the prices paid by urban consumers for a market basket of...

.

Relative poverty describes how income relates to the median income
Median household income
The median household income is commonly used to generate data about geographic areas and divides households into two equal segments with the first half of households earning less than the median household income and the other half earning more...

, 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
The Carsey Institute
The Carsey Institute is a nonprofit policy and applied research organization located in the United States on the campus of the University of New Hampshire in Durham, New Hampshire...

 at the University of New Hampshire
University of New Hampshire
The University of New Hampshire is a public university in the University System of New Hampshire , United States. The main campus is in Durham, New Hampshire. An additional campus is located in Manchester. With over 15,000 students, UNH is the largest university in New Hampshire. The university is...

, 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
War on Poverty
The War on Poverty is the unofficial name for legislation first introduced by United States President Lyndon B. Johnson during his State of the Union address on January 8, 1964. This legislation was proposed by Johnson in response to a national poverty rate of around nineteen percent...

.

Two official measures of poverty

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
United States Census Bureau
The United States Census Bureau is the government agency that is responsible for the United States Census. It also gathers other national demographic and economic data...

 issues the poverty thresholds
Poverty thresholds (United States Census Bureau)
For statistical purposes , the United States Census Bureau uses a set of annual income levels, the poverty thresholds, slightly different than the federal poverty guidelines...

, 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
United States Department of Health and Human Services
The United States Department of Health and Human Services is a Cabinet department of the United States government with the goal of protecting the health of all Americans and providing essential human services. Its motto is "Improving the health, safety, and well-being of America"...

 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
War on Poverty
The War on Poverty is the unofficial name for legislation first introduced by United States President Lyndon B. Johnson during his State of the Union address on January 8, 1964. This legislation was proposed by Johnson in response to a national poverty rate of around nineteen percent...

" 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
Mollie Orshansky
Mollie Orshansky, , was an American economist and statistician who, in 1963–65, developed the Orshansky Poverty Thresholds, which are used in the United States as a measure of the income that a household must not exceed to be counted as poor.-Life and career:Miss Orshansky was born January 9, 1915,...

 was an economist working for the Social Security Administration
Social Security Administration
The United States Social Security Administration is an independent agency of the United States federal government that administers Social Security, a social insurance program consisting of retirement, disability, and survivors' benefits...

 (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
United States Department of Agriculture
The United States Department of Agriculture is the United States federal executive department responsible for developing and executing U.S. federal government policy on farming, agriculture, and food...

) 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
Consumer price index
A consumer price index measures changes in the price level of consumer goods and services purchased by households. The CPI, in the United States is defined by the Bureau of Labor Statistics as "a measure of the average change over time in the prices paid by urban consumers for a market basket of...

 (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
United States Department of Health and Human Services
The United States Department of Health and Human Services is a Cabinet department of the United States government with the goal of protecting the health of all Americans and providing essential human services. Its motto is "Improving the health, safety, and well-being of America"...

 (HHS) figures for poverty in 2011
Persons in
Family Unit
48 Contiguous States
and D.C.
Alaska Hawaii
1 $10,890 $13,600 $12,544
2 $14,710 $18,380 $16,930
3 $18,530 $23,160 $21,320
4 $22,350 $27,940 $25,710
5 $26,170 $32,720 $30,100
6 $29,990 $37,500 $34,490
7 $33,810 $42,280 $38,880
8 $37,630 $47,060 $43,270
Each additional
person adds
$3,820 $4,780 $4,390

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. As of 2011-02-03, data for 2010 is only available as an XLS file (Microsoft Excel
Microsoft Excel
Microsoft Excel is a proprietary commercial spreadsheet application written and distributed by Microsoft for Microsoft Windows and Mac OS X. It features calculation, graphing tools, pivot tables, and a macro programming language called Visual Basic for Applications...

 format), but data for earlier years is available as HTML web pages.

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
Poverty in Indonesia
Poverty in Indonesia is a widespread issue though in recent years the official numbers show a declining trend. Due to the dense rural nature of parts of the Java, Bali, Lombok, and parts of Sumatra, poverty can be...

, which has a far lower Human Development Index
Human Development Index
The Human Development Index is a composite statistic used to rank countries by level of "human development" and separate "very high human development", "high human development", "medium human development", and "low human development" countries...

 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
Human Poverty Index
The Human Poverty Index is an indication of the standard of living in a country, developed by the United Nations . For highly developed countries, the UN considers that it can better reflect the extent of deprivation compared to the Human Development Index....

 (HPI), Human Development Index
Human Development Index
The Human Development Index is a composite statistic used to rank countries by level of "human development" and separate "very high human development", "high human development", "medium human development", and "low human development" countries...

 (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
European Union
The European Union is an economic and political union of 27 independent member states which are located primarily in Europe. The EU traces its origins from the European Coal and Steel Community and the European Economic Community , formed by six countries in 1958...

 and for the OECD, "relative poverty" is defined as an income below 60% of the national median
Median
In probability theory and statistics, a median is described as the numerical value separating the higher half of a sample, a population, or a probability distribution, from the lower half. The median of a finite list of numbers can be found by arranging all the observations from lowest value to...

 equalized disposable income
Disposable income
Disposable income is total personal income minus personal current taxes. In national accounts definitions, personal income, minus personal current taxes equals disposable personal 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
Eurostat
Eurostat is a Directorate-General of the European Commission located in Luxembourg. Its main responsibilities are to provide the European Union with statistical information at European level and to promote the integration of statistical methods across the Member States of the European Union,...

 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).

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 Förster, 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

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

Among married families: 5.8% lived in poverty. This number varied by ethnicity with

5.4% of white persons,

8.3% of black persons, and

14.9% of Hispanic persons (of any nationality) living in poverty.

Among single parent families: 26.6% lived in poverty. This number varied by ethnicity with

30% of white persons,

40% of black persons, and

30% of Hispanic persons (of any nationality) living in poverty.

Among unrelated individuals living alone: 19.1% lived in poverty. This number varied by ethnicity with

18% of white persons

27.9% of black persons and

27% of Hispanic persons (of any nationality) living in poverty

Poverty and race

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 nationality)

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
United States Census Bureau
The United States Census Bureau is the government agency that is responsible for the United States Census. It also gathers other national demographic and economic data...

 and the Agriculture Department
United States Department of Agriculture
The United States Department of Agriculture is the United States federal executive department responsible for developing and executing U.S. federal government policy on farming, agriculture, and food...

, which claims that 3.5 million children under the age of 5 are at risk of hunger in the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...

. The study claims that in 11 states, Louisiana
Louisiana
Louisiana is a state located in the southern region of the United States of America. Its capital is Baton Rouge and largest city is New Orleans. Louisiana is the only state in the U.S. with political subdivisions termed parishes, which are local governments equivalent to counties...

, which has the highest rate, followed by North Carolina
North Carolina
North Carolina is a state located in the southeastern United States. The state borders South Carolina and Georgia to the south, Tennessee to the west and Virginia to the north. North Carolina contains 100 counties. Its capital is Raleigh, and its largest city is Charlotte...

, Ohio
Ohio
Ohio is a Midwestern state in the United States. The 34th largest state by area in the U.S.,it is the 7th‑most populous with over 11.5 million residents, containing several major American cities and seven metropolitan areas with populations of 500,000 or more.The state's capital is Columbus...

, Kentucky
Kentucky
The Commonwealth of Kentucky is a state located in the East Central United States of America. As classified by the United States Census Bureau, Kentucky is a Southern state, more specifically in the East South Central region. Kentucky is one of four U.S. states constituted as a commonwealth...

, Texas
Texas
Texas is the second largest U.S. state by both area and population, and the largest state by area in the contiguous United States.The name, based on the Caddo word "Tejas" meaning "friends" or "allies", was applied by the Spanish to the Caddo themselves and to the region of their settlement in...

, New Mexico
New Mexico
New Mexico is a state located in the southwest and western regions of the United States. New Mexico is also usually considered one of the Mountain States. With a population density of 16 per square mile, New Mexico is the sixth-most sparsely inhabited U.S...

, Kansas
Kansas
Kansas is a US state located in the Midwestern United States. It is named after the Kansas River which flows through it, which in turn was named after the Kansa Native American tribe, which inhabited the area. The tribe's name is often said to mean "people of the wind" or "people of the south...

, South Carolina
South Carolina
South Carolina is a state in the Deep South of the United States that borders Georgia to the south, North Carolina to the north, and the Atlantic Ocean to the east. Originally part of the Province of Carolina, the Province of South Carolina was one of the 13 colonies that declared independence...

, Tennessee
Tennessee
Tennessee is a U.S. state located in the Southeastern United States. It has a population of 6,346,105, making it the nation's 17th-largest state by population, and covers , making it the 36th-largest by total land area...

, Idaho
Idaho
Idaho is a state in the Rocky Mountain area of the United States. The state's largest city and capital is Boise. Residents are called "Idahoans". Idaho was admitted to the Union on July 3, 1890, as the 43rd state....

 and Arkansas
Arkansas
Arkansas is a state located in the southern region of the United States. Its name is an Algonquian name of the Quapaw Indians. Arkansas shares borders with six states , and its eastern border is largely defined by the Mississippi River...

, 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.

Food security

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
    United States
    The United States of America is a federal constitutional republic comprising fifty states and a federal district...

     live in poverty, about 46% of black children and 40% of Latino
    Latino
    The demonyms Latino and Latina , are defined in English language dictionaries as:* "a person of Latin-American descent."* "A Latin American."* "A person of Hispanic, especially Latin-American, descent, often one living in the United States."...

     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
    Heritage Foundation
    The Heritage Foundation is a conservative American think tank based in Washington, D.C. Heritage's stated mission is to "formulate and promote conservative public policies based on the principles of free enterprise, limited government, individual freedom, traditional American values, and a strong...

     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
Free market
A free market is a competitive market where prices are determined by supply and demand. However, the term is also commonly used for markets in which economic intervention and regulation by the state is limited to tax collection, and enforcement of private ownership and contracts...

. 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
United States National Research Council
The National Research Council of the USA is the working arm of the United States National Academies, carrying out most of the studies done in their names.The National Academies include:* National Academy of Sciences...

'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
University of Chicago
The University of Chicago is a private research university in Chicago, Illinois, USA. It was founded by the American Baptist Education Society with a donation from oil magnate and philanthropist John D. Rockefeller and incorporated in 1890...

. 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
Disposable income
Disposable income is total personal income minus personal current taxes. In national accounts definitions, personal income, minus personal current taxes equals disposable personal income...

:

Understating poverty

Many sociologists and government officials have argued that poverty in the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...

 is understated, meaning that there are more household
Household
The household is "the basic residential unit in which economic production, consumption, inheritance, child rearing, and shelter are organized and carried out"; [the household] "may or may not be synonymous with family"....

s 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. While the poverty threshold is updated for inflation every year, the basket of goods used to determine what constitutes being deprived of a socially acceptable miniumum standard of living has not been updated since 1955. As a result, the current poverty line only takes goods into account that were common more than 50 years ago, updating their cost using the Consumer Price Index. Mollie Orshansky, who devised the original goods basket and methodology to measure poverty, used by the U.S. government, in 1963-65, updated the goods basket in 2000, finding that the actual poverty threshold, i.e. the point where a person is excluded from the nation's prevailing consumption patterns, is at roughly 170% of the official poverty threshold. According to John Schwarzt, 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
Real estate pricing
Real estate pricing deals with the valuation of real estate and all the standard methods of determining the price of fixed assets apply....

 and a high poverty rate such as California
California
California is a state located on the West Coast of the United States. It is by far the most populous U.S. state, and the third-largest by land area...

 where the median home price
Real estate pricing
Real estate pricing deals with the valuation of real estate and all the standard methods of determining the price of fixed assets apply....

 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
Los Ángeles
Los Ángeles is the capital of the province of Biobío, in the commune of the same name, in Region VIII , in the center-south of Chile. It is located between the Laja and Biobío rivers. The population is 123,445 inhabitants...

 being higher than the state average, it is almost impossible for not just the poor but also lower middle class
Lower middle class
In developed nations across the world, the lower middle class is a sub-division of the greater middle class. Universally the term refers to the group of middle class households or individuals who have not attained the status of the upper middle class associated with the higher realms of the middle...

 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
Household income in the United States
Household income is a measure commonly used by the United States government and private institutions, that counts the income of all residents over the age of 18 in each household, including not only all wages and salaries, but such items as unemployment insurance, disability payments, child support...

 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.

Overstating poverty

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
Robert Rector
Robert Rector is a senior research fellow at The Heritage Foundation and a nationally recognized expert on poverty issues. He is considered one of the architects of the 1996 federal welfare reform act, and has also influenced immigration reform and abstinence education policy...

, 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
Public housing
Public housing is a form of housing tenure in which the property is owned by a government authority, which may be central or local. Social housing is an umbrella term referring to rental housing which may be owned and managed by the state, by non-profit organizations, or by a combination of the...

 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
University of Pennsylvania
The University of Pennsylvania is a private, Ivy League university located in Philadelphia, Pennsylvania, United States. Penn is the fourth-oldest institution of higher education in the United States,Penn is the fourth-oldest using the founding dates claimed by each institution...

, 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
Dairy Queen
Dairy Queen, often abbreviated DQ, is a chain of soft serve and fast food restaurants owned by International Dairy Queen, Inc, who also owns Orange Julius and Karmelkorn. The name "Dairy Queen" is taken from the name of their soft serve product, which the company refers to as "Dairy Queen" or...

, or a pair of stylish new sneaker
Athletic shoe
Athletic shoe is a generic name for the footwear primarily designed for sports or other forms of physical exercise but in recent years has come to be used for casual everyday activities....

s 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
Sweden
Sweden , officially the Kingdom of Sweden , is a Nordic country on the Scandinavian Peninsula in Northern Europe. Sweden borders with Norway and Finland and is connected to Denmark by a bridge-tunnel across the Öresund....

 Libertarian think tank
Think tank
A think tank is an organization that conducts research and engages in advocacy in areas such as social policy, political strategy, economics, military, and technology issues. Most think tanks are non-profit organizations, which some countries such as the United States and Canada provide with tax...

 Timbro
Timbro
Timbro is a libertarian, free market think tank and book publisher based in Stockholm, Sweden, that works to promote ideas, influence legislation and public opinion...

 points out that lower-income households in the U.S. tend to own more appliances and larger houses than many middle-income Western Europeans.

Fighting poverty

There have been many governmental and nongovernmental
Non-governmental organization
A non-governmental organization is a legally constituted organization created by natural or legal persons that operates independently from any government. The term originated from the United Nations , and is normally used to refer to organizations that do not form part of the government and are...

 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
Advocacy
Advocacy is a political process by an individual or a large group which normally aims to influence public-policy and resource allocation decisions within political, economic, and social systems and institutions; it may be motivated from moral, ethical or faith principles or simply to protect an...

, education
Education
Education in its broadest, general sense is the means through which the aims and habits of a group of people lives on from one generation to the next. Generally, it occurs through any experience that has a formative effect on the way one thinks, feels, or acts...

, social work
Social work
Social Work is a professional and academic discipline that seeks to improve the quality of life and wellbeing of an individual, group, or community by intervening through research, policy, community organizing, direct practice, and teaching on behalf of those afflicted with poverty or any real or...

, legislation
Legislation
Legislation is law which has been promulgated by a legislature or other governing body, or the process of making it...

, direct service or charity
Charitable organization
A charitable organization is a type of non-profit organization . It differs from other types of NPOs in that it centers on philanthropic goals A charitable organization is a type of non-profit organization (NPO). It differs from other types of NPOs in that it centers on philanthropic goals A...

, and community organizing
Community organizing
Community organizing is a process where people who live in proximity to each other come together into an organization that acts in their shared self-interest. A core goal of community organizing is to generate durable power for an organization representing the community, allowing it to influence...

.

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
Aid to Families with Dependent Children
Aid to Families with Dependent Children was a federal assistance program in effect from 1935 to 1996, which was administered by the United States Department of Health and Human Services...

 (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
Earned income tax credit
The United States federal earned income tax credit or earned income credit is a refundable tax credit primarily for individuals and families who have low to moderate earned income. Greater tax credit is given to those who also have qualifying children...

 is viewed as the largest poverty reduction program in the United States.

See also

  • Income in the United States
    Household income in the United States
    Household income is a measure commonly used by the United States government and private institutions, that counts the income of all residents over the age of 18 in each household, including not only all wages and salaries, but such items as unemployment insurance, disability payments, child support...

  • Income inequality in the United States
    Income inequality in the United States
    Income inequality in the United States of America refers to the extent to which income is distributed in an uneven manner in the US. Data from the United States Department of Commerce, CBO, and Internal Revenue Service indicate that income inequality among households has been increasing...

  • Income deficit
    Income deficit
    The Income Deficit is the difference between a single person or family's income and its poverty threshold or poverty line, when the former is exceeded by the latter. Data on the income deficits of various members of a population allow for the construction of one type of measurement of income...

  • Lowest-income counties in the United States
    Lowest-income counties in the United States
    -100 counties with lowest per capita income:Number of counties by state in the 100 poorest counties: Texas, 17; Kentucky, 16; Mississippi, 14; South Dakota, 10; Louisiana, 5; Alabama, 4; Georgia, 4; Montana, 4; New Mexico, 4; North Dakota, 3; Arizona, 2; Idaho, 2; Nebraska, 2; Tennessee, 2; West...

  • Homelessness in the United States
    Homelessness in the United States
    Homelessness in the United States has continued to remain a focus area of concern of social service providers, government officials, and policy professionals since its resurgence among many types of individuals and families. The number of homeless people further grew in the 1980s, as housing and...

  • Federal assistance in the United States
    Federal assistance in the United States
    In the United States, federal assistance, also known as federal aid, federal benefits, or federal funds, is defined as any federal program, project, service, and activity provided by the federal government that directly assists or benefits the American public in the areas of education, health,...

  • Pathways out of Poverty
    Pathways out of Poverty
    Pathways Out of Poverty is a national workforce development program that was established on August 14, 2009, by the Obama administration and funded by the American Recovery and Reinvestment Act of 2009. The Department of Labor's Employment and Training Administration announced POP grantees on...

     (POP)


Other:
  • Human Poverty Index
    Human Poverty Index
    The Human Poverty Index is an indication of the standard of living in a country, developed by the United Nations . For highly developed countries, the UN considers that it can better reflect the extent of deprivation compared to the Human Development Index....

  • Mississippi Teacher Corps
    Mississippi Teacher Corps
    The Mississippi Teacher Corps is a two-year teaching program that recruits college graduates to teach in "critical-need areas" of Mississippi...

  • Basic Income
    Basic income
    A basic income guarantee is a proposed system of social security, that regularly provides each citizen with a sum of money. In contrast to income redistribution between nations themselves, the phrase basic income defines payments to individuals rather than households, groups, or nations, in order...

  • Negative Income Tax
    Negative income tax
    In economics, a negative income tax is a progressive income tax system where people earning below a certain amount receive supplemental pay from the government instead of paying taxes to the government. Such a system has been discussed by economists but never fully implemented...

  • Tipping Point Community
    Tipping Point Community
    Tipping Point Community is a grant-making organization that fights poverty in the San Francisco Bay Area. Founded by Daniel Lurie in 2005, Tipping Point finds the most effective non-profits addressing poverty in the community, funds them, and provides the management assistance necessary to ensure...

  • Redistributive change
    Redistributive change
    Redistributive change is a legal theory of economic justice in the context of U.S. law that promotes the recognition of poverty as a classification, like race, ethnicity, gender, and religion, that should likewise draw extra scrutiny from the courts in matters pertaining to civil rights.The theory...

  • De-industrialization crisis
  • The Other America
    The Other America
    Michael Harrington’s book The Other America was an influential study of poverty in the United States, published in 1962 by Macmillan. A widely read review, "Our Invisible Poor," in The New Yorker by Dwight Macdonald brought the book to the attention of President John F. Kennedy.The Other America...

  • Two Americas
    Two Americas
    Two Americas is a catch phrase referring to social stratification in American society, made famous in a speech by former US Senator and former presidential candidate John Edwards, originally referring to haves and have-nots...

  • Kids Against Hunger
    Kids Against Hunger
    Kids Against Hunger is a nonprofit organization with the mission to significantly reduce the number of hungry children in the USA and to feed starving children throughout the world...

  • Can you hear their voices?
    Can you hear their voices?
    Can You Hear Their Voices? A Play of Our Time is a 1931 play by Hallie Flanagan and her former student Margaret Ellen Clifford, based on the short story "Can You Make Out Their Voices" by Whittaker Chambers. This play is one of the earliest examples of Agitprop theatre in the U.S...

    (1931 play)


International:

External links

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