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Poverty in 2021 looks different than in 1964 – but the US hasn’t changed how it measures who’s poor since LBJ began his war
Professor of Social Welfare, Washington University in St Louis
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Mark Robert Rank does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.
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In 1964, President Lyndon B. Johnson famously declared war on poverty .
“The richest nation on Earth can afford to win it,” he told Congress in his first State of the Union address. “We cannot afford to lose it.”
Yet as the administration was to learn on both the domestic and foreign battlefields, a country marching off to war must have a credible estimate of the enemy’s size and strength. Surprisingly, up until this point, the U.S. had no official measure of poverty and therefore no statistics on its scope, shape or changing nature. The U.S. needed to come up with a way of measuring how many people in America were poor.
As I discuss in my recently published book “ Confronting Poverty ,” the approach that the government came up with in the 1960s is still – despite its many shortcomings – the government’s official measure of poverty and used to determine eligibility for hundreds of billions of dollars in federal aid.
Counting the poor
Broadly speaking, poverty means not having the money to purchase the basic necessities to maintain a minimally adequate life, such as food, shelter and clothing.
The government came up with its official method for counting poor people in the mid-1960s.
First, it asks, what does it cost to purchase a minimally adequate diet during the year for a particularly sized family? That number is then multiplied by three, and you have arrived at the poverty line. That’s it.
If a family’s income falls above the line it is not considered in poverty, while those below the line are counted as poor.
What about all the other basic necessities, such as housing, clothing and health care? That’s where the multiplier of three comes in. When the poverty thresholds were devised, research indicated that the typical family spent approximately one-third of its income on food and the remaining two-thirds on all other expenses.
Therefore, the logic was that if a minimally adequate diet could be purchased for a particular dollar amount, multiplying that figure by three would give the amount of income needed to purchase the basic necessities for a minimally adequate life.
Back in 1963, that translated into a poverty line of US$3,128 for a family of four. In 2019, the same family’s poverty line stood at $26,172 . For an interesting contrast, that’s less than half what the average American polled in 2013 said was the “smallest amount of money” a family of four needed to get by, or $58,000.
The federal government adjusts the poverty line annually to reflect increases in the cost of living. The cutoff itself varies by the number of people in the household, while a household’s annual income is based upon the earnings of everyone currently residing within it.
Using this measure, 10.5% of the U.S. population was in poverty in 2019, the most recent data available.
Keep in mind, though, these thresholds represent impoverishment at its most opulent level. Among those living below the poverty line, 45% live in “deep” poverty , which means they live on less than half of the official poverty line.
The government uses the official poverty line as the base to determine who’s eligible for a range of social programs, from Medicaid to the Supplemental Nutrition Assistance Program . For example, to qualify for SNAP, a household must be below 130% of the poverty line for its size.
Other measures of poverty
Most analysts , however, consider the official poverty line to be an extremely conservative measure of economic hardship.
A major reason for this is that families today have to spend much more on things other than food than they did in the 1960s. For example, housing costs have surged over 800% since then.
For that reason, some critics say the multiplier of three should be raised to four or even higher . Taking that step would result in a much larger percentage of the population being seen as in poverty, making them eligible for anti-poverty benefits.
In response, in 2011 the census bureau developed an alternative measure of poverty , called the Supplemental Poverty Measure. This method takes into account a number of factors that the official poverty measure does not, such as differences in cost of living across the country. The result pushes the poverty rate up just a tad, to 11.7% for 2019 . This measure is mostly used today by academics and researchers.
Another method, common in many high-income countries , ignores the cost of living calculations entirely.
The European Union, for example, defines poverty as the percentage of the population that earns below one half of whatever the median income is. For example, in the U.S., the median income in 2019 was $68,703 , which means anyone earning less than $34,351 would be deemed poor. By that measure, the U.S. would have a poverty rate of 17.8% .
In fact, back in 1959, the poverty line for a family of four was about half of median income in the U.S. Today, it’s about a quarter, which means the federal government’s definition of who is poor hasn’t kept up with overall rising standards of living.
One other approach is based on the idea that poverty is more than just a lack of income and should reflect economic insecurity more broadly, such as not having unemployment or health insurance. The census recently calculated what poverty might look from this perspective and concluded 38% of Americans experienced one or more aspects of deprivation in 2019.
The only way to win the war
Why does it matter how a society measures poverty?
It matters because in order to address a problem, you must have a clear understanding of its scope. By using an extremely conservative measurement such as the federal poverty line, the U.S. minimizes the extent and depth of poverty in the country.
An inaccurate poverty line inevitably also limits the number of impoverished people who qualify for much-needed federal and state assistance. During the COVID-19 pandemic, millions of people would have fallen into poverty were it not for less conditional coronavirus aid from the federal government, such as the three rounds of economic impact checks and supplemental federal employment insurance .
Many Americans in the past have been rudely surprised at just how inadequate America’s safety net is, at least in part because it’s based on outdated federal poverty thresholds. Broadening the definition of poverty would ensure it’s more likely to be there to support people in a crisis.
Ultimately, poverty will touch the majority of Americans at some point in their lives. My own research shows that roughly 6 in 10 Americans will spend at least one of their adult years below the official poverty line .
But if the U.S. ever hopes to finally win the war LBJ began in 1964, the poor need to be seen in order for the government to lift them out of poverty.
[ Insight, in your inbox each day. You can get it with The Conversation’s email newsletter .]
- War on poverty
- Lyndon Baines Johnson
- Poverty line
- Ending poverty
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Poverty in the US: Causes and Measures Essay
Introduction, measures of poverty, causes of poverty, fight against poverty.
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The existence of poverty in the United States (U.S.) is considered a paradox. The U.S. is one of the world’s richest countries and is regarded as the only economic superpower. Despite such lofty distinctions, poverty in the U.S. exists. The government has recognized this reality and is doing measures to reduce the figures. In addition, the entities in the country work hand in hand to ensure that poverty is reduced. Programs and projects are created to address the specific needs of poor communities. The fight against poverty is an unending task. It requires policies, cooperation, and sustenance. Poverty in the U.S. is referred to a household that accumulates income below the poverty level (U.S. Census, 2003). In essence, poverty is a condition that deprives individuals of acquiring the necessities required to meet the minimum standard of well-being and life. The government has set a poverty line that measures the capacity of families to satisfy their daily needs. This line is equated with other economic indicators such as price and inflation. The measurement determined by the government is equal to three times the annual cost of a nutritionally sufficient diet. At present, the poverty rate in the U.S. is estimated at approximately 12.3%. This means that 36.5 million Americans are classified as poor. But the parameters used by the United Nations measure poverty in the U.S. at around 17%. The incidence of poverty among individuals below 18 years old is high compared with individuals who are 18 to 64 years old. In 2006, the poverty rates for the respective age groups are 17.4% and 10.8% (CIA Factbook, 2007).
The government uses three measures to determine the poverty level. The Census Bureau is tasked to provide the poverty threshold. These figures are used for statistical analysis. Usually, the Bureau uses the data to classify the clusters and areas where poverty exists. Moreover, the Department of Health and Human Services handles the poverty figures for administrative purposes (Health and Human Services, 2007). The agency determines the individuals in dire need of assistance from the government. Both offices work to ascertain the accuracy of the information and the extent of aid needed. Another measure of poverty is used by the Office of Management and Budget. The agency derives its figures from the “Orshansky Poverty Threshold”. This was developed by Mollie Orshansky who once worked for the Social Security Administration (Social Security Agency, 2007). The data is used to determine the budget to be allocated to fight poverty. The Department of Agriculture also has its version of the poverty level. The agency develops the economy food plan which determines the least costly food plans. This is vital because it is used as the basis for food creation. Food security is a major issue attached to poverty. In 2002, the U.S. stated that 89% of the population has full access to food. The other households were determined to have inconsistent food sources throughout the year. The incidence of poverty in the U.S. is at times cyclical. Some families earn income only at certain periods. This means that the distribution of the resources is an imbalance to satisfy the needs of the families.
There are several reasons why poverty exists. The most common cause is the individual’s lack of skills to acquire employment. An individual must have a job to earn. Aside from the skills, educational attainment is another major consideration. Education is often a requirement when looking for employment. In addition, disability can also cause an individual to experience poverty. Disabled individuals are more often segregated from the physically capable. This form of social bias deprives physically impaired individuals of acquiring the same privileges enjoyed by others. One of the most talked-about issues in the U.S. is the prevalence of illegal immigration (Rector, 2006). For some foreigners, U.S. is viewed as the “land of milk honey”. Hence several foreign individuals try to transfer to the U.S. hoping to uplift their lives. Unfortunately, this has become a big problem for the government. The increase in population has also stretched the budget requirements needed to address poverty. Some foreigners are perceived to take away the services provided by the government to the locals. Instead of changing their statuses, these immigrants worsen their already poor state. The social condition is also linked to the existence of poverty. Communities with high crime rates are usually occupied by poor families. Crime is considered an option for individuals who find it difficult to earn in conventional ways (Harris, 2006). Discrimination is another social issue that causes poverty. Preference of race and religion can often determine the jobs that most individuals try to acquire.
Solving poverty requires solid programs and sustained efforts. One of the most used methods to solve poverty is to increase the wages received by individuals. This will expand their buying power and allow households to purchase their necessities. In addition, the government can also reduce the tax rates on households receiving low income. The government needs to sacrifice the income from taxes and directly give the benefits to earners. Aside from the income tax, the government can also reduce the tax imposed on basic goods and services that are usually acquired by low-earning households. The government has to extend its social services and focus on these poor individuals. Provision of necessities such as free education and healthcare are musts (Center for American Progress, 2007). Allocating a huge chunk of the budget on poverty alleviation has to be done. The government can temporarily alter its funds for non-priorities to fights against poverty. The government needs to address fiscal balance to ensure that poverty is addressed. It has to be noted that resources are needs to ensure that social services are delivered. Moreover, the government has to start pushing on job creation. It has to start by making policies that provide incentives for companies that will expand in depressed areas. The government can facilitate industrial growth through the provision of infrastructures and the expansion of communication arteries. Communities must be developed and made accessible to these firms. Employing these poor individuals is a good start to address poverty. This will allow these households to participate in the actual economic process. Aside from fiscal policies, there are certain monetary policies that the government can pursue. The reduction of the interest of government loans is a good option. This will allow poor individuals to have access to government financing. Apart from being employees, poor households can plan of being entrepreneurs. Although the government is not advised to intervene on prices, it can provide measures to limit the exposure of poor households to high-priced commodities (Walls, 2007). The government can provide its goods that can compete against commercially produced products.
Poverty is undeniably a concern for the U.S. Despite the daunting task head, poverty can be reduced and eventually eliminated. Several strategies can be manifested. But these strategies have to revolve around the social, political, and economic aspects of the country. The social issues involve the elimination of prejudices related to race and religion. All American has to gain equal access to basic services regardless of ethnic origin. In the economic aspect, the government has to provide both fiscal and monetary measures to strengthen the distribution of wealth. Politically, leaders have to manifest their full power to ensure that equality is present in their respective jurisdictions. But the government needs help in fighting against poverty. The private sector has to continually expand and create more employment opportunities. In addition, all Americans have to cooperate with these policies. The synergy of these aspects is needed to finally end the incidence of poverty in the U.S.
- Harris, P., (2006), The Observer , “ 37 million poor hidden in the land of plenty ” Web.
- Rector, R.E., (2006), The Heritage Foundation, “ Importing Poverty: Immigration and Poverty in the United States: A Book of Charts ,” Web.
- Walls, D., (2007), Models of Poverty and Planned Changed , Web.
- Center for American Progress, (2007), From poverty to prosperity: A National strategy to cut poverty in half, Web.
- Central Intelligence Agency (CIA) Factbook, (2007), U.S. Poverty , Web.
- Health and Human Services, (2007), Poverty Guidelines, Research, and Measurement , Web.
- Social Security Administration, (2007), Mollie Orshansky , Web .
- U.S. Census Bureau, (2003), Definition of Poverty , Web.
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Research Poverty Thresholds
Announcements.
- 2021 Research Supplemental Poverty Measure Thresholds Based on Consumer Expenditure Survey Data
- Methodology Introduced in 2021 to Produce Supplemental Poverty Measure Thresholds; Impact on 2019 Thresholds
- 2017 and 2018 Research Poverty Thresholds Based On Reprocessed Consumer Expenditure Interview Survey Data
On This Page
Disclaimer: Not all the authors of the research papers and conference presentations are affiliated with BLS. This information is provided for your convenience and does not necessarily reflect the views or policies of BLS.
Overview
Since 1995, the Bureau of Labor Statistics (BLS) has been conducting research on the development of expenditure-based poverty thresholds. The earliest work focused on the development and production of what are referred to as the National Academy of Science (NAS) Thresholds. The BLS production of these thresholds are based on recommendations of the 1995 NAS report Measuring Poverty: A New Approach (Citro and Michael 1995). In 2010, an Interagency Technical Working Group (ITWG) provided a framework for a second set of poverty thresholds as part of a new Supplemental Poverty Measure (SPM). The ITWG's recommendations are outlined in the document " Observations from the Interagency Technical Working Group on Developing a Supplemental Poverty Measure ". This was followed by the creation of a second ITWG focused on the SPM in January 2016. One of the goals of this group was to consider improvements to the SPM. Based on research conducted at the BLS and U.S. Census Bureau since 2010, on September 30, 2020 the SPM ITWG voted on a series of changes to be made. For a summary of the changes to the thresholds and resources with impacts on poverty statistics visit the Census Bureau website. To examine the impact on SPM thresholds, included on this website is an additional set of 2019 thresholds (referred to as “revised”) that show the impact of each change relative to the 2019 previously published thresholds. All of the ITWG SPM approved changes are implemented with the production and release of the 2021 SPM poverty statistics in June 1st 2022.
A guiding principle included in the SPM documents is that resources and thresholds be consistently defined in the development of the SPM. Individuals are considered poor when the consumer unit or household in which they live do not have resources to meet their needs as defined by the SPM thresholds.
Both the NAS and ITWG documents refer to the U.S. Consumer Expenditure Survey (CE) as the basis for these expenditure-based poverty thresholds. The documents also note that the BLS is responsible for conducting research on expenditure-based poverty thresholds, and for providing these thresholds to the U.S. Census Bureau for use in producing research poverty statistics. The ITWG acknowledged that the BLS had produced the NAS thresholds in the past and expected that the BLS would continue to play this role for the SPM.
Within the BLS, the Division of Price and Index Number Research (DPINR) conducts all expenditure-based poverty threshold research. Support regarding the CE data is provided, as needed, by staff within the Division of Consumer Expenditure Surveys. DPINR research is conducted in consultation and cooperation with U.S. Census Bureau researchers.
Research Poverty Thresholds are presented with a caveat: what appears on this BLS web page does not reflect the rigors of production quality thresholds or related statistics. For such thresholds to be produced, a broader BLS endeavor would need to be created that coordinates the development of improvements in, and the production and dissemination of, expenditure-based SPM thresholds. This effort would include support for: research economists to devise and test suggested improvements in the thresholds and share this research with the economics and statistics profession at large, as well as the general public; IT staff to design, code, test, and provide diagnostic statistics; statistical methods staff to develop measures of data and statistical quality; and economists to analyze the data, produce the thresholds and related statistics, and disseminate the thresholds to the public. Currently, the BLS produces the SPM thresholds using CE Interview data as an experimental research product, since production quality thresholds cannot not be produced within existing resources.
On this web page, recently produced BLS-DPINR Research Poverty Thresholds are presented along with papers and presentations related to these. Much of the research was conducted by the BLS in cooperation with U.S. Census Bureau staff and other academic researchers. Again, as noted above, the thresholds developed and described in the research papers and conference presentations are not produced using standard BLS production procedures
Starting in May 2019, this BLS website is the host for the Research NAS Poverty Thresholds . Through July 2019 these thresholds also appeared on the U.S. Census Bureau website. Similarly, the U.S. Census Bureau website also hosts the official measure .
Background
The official poverty measure of the United States was first developed in the early 1960s and adopted as "official" in 1969. The official poverty threshold was determined to be the dollar value of a minimally adequate diet times three. The multiplier of three was used because 1955 Food Consumption Survey data showed that food expenditures accounted for one-third of after-tax income for an average family with children. An annual threshold of about $3,100 for a family with two adults and two children was set as the standard of need for 1963, and has been fixed in inflation-adjusted terms since then. The U.S. Census Bureau is responsible for publishing official annual poverty thresholds, rates, and other statistics.
The NAS recommendations provide the framework for a definition of the SPM. However, research over the years has suggested modifications to the NAS recommendations; the modifications are discussed in detail in the ITWG recommendations document referenced earlier. The SPM is not intended to replace the official poverty measure, but is to be considered a work in progress, with the expectation that there will be improvements to it over time. Changes in the SPM are to be decided upon in a process led by research economists, survey methodologists, and statisticians within the U.S. Census Bureau in consultation with the BLS, other appropriate data agencies, and outside experts, and will be based on solid analytical evidence.
Following a NAS report recommendation, the Office of Management and Budget (OMB) in January 2016 convened a new SPM ITWG to provide advice on challenges and opportunities brought before it by the U.S. Census Bureau and the BLS concerning data sources, estimation, survey production, and processing activities for development, implementation, publication, and improvement of the SPM (Renwick and Fox 2020). For further information refer to Census’ website Research on resources and resulting poverty statistics can be found on the U.S. Census Bureau website . The new methodology is described below in the section, “New Methodology to Produce the SPM Thresholds.”
Research Supplemental Poverty Measure (SPM) Thresholds
Presented in this section are the methodologies to produce the previously published SPM thresholds (for 2005-2019) and those that incorporate the changes approved by the SPM Interagency Technical Working Group (TWG) on September 30, 2020 (for 2019 revised – 2021). For both, five years of quarterly data from the U.S. Consumer Expenditure Survey (CE) Interview data are used. Both start with out-of-pocket expenditures for food, clothing, shelter, and utilities (FCSU) to which a multiplier is applied to account for the expenditures of other basic goods and services, like those for household supplies, personal care, and non-work-related transportation. For the earlier methodology, telephone services were included in utilities. However, with the newer methodology, telephone services are separated from other utilities, and internet services and the value of select in-kind transfers (FCSUti) are added. With the addition of in-kind benefits, SPM thresholds are more consistently defined with respect to resources than those published previously. The earlier methodology did not sufficiently account for the receipt of in-kind benefits. The SPM resource measure produced by the U.S. Census Bureau includes the value of in-kind benefits associated with the following programs: Low Income Housing Energy Assistance Program (LIHEAP), National School Lunch Program (NSLP), Supplemental Nutrition and Assistance Program (SNAP), Women, Infants, and Children Program (WIC), and rental assistance. For the CE, since SNAP benefits are delivered as electronic benefit transfers, they are assumed to be used in the same way as other forms of cash or credit to purchase food, and thus to be included in reported out-of-pocket food expenditures. Given this, in-kind benefits included in the 2005-2019 thresholds were limited to those associated with SNAP. However, with the publication of SPM thresholds in September 2021, benefits associated with LIHEAP, NSLP, WIC, and rental assistance are added to FCSU out-of-pocket expenditures at the consumer unit level before the thresholds are estimated. Thresholds for 2019 revised, 2020, and 2021 account for the addition of these in-kind benefits.
Production of Thresholds for Consumer Units with Two Adult and Two Children
Thresholds are based on the distribution of the of FCSU or FCSUti, depending on the threshold year. Before the distribution is produced, the values of these are converted to threshold year dollars for consumer units composed of two adults and two children, the reference group. While the SPM estimation sample is composed of consumer units with children, their expenditures are converted to those of the reference group using a three-parameter equivalence scale. For each consumer unit, the values for FCSU and FCSUti are converted to annual threshold year dollars by multiplying each quarter of data by four and updating using a consumer price index. The All-Items CPI-U was used to update quarterly CE expenditure data for the production of the 2005-2019 thresholds. A new composite CPI-U index, based on FCSUti, is used to update FCSUti expenditures for the production of the 2019 revised-2021 thresholds. In the section are description of the three-parameter equivalence scale, price indexes, and threshold estimation for housing tenure groups defined as owners with mortgages, owners without mortgages, and renter.
Methodologies to Produce Thresholds
methodology used to produce previously published thresholds (2005-2019).
The previously published Research SPM thresholds were based on a range of FCSU expenditures centered on the 33rd percentile using data from an estimation sample composed of consumer units with exactly two children and any number of adults. These expenditures were equivalized to the expenditures of a consumer unit with two adults and two children through the use of the three-parameter equivalence scale proposed by Betson (1996). The parameters allow for the differing needs of adults and children and for economies of scale of consumption within the consumer unit. A distinguishing feature of the three-parameter equivalence scale is the adjustment for single parents; no adjustment for single parents was included in the two-parameter scale proposed by the NAS Panel. The three-parameter equivalence scale has been used in the production of the NAS and SPM thresholds in the past (e.g., Garner 2010). Directly below, we present the three-parameter equivalence scale that is applied to the estimation sample for the production of the BLS-DPINR Research SPM Thresholds:
Single adults with children scale = (1 + a + ß(K- 1 )) f
Multiple adults with children scale = (A + ßK) f
a = parameter to account for the needs of the first child,
ß = parameter to account for the needs of additional children,
f = parameter to account for economies of scale within the consumer unit,
A = number of adults within the consumer unit, and
K = number of children within the consumer unit
The parameters a , ß , and f were estimated by Betson to fit the literature on the cost of children, and when rounded, were 0.8, 0.5, and 0.7, respectively.
For poverty measurement, the three-parameter equivalence is also used to convert the two-adult two-child SPM thresholds to thresholds for consumer units with differing numbers of adults and children. For consumer units with children, the equivalence scales presented above are used. For one and two adult consumer units, the equivalence scale equals (A) 0.5 . To produce thresholds for two adults, the scale is set to 1.41.
To produce the reference unit thresholds, the most recent five years of CE Interview data were used, with the earlier years of data updated to threshold year dollars using the All-Items CPI-U. Two adult-two child FCSU expenditures were ranked to identify the point in the distribution upon which to derive the thresholds. The 2010 ITWG Observations document noted that the 33rd percentile of FCSU equivalized expenditures would serve as the basis of the thresholds. However, the 33rd percentile is one point in the distribution, and thus, represents a single consumer unit who could be a renter, owner with a mortgage, or owner without a mortgage. To allow for the production of the three thresholds, a range of expenditures around the 33rd percentile was used, this being the 30-36th percentile of two adult-two child FCSU expenditures. The previously published Research SPM Thresholds for renters, owners with mortgages, and owners without mortgages were produced using the equation below.
SPM Threshold E h =1.2 * FCSU E - (S + U) E + (S + U) E h
1.2 = multiplier used to account for expenditures for other basic goods and services, like those for household supplies, personal care, and non-work related transportation.
FCSU , S , and U refer to the means of the sum of expenditures for food, clothing, shelter and utilities, and the shelter and utilities portions of FCSU, respectively, for the estimation of sample CUs within the 30 th to 36 th percentile range of FCSU expenditures.
E refers to consumer units in the estimation sample within the 30 th to 36 th percentile range of FCSU equivalized expenditures.
h refers to one of three housing tenure groups:
Owners with mortgages Owners without mortgages, or Renters.
Methodology to Produce the SPM Thresholds (2019 revised, 2020 and 2021)
A noted earlier, changes approved by the ITWG SPM on September 30, 2020 underlie the new methodology used to produce the SPM Thresholds published in September 2021. The decision to implement these changes was based on work from Fox and Garner (2018), Garner et al. (2019), and Garner (2020). The following changes go into effect with the release of the 2020 thresholds.
The base of thresholds has been moved from the FCSU and S+U averages within the 30th-36th FCSU expenditure percentile range to 83 percent of the averages inherent within the 47th-53rd FCSU percentile range.
The estimation sample has been expanded from consumer units with exactly two children to consumer units with any number of children.
The CE Interview data are lagged by one year.
Imputed in-kind benefits from LIHEAP, NSLP, WIC, and rental assistance from government sources are added to the thresholds.
Telephone service expenditures are no longer geographically adjusted; in other words, they are no longer included with other utilities but are instead included along with food and clothing.
Home internet service expenditures have been added to the commodities.
To adjust the five years of CE Interview data to threshold year dollars, the All Items, Consumer Price Index for All Urban Consumers (All Items CPI-U) has been replaced by a composite “Food, Clothing, Shelter, Utilities, and telephone and internet service” price index; this is referred to as the FCSUti CPI-U.
As with the previously published SPM thresholds, five years of data are used to produce the thresholds under the new revised methodology. However, a decision was made by the ITW SPM to lag the CE data by one year. The new thresholds for 2020 are based on data collected in the CE Interview from 2015 quarter two through 2020 quarter one to represent the years 2015 through 2019. The reference period for each quarter is the previous three months. Lagging the expenditure data is preferred since the methods to impute the in-kind benefits for LIHEAP, NSLP, and WIC are based on data from the Current Population Annual Social and Economic Supplement (CPS ASEC). CPS ASEC data for the threshold year, let’s say 2020, are not released until after the 2020 SPM thresholds are needed to produce the U.S. Census Bureau poverty report.
Incorporating the seven changes, the following formula is used to produce the thresholds:
SPM E h = 0.83 * (1.2 * FCSUti E - SU E, w/o telephone + SU E h , w/o telephone )
with subscripts defined as earlier. With telephone separate from household utilities and with the addition of internet, we now refer to the base of the thresholds as FCSUti. Also, rather than the 30-36th percentile, the revised methodology uses the 47th to 53rd percentile range; this represents the median. The percentage of the median chosen, 83 percent, is based on two factors: (1) the NAS guideline that a percentage of the median be used to produce the poverty threshold; and (2) 83 percent of the median, estimated when all of the other changes are implemented to produce a revised 2019 set of thresholds, results in an overall poverty rate that is closest to the previously published poverty rate for 2019 (Burns and Fox, 2021).
Imputation of In-kind Benefits at the Consumer Unit Level
In-kind benefits are imputed to consumer units in the CE for all but SNAP. For rental assistance, rent paid and housing units characteristics in the CE are available to support the imputation of benefits. However, for LIHEAP, NSLP, and WIC no data are collected in the CE, but consumer unit characteristics are available and thus can be used to impute values from another source. In this section, the imputation methods used to impute the values of rental assistance and the listed in-kind benefits are briefly described. Detailed technical documentation for the imputation methods is forthcoming in 2022.
Imputed values of rental assistance are produced for consumer units who report receiving government assistance in paying rent, those who live in public housing, and those who live in rent-controlled units; rental assistance for these types of housing can be referred to as public rental assistance. Imputed rents are also produced for renter consumer units who receive part of their pay as rent; these are referred to as private rent transfers. The CE rental sample was divided into two subsamples: one including CUs identified as receiving rental assistance (including private rent transfers), and another as those not receiving this assistance. To produce imputed rent values for the rental assistance subsample, a limited dependent variable model is used. The rent dependent variable is assumed to be censored from above for the rental assistance sample.
CE imputed values for LIHEAP, NSLP, and WIC are based on reports from the Current Population Survey Annual Social and Economic Survey (CPS-ASEC). Multiple imputation models are used to assign LIHEAP benefits, and NSLP and WIC participation from CPS-ASEC households to CE consumer units. An underlying assumption for this imputation approach is that both the CPS-ASEC and CE samples are both representative of the sampled U.S. population, and thus data from the two surveys can be pooled. In the pooled sample, values for LIHEAP benefits, NSLP participation, and WIC participation exist for the CPS-ASEC but are missing for the CE. Using comparably defined household and consumer unit characteristics, regression-based models are used to assign CPS-ASEC recorded non-missing LIHEAP benefits, participation in the NSLP, and participation in WIC to the CE which, by design, has missing values for these programs. Benefit values for consumer units participating in NSLP and WIC are assigned using published data for these programs from the U.S. Department of Agriculture (USDA).
FCSUti Composite CPI-U
The price index used to adjust quarterly CE expenditures to threshold year dollars is referred to as the FCSUti CPI-U. The FCSUti index is processed as an annual average for the urban population. Upper-level index estimation for the FCSUti index is comparable to the CPI-U as a modified Laspeyres formula. See the Chart below for the FCSUti CPU-U indexes relative to the All-Items CPI-U indexes; the All-Items indexes were used in the production of previously published SPM thresholds.
[ Chart data ]
Testing for Statistical Differences
To test for a significant change in the threshold from the previous year, or to make a comparison between thresholds within a year, one would conduct a Z-test. The test statistics are specified below, for each type of comparison. First, to test for the statistical difference in thresholds from one year to the next (e.g., SPM renter thresholds in 2020 as compared to 2019 revised), simply divide the difference in the thresholds for time t and t-1 by the standard error of the year-to-year difference.
Z Renters, t , t-1 = (SPM Renters, t - SPM Renters , t-1 ) / Standard error Renters, t, t-1
For a statistical comparison of thresholds within year t (e.g., renter thresholds compared to owner without mortgage thresholds), simply divide the difference in the two thresholds within the year by the standard error of the difference between the two housing tenure groups that is listed for the current threshold year.
Z Renters compared to Owners without mortgages , t =
(SPM Renters, t - SPM Owner without mortgages , t ) / Standard error Renters compared to Owners without mortgages, t
Research SPM Thresholds for 2009-2010 were first posted to the BLS website in table format in November 2011. Thresholds for 2005-2008 were added shortly thereafter. Ever since, the time series has been supplemented by an additional year's threshold each year after the release of CE public use data.
The BLS-DPINR Research SPM Thresholds and associated standard errors can be found through the links below. Also available are the expenditure shares of each of the components of the thresholds. Please note that use of all of the significant digits presented in the spreadsheets are necessary for inclusion in calculations; precision will affect the resulting dollar value.
- SPM Thresholds ( XLSX )
- Standard Errors of Differences in SPM Thresholds ( XLSX )
- SPM Threshold Shares ( XLSX )
The weighted share distribution of consumer units by housing tenure for the SPM thresholds for each year is included in the "BLS-DPINR Research SPM Thresholds with Housing Tenure Shares" file. This is included to facilitate the calculation of a weighted average of the three SPM thresholds for users who are interested in FCSU threshold that does not account for housing tenure. Note: The ITWG included the recommendation for the production of three housing tenure thresholds, not a single threshold. A weighted average of a particular component of the SPM thresholds (i.e., food, clothing, shelter, utilities) can be computed using the housing tenure distributional weights along with the housing tenure specific component from the "Expenditure Shares" file below. For example, a weighted average of Shelter across the three housing tenure groups would be calculated as follows:
S W = (P Owners with mortgages * S Owners with mortgages * SPM Owners with mortgages )
+(P Owners without mortgages * S Owners without mortgages * SPM Owners without mortgages )
+(P Renters * S Renters * SPM Renters )
S W = weighted average of shelter share in SPM threshold
P = weighted share distribution of consumer units by housing tenure
S = shelter component share of SPM threshold for housing group
SPM = SPM threshold for housing group
Research Papers
- Improvements to Supplemental Poverty Measure for 2021 ( PDF ) U.S. Census Bureau SEHSD Working Paper #2021-17. Kalee Burns, U.S. Census Bureau. Liana E. Fox, U.S. Census Bureau. September 2021.
- Choices in Defining and Estimating Poverty Thresholds: Focus on the U.S. Supplemental Poverty Measure ( PDF ) Division of Price and Number Research, Bureau of Labor Statistics. Thesia I. Garner, Bureau of Labor Statistics. Juan D. Munoz, Bureau of Labor Statistics. March 15, 2021.
- Alternative Poverty Measurement for the U.S.: Focus on Supplemental Poverty Measure Thresholds ( PDF ) Bureau of Labor Statistics Working Papers 510. Thesia I. Garner, Bureau of Labor Statistics. Marisa Gudrais, Bureau of Labor Statistics. September, 2018.
- Controlling for Prices before Estimating SPM Thresholds and the Impact on SPM Poverty Statistics ( PDF ) Society of Government Economists. Thesia I. Garner, Bureau of Labor Statistics. Juan D. Munoz, Bureau of Labor Statistics. April 19, 2018.
- Varying Economies of Scale in Housing: The Impact on Poverty Statistics ( PDF ) Society for the Study of Economic Inequality. Thesia I. Garner, Bureau of Labor Statistics. Trudi Renwick, U.S. Census Bureau. February 15, 2017.
- Changing the Housing Share of Poverty Thresholds for the Supplemental Poverty Measure: Does Consumer Unit Size Matter? ( PDF ) Southern Economics Association. Thesia I. Garner, Bureau of Labor Statistics. Trudi Renwick, U.S. Census Bureau. November 19, 2016.
- Supplemental Poverty Measure Thresholds and Noncash Benefits ( PDF ) The Supplemental Poverty Measure Workshop, Brookings Institution, Washington, DC, April 26, 2016. Thesia I. Garner, Bureau of Labor Statistics. Marisa Gudrais, Bureau of Labor Statistics. Kathleen S. Short, Census Bureau.
- Consistency in Supplemental Poverty Measurement: Adding Imputed In-Kind Benefits to Thresholds and Impact on Poverty Rates for the United States ( PDF ) Joint Statistical Meetings, Seattle, WA, August 9, 2015. Thesia I. Garner, Bureau of Labor Statistics. Marisa Gudrais, Bureau of Labor Statistics. Kathleen S. Short, Census Bureau.
- The Supplemental Poverty Measurement: Adding Imputed In-Kind Benefits to Thresholds and Impact on Poverty Rates for the United States ( PDF ) Sixth ECINEQ Meeting, July 6, 2015. Thesia I. Garner, Bureau of Labor Statistics. Marisa Gudrais, Bureau of Labor Statistics. Kathleen S. Short, Census Bureau.
- The Supplemental Poverty Measure Under Alternate Treatments of Medical Out-of-Pocket Expenditures ( PDF ) Thesia I. Garner, Bureau of Labor Statistics. Marisa Gudrais, Bureau of Labor Statistics. Kathleen S. Short, Census Bureau. December 30, 2013.
- Maintaining Consumption Levels over Economic Fluctuations and the Impact on Consumption vs. Spending-Based SPM Thresholds ( PDF ) Thesia I. Garner, Bureau of Labor Statistics. Marisa Gudrais, Bureau of Labor Statistics. December 29, 2012.
- The Supplemental Poverty Measure: A Joint Project between the Census Bureau and the Bureau of Labor Statistics ( PDF ) Kathleen S. Short, Census Bureau. Thesia I. Garner, Bureau of Labor Statistics. June 8, 2012.
- Supplemental Poverty Measure Thresholds: Imputing School Lunch and WIC Benefits to the Consumer Expenditure Survey Using Current Population Survey ( PDF ) Thesia I. Garner, Bureau of Labor Statistics. Charles Hokayem, Census Bureau. July 2012.
- Supplemental Poverty Measure Thresholds: Imputing Noncash Benefits to the Consumer Expenditure Survey Using Current Population Survey-Parts I and II ( PDF ) Thesia I. Garner, Bureau of Labor Statistics. Charles Hokayem, Census Bureau. September 2011.
- The Supplemental Poverty Measure: Examining the Incidence and Depth of Poverty in the U.S. Taking Account of Taxes and Transfers ( PDF ) Kathleen Short, Census Bureau. June 2011.
- Supplemental Poverty Measure Thresholds: Laying the Foundation ( PDF ) Thesia I. Garner, Bureau of Labor Statistics. 2010.
- Setting and Updating Modern Poverty Thresholds ( PDF ) BLS Working Papers. March 2010. Thesia I. Garner, Bureau of Labor Statistics. David Betson, University of Notre Dame.
- Housing and Poverty Thresholds: Different Potions for Different Notions ( PDF ) Thesia I. Garner, Bureau of Labor Statistics. David Betson, University of Notre Dame. 2010.
- Note on Standard Errors and Other Relevant Statistics of Experimental Poverty Thresholds Produced at the Bureau of Labor Statistics: 2006 to 2008 ( PDF ) BLS Working Papers. March 2010. Thesia I. Garner, Bureau of Labor Statistics.
- Identifying the Poor: Poverty Measurement for the U.S. from 1996 to 2005 ( PDF ) The Review of income and wealth, Volume 56, Issue 2, pages 237-258, June 2010. Thesia I. Garner, Bureau of Labor Statistics. Kathleen S. Short, Census Bureau.
- A Note on the Movement in Median FCSU Expenditures from 2006 to 2007 ( PDF ) Thesia I. Garner, Bureau of Labor Statistics. 2009.
- Reconciling User Costs and Rental Equivalence: Evidence from the US Consumer Expenditure Survey ( PDF ) Thesia I. Garner and Randal Verbrugge, Bureau of Labor Statistics. 2008.
- Creating a Consistent Poverty Measure over Time Using NAS Procedures: 1996-2005 ( PDF ) BLS Working Papers. April 2008. Thesia I. Garner, Bureau of Labor Statistics. Kathleen S. Short, Census Bureau.
- Comparing Approaches to Value Owner-Occupied Housing Using U.S. Consumer Expenditure Survey Data ( PDF ) Thesia I. Garner, Bureau of Labor Statistics. Uri Kogan, Northwestern University.
- What Do We Know About the Value of Owner Occupied Housing Services? Rental Equivalence and Other Approaches ( PDF ) Thesia I. Garner, Bureau of Labor Statistics. Kathleen S. Short, Census Bureau. Uri Kogan, Northwestern University.
- Developing a New Poverty Line for the USA: Are There Lessons for India? ( PDF ) BLS Working Papers. March 2005. Thesia I. Garner, Bureau of Labor Statistics. Kathleen S. Short, Census Bureau.
- Personal Assessments of Minimum Income and Expenses: What Do They Tell Us about 'Minimum Living' Thresholds and Equivalence Scales? ( PDF ) BLS Working Papers. March 2005. Thesia I. Garner, Bureau of Labor Statistics. Kathleen S. Short, Census Bureau.
- The Role of Housing in Developing Poverty Thresholds 1993-2003 ( PDF ) Thesia I. Garner, Bureau of Labor Statistics. 2005.
- Experimental poverty measures: accounting for medical expenditures ( PDF ) Monthly Labor Review, Volume 125, No. 8. August 2002. Kathleen S. Short, Census Bureau. Thesia I. Garner, Bureau of Labor Statistics.
- Owner-Occupied Shelter in Experimental Poverty Measures ( PDF ) Thesia I. Garner, Bureau of Labor Statistics. Kathleen S. Short, Census Bureau. 2001.
- Report on Experimental Poverty Measures 1990 to 1997 ( PDF ) Kathleen S. Short and John Iceland, Census Bureau. Richard Bavier, Office of Management and Budget. Thesia I. Garner and Patricia Rozaklis, Bureau of Labor Statistics. Donald J. Hernandez, SUNY at Albany. 2001.
- Redefining Poverty Measurement in the U.S.: Examining the Impact on Inequality and Poverty ( PDF ) 25th Conference of The International Association for Research in Income and Wealth. Kathleen S. Short, Census Bureau. Thesia I. Garner, Bureau of Labor Statistics. Cambridge, England 23 - 29 August 1998.
- Experimental poverty measure for the 1990s ( PDF ) Monthly Labor Review, Volume 121, No. 3. March 1998. Thesia I. Garner, Bureau of Labor Statistics. Kathleen S. Short, Census Bureau. Stephanie Shipp, Bureau of Labor Statistics. Charles Nelson, Census Bureau. Geoffrey Paulin, Bureau of Labor Statistics.
- Developing Poverty Thresholds Using Experimental Data ( PDF ) Joint Statistical Meetings, Invited Session 6: “Redefining Poverty in the United States.” David Johnson, Stephanie Shipp, and Thesia I. Garner, Bureau of Labor Statistics. Anaheim, CA, August 1997.
- An experimental Consumer Price Index for the poor ( PDF ) Monthly Labor Review, Volume 119, No. 9. September 1996. Thesia I. Garner, David S. Johnson, and Mary F. Kokoski, Bureau of Labor Statistics.
- "Is Everything Relative?" The Role of Equivalence Scales in Poverty Measurement ( PDF ) David M. Betson, University of Notre Dame.
Conference Presentations
- Proposed Changes to the Supplemental Poverty Measure ( PDF ) Southern Economic Association. Trudi Renwick (U.S.Census Bureau) and Thesia I. Garner (Bureau of Labor Statistics). November 23, 2020.
- Changes under Consideration for 2021: Thresholds (Revised) ( PDF ) Brookings Expert Meeting. Thesia I. Garner (Bureau of Labor Statistics). October 14, 2020
- Changes to be Made for 2021: SPM Thresholds ( PDF ) Association for Public Policy Analysis and Management (AAPAM) Annual Conference. Thesia I. Garner, Bureau of Labor Statistics. November 13, 2020.
- Interagency Technical Working Group (ITWG) on Changes under Consideration for 2021: Thresholds ( PDF ) Interagency Technical Working Group (ITWG). Thesia I. Garner, Bureau of Labor Statistics. September 30, 2020.
- Changes under Consideration for 2021: Thresholds ( PDF ) Brookings Expert Meeting. Thesia I. Garner, Bureau of Labor Statistics. May 28, 2020.
- Interagency Technical Working Group (ITWG) on Evaluating Alternative Measures of Poverty: Status Report ( PDF ) Interagency Technical Working Group (ITWG). Thesia I. Garner, Bureau of Labor Statistics. March 13, 2020.
- Moving to the Median and Expanding the Estimation Sample: The Case for Changing the Expenditures Underlying SPM Thresholds ( PDF ) Southern Economics Association. Thesia I. Garner, Bureau of Labor Statistics. Liana Fox, U.S. Census Bureau. November 20, 2018.
- Controlling for Prices before Estimating SPM Thresholds and the Impact on SPM Poverty Statistics ( PDF ) Society of Government Economists. Thesia I. Garner, Bureau of Labor Statistics. Juan D Munoz Henao, Bureau of Labor Statistics. April 20, 2018.
- Moving to the Median and Expanding the Estimation Sample: The Case for Changing the Expenditures Underlying SPM Thresholds ( PDF ) Statistics FCSM 2018 Research and Policy Conference. Thesia I. Garner, Bureau of Labor Statistics. Liana Fox, U.S. Census Bureau. March 7-9, 2018.
- Varying the Economies of Scale in Housing: Impact on Supplemental Poverty Measure Statistics ( PDF ) Seventh Meeting of the Society for the Study of Economic Inequality, New York, NY. Jul. 17-19, 2017. Thesia I. Garner, Bureau of Labor Statistics. Marisa Gudrais, U.S. Census Bureau.
- Alternative Poverty Measurement for the U.S.: Focus on Supplemental Poverty Thresholds ( PDF ) Western Economic Association 13th International Conference, Santiago, Chile. Jan. 3-6, 2017. Thesia I. Garner, Bureau of Labor Statistics. Trudi Renwick, U.S. Census Bureau.
- Supplemental Poverty Measurement (SPM) Thresholds and a Missing Data Problem ( PDF ) 6th Annual BLS-Census Workshop on Empirical Research using BLS-Census data, Washington, DC, June 6, 2016. Thesia I. Garner, Bureau of Labor Statistics. Marisa Gudrais, Bureau of Labor Statistics.
- SPM Thresholds: Imputing Subsidies to the Consumer Expenditure Survey for Poverty Measurement ( PDF ) Society of Government Economists Annual Conference, Washington, DC, May 13, 2016. Thesia I. Garner, Bureau of Labor Statistics. Marisa Gudrais, Bureau of Labor Statistics.
- Supplemental Poverty Measure Thresholds and Noncash Benefits ( PDF ) The Supplemental Poverty Measure Workshop, Brookings Institution, Washington, DC, April 26, 2016. Thesia I. Garner, Bureau of Labor Statistics. Marisa Gudrais, Bureau of Labor Statistics.
- Measuring Medical Expenses: MOOP in Thresholds vs. MOOP Subtractions ( PDF ) Measuring Poverty in the 21st Century Conference Stanford Center on Poverty & Inequality, Stanford, CA, March 11, 2016. Thesia I. Garner, Bureau of Labor Statistics.
- The Rationale for the Current Poverty Threshold ( PDF ) Measuring Poverty in the 21st Century Conference Stanford Center on Poverty & Inequality, Stanford, CA, March 11, 2016. Thesia I. Garner, Bureau of Labor Statistics.
- Supplemental Poverty Measure Thresholds: Imputing In-Kind Government Transfers from CPS Public Use Data to CE ( PDF ) Eastern Economic Association Annual Meetings, Washington, DC, February 26, 2016. Thesia I. Garner, Bureau of Labor Statistics. Marisa Gudrais, Bureau of Labor Statistics. Kathleen S. Short, Census Bureau.
- The Supplemental Poverty Measurement: Adding Imputed In-Kind Benefits to Thresholds and Impact on Poverty Rates for the United States ( PDF ) Joint Statistical Meetings, Seattle, WA, August 9, 2015.Thesia I. Garner, Bureau of Labor Statistics. Marisa Gudrais, Bureau of Labor Statistics. Kathleen S. Short, Census Bureau.
- Supplemental Poverty Measurement Thresholds: Research at the BLS ( PDF ) APDU Annual Conference, Rosslyn, VA. Sep. 17, 2014. Thesia I. Garner, Bureau of Labor Statistics.
- The Supplemental Poverty Measure Under Alternate Treatments of Medical Out-of-Pocket Expenditures ( PDF ) Allied Social Science Association (ASSA) Meetings, Philadelphia, PA. Jan. 4, 2014. Thesia I. Garner and Marisa Gudrais, Bureau of Labor Statistics. Kathleen S. Short, Census Bureau.
- Supplemental Poverty Measure (SPM): Threshold Issues ( PDF ) Brookings/Census Bureau Meetings on Improved Poverty Measurement, Washington, D.C. Nov. 7, 2011. Thesia I. Garner and Marisa Gudrais, Bureau of Labor Statistics.
- Supplemental Poverty Measure Thresholds: Laying the Foundation ( PDF ) Allied Social Science Association Annual Meetings, Denver, CO. Jan. 8, 2011. Thesia I. Garner, Bureau of Labor Statistics.
- Moving to a Supplemental Poverty Measure (SPM): Research on Thresholds for 2008 ( PDF ) Southern Economics Association Annual Meeting, Atlanta, GA. Nov 10, 2010. Thesia I. Garner, Bureau of Labor Statistics.
- Housing and Poverty Thresholds: Different Potions for Different Notions ( PDF ) Midwestern Economics Association Annual Meeting, Evanston, IL. Mar 20, 2010. Thesia I. Garner, Bureau of Labor Statistics. David Betson, University of Notre Dame.
- Setting and Updating Modern Poverty Thresholds ( PDF ) Annual Meeting of the Allied Social Science Associations (ASSA), Atlanta, GA. Jan 3, 2010. Thesia I. Garner, Bureau of Labor Statistics. David Betson, University of Notre Dame.
- Poverty Threshold Alternatives/Choices ( PDF 1.6 MB) Brookings/Census Bureau Conference on Improved Poverty Measurement. Oct 20, 2009. Thesia I. Garner, Bureau of Labor Statistics.
- National Academy of Sciences (NAS)-Based Poverty Thresholds: Details of Alternatives and Choices in Specification ( PDF ) Joint Statistical Meetings, Washington, DC. Aug 3, 2009. Thesia I. Garner, Bureau of Labor Statistics.
- Reconciling User Costs and Rental Equivalence: Evidence from the US Consumer Expenditure Survey ( PDF ) Annual Meeting of the Allied Social Science Associations, San Francisco, CA. Jan 4, 2009. Thesia I. Garner and Randal Verbrugge, Bureau of Labor Statistics.
- Accounting for Housing Services in Consumption and Income ( PDF ) ASSA-SGE Annual Meetings, New Orleans, LA. Jan 6, 2008. Thesia I. Garner, Bureau of Labor Statistics. Sylvester Young, International Labour Organization.
- Comparing Approaches to Value Owner-Occupied Housing Using U.S. Consumer Expenditure Survey Data ( PDF ) ASSA-SGE Annual Meetings, Chicago, IL. Jan 7, 2007. Thesia I. Garner, Bureau of Labor Statistics. Uri Kogan, Northwestern University.
- What Do We Know About the Value of Owner-occupied Housing Services? Rental Equivalence and Other Approaches ( PDF ) Annual Meeting of the Southern Economics Association, Charleston, SC. Nov 18, 2006. Thesia I. Garner, Bureau of Labor Statistics. Kathleen S. Short, Census Bureau. Uri Kogan, Northwestern University.
- The Role of Housing in Poverty Thresholds: 1993-2003 ( PDF ) Annual Meeting of the Southern Economics Association, Washington, DC. Nov 19, 2005. Thesia I. Garner, Bureau of Labor Statistics.
- Developing Poverty Thresholds ( PDF ) JSM, Social Statistics Section, Minneapolis, MN. Aug 10, 2005. Thesia I. Garner, Bureau of Labor Statistics.
- Incorporating the Value of Owner-Occupied Housing in Poverty Measurement ( PDF ) Thesia I. Garner, Bureau of Labor Statistics. Kathleen S. Short, Census Bureau. 2004.
- Owner-Occupied Shelter in Experimental Poverty Measurement with a ?Look? at Inequality and Poverty ( PDF ) Southern Economics Association Conference, Tampa, FL. Nov 18, 2001. Thesia I. Garner, Bureau of Labor Statistics. Kathleen S. Short, Census Bureau.
Last Modified Date: September 13, 2022
The antipoverty effects of the expanded Child Tax Credit across states: Where were the historic reductions felt?
Child poverty is a persistent national issue with lifetime and intergenerational consequences, but the distribution of its incidence and its impacts vary. One dimension that deserves attention is the variation in child poverty by state and the effectiveness of and potential for federal policy to confront the problem. In this essay, the authors investigate how the CTC affected child poverty in states by two characteristics: state-level cost of living (high-cost versus low-cost states) and state-level poverty (high versus low pre-tax/transfer poverty rates). They find that while the CTC caused substantial reductions in poverty in each kind of state, poverty reductions were the highest in low-cost, high poverty states, i.e., those states with relatively lower cost of living and with a higher poverty baseline.
INTRODUCTION
The 2021 expansion of the Child Tax Credit (CTC) led to a historic reduction in poverty in the United States, particularly for children. Research showed that child poverty fell immediately and substantially. On an annual basis, according to the US Census Bureau, child poverty fell to its lowest level on record in 2021: 5.2% (Creamer et al. 2022). Moreover, the CTC benefit’s monthly delivery likely reduced volatility in income and poverty; research has shown that volatility compromises family and child well-being (Hamilton et al. 2022).
Sophie Collyer
Research director - center on poverty and social policy at columbia university.
Bradley Hardy
Nonresident senior fellow - economic studies.
Christopher Wimer
Co-director - center on poverty and social policy at columbia university.
The dramatic reductions in poverty induced by the expanded CTC represent positive changes to economic well-being. There are potentially larger and longer-run benefits from an increase in economic security for families with low and moderate levels of income (Garfinkel et al. 2022). Income support enhances children’s lifetime social and economic outcomes by allowing families to meet basic needs and by increasing families’ income stability. Specifically, transfer programs that provide cash and near-cash supports have been shown to promote stronger educational, emotional, and health outcomes (Akee et al. 2018; Hardy 2022; Hardy, Hill, and Romich 2019; Hoynes, Schanzenbach, and Almond 2016; Rothstein and Wozny 2013).
The 2021 expanded CTC extended full refundability to families with little or no taxable income. Adults with young children between 0 and 5 years old received refundable credits of $3,600 per child, while those with children between 6 and 17 years old received credits of $3,000 per child. These benefit changes allowed for more of the lowest-income families—historically, those from non-Hispanic Black, Hispanic, and American Indian and Alaska Native communities (Hardy 2022)—to benefit from the program (Center on Poverty and Social Policy at Columbia University, 2021). The Census’s Supplemental Poverty Measure (SPM) showed that children from all racial and ethnic minority groups experienced relatively large reductions in poverty rates, but that SPM poverty rates fell most dramatically for Black and Hispanic children. Black child poverty rates fell by 17 percentage points between 2009 and 2021, while SPM child poverty rates fell from 30% to 8% among Hispanic children over the same period (Creamer et al. 2022).
But where in the country did the expanded CTC reduce child poverty the most? It is not obvious, for example, whether the expanded CTC would have reduced poverty more or less in higher-versus lower-poverty states, or whether the degree of poverty re-duction differed by the cost of living in states. Income distributions vary across states, as does the depth of poverty (i.e., how close or far families lie from the poverty line) within any given state. One well-established feature of federally administered transfer programs is that they tend to reallocate resources from higher-income states to lower-income states. And, importantly, states vary on cost of living, which is an often-underexplored driver of poverty.
These differences across states are especially relevant today, given well-documented housing supply gaps and staggeringly high housing costs facing many families. On the one hand, some of the nation’s poorest states, disproportionately situated in the South, are among the least expensive. On the other hand, these same less-expensive states tend to provide weaker safety net protections and make lower investments in education; strong safety nets and higher investments in education are two core features of successful economic mobility strategies (Ziliak 2019).
This essay investigates how the CTC affected child poverty across states. In our two primary analyses, we examine how the reduction in child poverty varies across two characteristics: state-level cost of living (high vs. low cost of living) and state-level poverty (high vs. low pretax/transfer poverty rates). We find that, although the CTC caused substantial reductions in poverty in each kind of state (i.e., high vs. low cost of living, high vs. low pretax/transfer poverty rates), poverty reductions were the highest in low-cost, high-poverty states, which are those states with a relatively lower cost of living and with a higher baseline poverty rate. It stands to reason that, when the expanded CTC sunset on Dec. 31, 2021, those states were also where child poverty increased the most.
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U.S. Poverty Fell Last Year as Government Aid Made Up for Lost Jobs
When government benefits are taken into account, a smaller share of the population was living in poverty in 2020 even as the pandemic eliminated millions of jobs.
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Poverty rate acounting for
government aid programs
(Supplemental poverty measure)
Official poverty rate
By Ben Casselman and Jeanna Smialek
The share of people living in poverty in the United States fell to a record low last year as an enormous government relief effort helped offset the worst economic contraction since the Great Depression.
In the latest and most conclusive evidence that poverty fell because of the aid, the Census Bureau reported on Tuesday that 9.1 percent of Americans were living below the poverty line last year, down from 11.8 percent in 2019. That figure — the lowest since records began in 1967, according to calculations from researchers at Columbia University — is based on a measure that accounts for the impact of government programs. The official measure of poverty, which leaves out some major aid programs, rose to 11.4 percent of the population.
The new data will almost surely feed into a debate in Washington about efforts by President Biden and congressional leaders to enact a more lasting expansion of the safety net that would extend well beyond the pandemic. Democrats’ $3.5 trillion plan, which is still taking shape, could include paid family and medical leave, government-supported child care and a permanent expansion of the Child Tax Credit .
Liberals cited the success of relief programs, which were also highlighted in an Agriculture Department report last week that showed that hunger did not rise in 2020, to argue that such policies ought to be expanded. But conservatives argue that higher federal spending is not needed and would increase the federal debt while discouraging people from working.
The fact that poverty did not rise more during an enormous economic disruption reflects the equally enormous response. Congress expanded unemployment benefits and food aid, doled out hundreds of billions of dollars to small businesses and sent direct checks to most Americans. The Census Bureau estimated that the direct checks alone lifted 11.7 million people out of poverty last year; unemployment benefits and nutrition assistance prevented an additional 10.3 million people from falling into poverty, according to an analysis of the data by The New York Times.
“It all points toward the historic income support that was delivered in response to the pandemic and how successful it was at blunting what could have been a historic rise in poverty,” said Christopher Wimer, a co-director of the Center on Poverty and Social Policy at the Columbia University School of Social Work. “I imagine the momentum from 2020 will continue into 2021.”
Poverty rose much more after the previous recession, peaking at 16.1 percent in 2011, by the measure that takes fuller account of government assistance, and improving only slowly after that. Many economists have argued that the federal government did not do enough back then and pulled back aid too quickly.
Despite the more aggressive response this time, however, median household income last year fell 2.9 percent, adjusted for inflation, to about $68,000. That figure includes unemployment benefits but not stimulus checks or noncash benefits such as food stamps. The decline reflects the pandemic’s toll on jobs: About 13.7 million fewer people worked full time year-round compared with 2019.
Median household income
Adjusted for inflation
Among those who kept their jobs, however, median earnings rose 6.9 percent.
The share of Americans without health insurance was virtually unchanged, according to the Census Bureau report, a sign that pandemic measures and the Affordable Care Act may have helped people who would have otherwise lost coverage. But it is difficult to assess changes in health coverage last year. Census estimates conflicted with other government counts , and officials acknowledged problems with data collection during the pandemic.
The government defines poverty, under the more comprehensive definition, as an income level below about $30,000 for a family of four, although the exact threshold varies depending on family size, homeownership status and regional housing costs.
Inflation F.A.Q.
What is inflation? Inflation is a loss of purchasing power over time , meaning your dollar will not go as far tomorrow as it did today. It is typically expressed as the annual change in prices for everyday goods and services such as food, furniture, apparel, transportation and toys.
What causes inflation? It can be the result of rising consumer demand. But inflation can also rise and fall based on developments that have little to do with economic conditions, such as limited oil production and supply chain problems .
Is inflation bad? It depends on the circumstances. Fast price increases spell trouble, but moderate price gains can lead to higher wages and job growth.
How does inflation affect the poor? Inflation can be especially hard to shoulder for poor households because they spend a bigger chunk of their budgets on necessities like food, housing and gas.
Can inflation affect the stock market? Rapid inflation typically spells trouble for stocks. Financial assets in general have historically fared badly during inflation booms , while tangible assets like houses have held their value better.
The decline in poverty last year was broad-based. It fell among all racial and ethnic groups, among all family types, and among Americans at every age and education level.
But government programs excluded some groups, such as undocumented immigrants and their families, and failed to reach others. Poverty was significantly higher than the overall average for Black and Hispanic Americans, foreign-born residents and those without college educations. Millions of people waited weeks or months to receive benefits, forcing many to turn to charities.
“We measure poverty annually, when the reality of poverty is faced on a day-to-day-to-day basis,” said Hilary Hoynes, an economist at the University of California, Berkeley, who has studied the government’s response to the pandemic.
Nakitta Long, a single mother of two who was laid off from a North Carolina automotive plant at the start of the pandemic, said government aid helped her get back on her feet.
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The first stimulus check helped cover rent and a car payment, and enhanced unemployment benefits helped sustain her family until she was called back to work in October.
“The stimulus relief, it has been a blessing for my family because there was so much uncertainty there financially,” Ms. Long, 46, said.
Still, Ms. Long waited weeks to start receiving unemployment benefits. Then in July 2020, the $600-a-week federal supplement to state unemployment benefits lapsed . She fell behind on bills, setting in motion events that ultimately left her family homeless for two months this year.
New aid programs adopted this year, including the expanded Child Tax Credit, helped Ms. Long, who moved into a new home last month. She said she had noticed improvements in her children, particularly her 5-year-old son.
“It was bad, but it could have been so much worse, and we have come out the other side once again unbroken,” Ms. Long said.
By the government’s official definition, the number of people living in poverty jumped by 3.3 million in 2020, to 37.2 million, among the biggest annual increases on record. But economists have long criticized that definition, which dates to the 1960s, and said it did a particularly poor job of reflecting reality last year.
The official measure ignores the impact of many government programs, such as food and housing assistance and tax credits. This year, it also ignored the direct checks sent to households.
In recent years, the Census Bureau has produced an alternative poverty rate, known as the Supplemental Poverty Measure, which includes those programs and also factors in regional differences in housing costs, medical expenses and other costs.
Many of the programs that helped people avert poverty last year have expired, even as the pandemic continues. An estimated 7.5 million people lost unemployment benefits this month after Congress allowed expansions of the program to lapse.
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Jen Dessinger, a photographer who lives in New York City and Los Angeles, said work dried up abruptly at the start of the pandemic. A freelancer, she didn’t qualify for traditional unemployment benefits but eventually received help under a federal program created last year to help people who fell outside the regular system.
Now that program has ended in the middle of another surge in coronavirus cases. Ms. Dessinger said a single positive coronavirus case could shut down a photo shoot. “It’s made it a more desperate situation,” she said.
Democrats on Tuesday said experiences like Ms. Dessinger’s showed both the potential for government aid to protect people from financial ruin, and the need for a more expansive, permanent safety net that can support people in bad and good times.
A White House economist, Jared Bernstein, said on Tuesday that the new poverty data should encourage lawmakers to enact the $3.5 trillion Democratic measure that includes much of Mr. Biden’s economic agenda, which the administration argues will create more and better-paying jobs.
“It’s one thing to temporarily lift people out of poverty — hugely important — but you can’t stop there,” said Mr. Bernstein, a member of Mr. Biden’s Council of Economic Advisers. “We have to make sure that people don’t fall back into poverty after these temporary measures abate.”
But even as Democrats cheered the Tuesday report, most Republican lawmakers, who were in control of the Senate and the White House last year, did not issue statements promoting the poverty numbers. That may be a reflection of the party’s unified opposition to the Democratic push for more social programs, which the Senate minority leader, Mitch McConnell, described on Monday as a “reckless taxing and spending spree.”
Conservative policy experts said that although some expansion of government aid was appropriate during the pandemic, those programs should be wound down, not expanded, as the economy healed.
“Policymakers did a remarkable job last March enacting CARES and other legislation, lending to businesses, providing loan forbearance, expanding the safety net,” Scott Winship, a senior fellow and the director of poverty studies at the American Enterprise Institute, a conservative group, wrote in reaction to the data, referring to an early pandemic aid bill , which included around $2 trillion in spending. “But we should have pivoted to other priorities thereafter.”
Jason DeParle and Margot Sanger-Katz contributed reporting.
Evaluating the Success of President Johnson’s War on Poverty: Revisiting the Historical Record Using an Absolute Full-Income Poverty Measure
We evaluate progress in President Johnson's War on Poverty relative to the 20 percent baseline poverty rate he established for 1963. No existing poverty measure fully captures poverty reductions based on these standards. We fill this gap by developing an absolute Full-income Poverty Measure (FPM) whose thresholds are established to obtain this same 20 percent official poverty rate in 1963 while using a fuller measure of income and updating thresholds each year only for inflation. While the official poverty rate fell from 19.5 percent in 1963 to 10.5 percent in 2019, our absolute FPM rate fell from 19.5 to 1.6 percent. This reflects increases in full income throughout the distribution, with real median income more than doubling between 1963 and 2019, together with the expansion of government transfers and tax benefits not fully captured by the official measure. It is also broadly consistent with the expectations of President Johnson and his Council of Economic Advisers, including Robert Lampman who predicted in 1971 that poverty based on these absolute standards would be eliminated by 1980. However, we also show that reductions in relative poverty since 1963 have been far more modest, falling from 19.5 to 16.0 percent in 2019.
The views in this paper reflect those of the authors and should not be attributed to the Board of Governors of the Federal Reserve System, the Council of Economic Advisers, the Joint Committee on Taxation, their staff, or the National Bureau of Economic Research. Elwell’s work on this research was funded by The Lynde and Harry Bradley Foundation while he was a graduate student at Cornell University. Part of this work was undertaken while Burkhauser and Corinth were employed by the Council of Economic Advisers and Larrimore was on detail at the Council of Economic Advisers.
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The Antipoverty Effects of the Expanded Child Tax Credit across States: Where Were the Historic Reductions Felt?
Sophie Collyer
Bradley L. Hardy
Christopher Wimer
Mar 1, 2023
Child poverty is a persistent national issue with lifetime and intergenerational consequences, but the distribution of its incidence and its impacts vary. One dimension that deserves attention is the variation in child poverty by state and the effectiveness of and potential for federal policy to confront the problem. In this essay, the authors investigate how the CTC affected child poverty in states by two characteristics: state-level cost of living (high-cost versus low-cost states) and state-level poverty (high versus low pre-tax/transfer poverty rates). They find that while the CTC caused substantial reductions in poverty in each kind of state, poverty reductions were the highest in low-cost, high poverty states, i.e., those states with relatively lower cost of living and with a higher poverty baseline.
Introduction
The 2021 expansion of the Child Tax Credit (CTC) led to a historic reduction in poverty in the United States, particularly for children. Research showed that child poverty fell immediately and substantially. On an annual basis, according to the US Census Bureau, child poverty fell to its lowest level on record in 2021: 5.2 percent (Creamer et al. 2022). Moreover, the CTC benefit’s monthly delivery likely reduced volatility in income and poverty; research has shown that volatility compromises family and child well-being (Hamilton et al. 2022).
The dramatic reductions in poverty induced by the expanded CTC represent positive changes to economic well-being. There are potentially larger and longer-run benefits from an increase in economic security for families with low and moderate levels of income (Garfinkel et al. 2022). Income support enhances children’s lifetime social and economic outcomes by allowing families to meet basic needs and by increasing families’ income stability. Specifically, transfer programs that provide cash and near-cash supports have been shown to promote stronger educational, emotional, and health outcomes (Akee et al. 2018; Hardy 2022; Hardy, Hill, and Romich 2019; Hoynes, Schanzenbach, and Almond 2016; Rothstein and Wozny 2013).
The 2021 expanded CTC extended full refundability to families with little or no taxable income. Adults with young children between 0 and 5 years old received refundable credits of $3,600 per child, while those with children between 6 and 17 years old received credits of $3,000 per child. These benefit changes allowed for more of the lowest-income families—historically, those from non-Hispanic Black, Hispanic, and American Indian and Alaska Native communities (Hardy 2022)—to benefit from the program (Center on Poverty and Social Policy at Columbia University, 2021). The Census’s Supplemental Poverty Measure (SPM) showed that children from all racial and ethnic minority groups experienced relatively large reductions in poverty rates, but that SPM poverty rates fell most dramatically for Black and Hispanic children. Black child poverty rates fell by 17 percentage points between 2009 and 2021, while SPM child poverty rates fell from 30 percent to 8 percent among Hispanic children over the same period (Creamer et al. 2022).
But where in the country did the expanded CTC reduce child poverty the most? It is not obvious, for example, whether the expanded CTC would have reduced poverty more or less in higher-versus lower-poverty states, or whether the degree of poverty re-duction differed by the cost of living in states. Income distributions vary across states, as does the depth of poverty (i.e., how close or far families lie from the poverty line) within any given state. One well-established feature of federally administered transfer programs is that they tend to reallocate resources from higher-income states to lower-income states. And, importantly, states vary on cost of living, which is an often-underexplored driver of poverty.
These differences across states are especially relevant today, given well-documented housing supply gaps and staggeringly high housing costs facing many families. On the one hand, some of the nation’s poorest states, disproportionately situated in the South, are among the least expensive. On the other hand, these same less-expensive states tend to provide weaker safety net protections and make lower investments in education; strong safety nets and higher investments in education are two core features of successful economic mobility strategies (Ziliak 2019).
This essay investigates how the CTC affected child poverty across states. In our two primary analyses, we examine how the reduction in child poverty varies across two characteristics: state-level cost of living (high vs. low cost of living) and state-level poverty (high vs. low pretax/transfer poverty rates). We find that, although the CTC caused substantial reductions in poverty in each kind of state (i.e., high vs. low cost of living, high vs. low pretax/transfer poverty rates), poverty reductions were the highest in low-cost, high-poverty states, which are those states with a relatively lower cost of living and with a higher baseline poverty rate. It stands to reason that, when the expanded CTC sunset on December 31, 2021, those states were also where child poverty increased the most.
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How is poverty measured?
Poverty is measured in the United States by comparing a person’s or family’s income to a set poverty threshold or minimum amount of income needed to cover basic needs. People whose income falls under their threshold are considered poor.
The U.S. Census Bureau is the government agency in charge of measuring poverty. To do so, it uses two main measures, the official poverty measure and the Supplemental Poverty Measure, both of which are described in this FAQ.
Official Poverty Measure
The Census Bureau determines poverty status by using an official poverty measure (OPM) that compares pre-tax cash income against a threshold that is set at three times the cost of a minimum food diet in 1963 and adjusted for family size.
The OPM uses calculations of these three elements—income, threshold, and family—to estimate what percentage of the population is poor.
The official poverty estimates are drawn from the Current Population Survey Annual Social and Economic Supplement (CPS ASEC), which is conducted in February, March, and April with a sample of approximately 100,000 addresses per year.
In 2016, the most recent year for which data are available, the OPM national poverty rate was 12.7 percent. There were 40.6 million people in poverty.
The CPS ASEC questionnaire asks about income from more than 50 sources and records up to 27 different income amounts. Income is defined by the OPM to include, before taxes, the following sources:
- Unemployment and workers’ compensation
- Social Security
- Supplemental Security Income
- Public assistance
- Veterans’ payments
- Pension or retirement income
- Child support
- Educational assistance
- Other miscellaneous sources
The OPM does not include as income noncash government benefits such as Supplemental Nutrition Assistance Program (SNAP) benefits and housing assistance.
Poverty thresholds, the minimum income needed to avoid poverty, are updated annually for inflation using the Consumer Price Index , and adjusted for family size, composition, and age of householder.
OPM thresholds do not vary geographically.* In 2016, the OPM poverty threshold for a family of four was $24,339.
Poverty thresholds serve different purposes, including tracking poverty over time, comparing poverty across different demographic groups, and as the starting point for determining eligibility for a range of federal assistance programs.
(To learn more about using the poverty thresholds, or their administrative counterpoint, the poverty guidelines, for determining program eligibility, see FAQ: What are poverty thresholds and poverty guidelines? )
* The Census Bureau cautions that the thresholds should be interpreted as a “statistical yardstick” rather than as a complete accounting of how much income people need to live. They were intended to define and quantify poverty in America and to record changes in the number of persons and families in poverty and their characteristics over time.
Family is defined by the OPM as a group of two people or more (one of whom is the householder) related by birth, marriage, or adoption who reside together. All such people (including related subfamily members) are considered as members of one family.
In 1959, when the official government poverty series began, poverty was estimated at 22 percent. Before that time, unofficial estimates by researchers found a poverty rate in 1914 of 66 percent; 78 percent in 1932; 32 percent in 1947; and 24 percent in 1958.**
Figure 1 shows more recent poverty rates, in 1968, 1990, and 2016, by age, race, and Hispanic origin, using the OPM.
Figure 1. Official U.S. poverty rates in 1968, 1990, and 2016 show variation by age and racial/ethnic group and over time
** R. D. Plotnick, E. Smolensky, E. Evenhouse, and S. Reilly, “The Twentieth-Century Record of Inequality and Poverty in the United States,” in The Cambridge Economic History of the United States, Vol. 3, eds. S. L. Engerman and R. E. Gallman (Cambridge: Cambridge University Press, 2000), 249-299; G. Fisher, “Estimates of the Poverty Population under the Current Official Definition for Years before 1959,” mimeograph, Office of the Assistant Secretary for Planning and Evaluation, U.S. Department of Health and Human Services, 1986.
The Census Bureau releases the results of their analysis using the OPM every year in a report called Income and Poverty in the United States . The report includes charts and tables on information such as the following:
- household income by race and Hispanic origin, age of household head, nativity, region, residence, income inequality, and earnings and work experience;
- poverty estimates by race and Hispanic origin, age, sex, nativity, region, residence, work experience, disability status, educational attainment, and family type; and
- depth of poverty, ratio of income to poverty, income deficit, shared households, and estimates using alternative and experimental poverty measures.
To learn more about the official poverty measure, see the Census Bureau discussion, “How the Census Bureau Measures Poverty,” and the infographic, “ How Census Measures Poverty .”
Researchers and policymakers have long called for changes to the official poverty measure for a number of reasons. However, in spite of its shortcomings, detailed below, its salience in policymaking is noted by the economists Bruce D. Meyer and James X. Sullivan:
Few economic indicators are more closely watched or more important for policy than the official poverty rate. The poverty rate is often cited by policymakers, researchers, and advocates who are evaluating social programs that account for more than half a trillion dollars in government spending.
Principal criticisms of the OPM include:
- Its “headcount” approach identifies only the share of people who fall below the poverty threshold, but does not measure the depth of economic need;
- It does not reflect modern expenses and resources, by excluding significant draws on income such as taxes, work expenses, and out-of-pocket medical expenses, and excluding potentially sizable resources such as in-kind benefits (e.g., food assistance);
- It does not vary by geographic differences in cost of living within the contiguous United States despite huge variation;
- It is not adjusted for changes in the standard of living over time; and
- Its strict definition of measurement units—“family”—as persons living in the same household who are related by birth, marriage, or adoption does not reflect the nature of many households today, including those made up of cohabitors, unmarried partners with children from previous relationships, and foster children.
While the official measure remains the official national poverty statistic, the Census Bureau has been estimating poverty using a number of experimental measures as well, since the mid-1990s. See Poverty: Experimental Measures on the Census Bureau’s website for more about these approaches.
The most recent and prominent experimental measure, the Supplemental Poverty Measure—a work-in-progress that supplements but does not replace the official measure—is discussed below.
Supplemental Poverty Measure
The Census Bureau introduced the Supplemental Poverty Measure or SPM in 2010 to provide an alternative view of poverty in the United States that better reflects life in the 21st century, including contemporary social and economic realities and government policy.
As its name suggests, the SPM supplements but does not replace the official poverty measure, which remains the nation’s source for official poverty statistics and for determining means-tested program eligibility.
In a side-by-side comparison of the official poverty measure and the SPM, the Census Bureau notes their differences in measurement units, poverty threshold, threshold adjustments (e.g., by family size), updating thresholds, and what counts as resources, summarized in Table 3 below.
Source: L. Fox, “The Supplemental Poverty Measure: 2016,” Current Population Reports P60-261 (RV), Revised September 2017.
Note: “Family” as defined by the Census Bureau is “a group of two people or more (one of whom is the householder) related by birth, marriage, or adoption and residing together; all such people (including related subfamily members) are considered as members of one family.”
A comparison of official and SPM poverty rates in 2016 for the total population and among three age groups: under age 18, adults ages 18 to 64, and elders age 65 and over, is shown in Figure 2.
For most groups, SPM poverty rates were higher than official poverty rates; children are an exception with 15.2 percent poor using the SPM and 18.0 percent poor using the official measure. Analysts attribute the lower SPM child poverty rate largely to the measure’s inclusion of noncash benefits such as Supplemental Nutrition Assistance Program (SNAP, formerly Food Stamps) benefits.
The much higher SPM poverty rates for people age 65 and older—14.5 percent vs. 9.3 percent using the OPM—partially reflect that the official thresholds are set lower for families with householders in this age group, while the SPM thresholds do not vary by age.
In addition, the SPM rate is higher for people age 65 and older because it includes out-of-pocket medical expenditures, which are typically high for the elderly, whereas the official measure does not take them into account.
Figure 2. Poverty rates using OPM and SPM measures for total population and by age group, 2016, show a higher OPM child poverty rate and higher SPM elderly poverty rates.
IMF Austerity is Alive and Increasing Poverty and Inequality
By Rebecca Ray
For many years, researchers have debated the International Monetary Fund’s (IMF) use of austerity, or required fiscal budget tightening: how common it is, which borrowers receive such requirements, whether IMF practice has changed after successive financial crises , and what impacts such austerity has had .
Two new working papers from the Boston University Global Development Policy Center (GDP Center) pushes these questions further. Using a new dataset that measures the depth of required fiscal adjustment in each agreement from 2001-2018, these papers reveal four main findings.
From “ IMF Austerity Since the Global Financial Crisis: New Data, Same Trend, and Similar Determinants ” by Rebecca Ray, Kevin P. Gallagher, and William Kring:
- IMF-required austerity is commonplace and did not diminish in intensity after the 2008/2009 financial crisis.
- Borrowing countries are less likely to face required austerity if they are strongly tied to Western Europe, either through trade or diplomatic channels, or if they receive significant aid from non-OECD countries (mostly China).
From “ Poverty, Inequality, and the International Monetary Fund: How Austerity Hurts the Poor and Widens Inequality ,” authors Thomas Stubbs, Alexander Kentikelenis, Rebecca Ray, and Kevin P. Gallagher:
- Borrowing countries are more likely to face austerity if they are host to significant foreign direct investment (FDI), particularly from Western Europe.
- IMF-required austerity is significantly associated with rising inequality , by increasing the income share to the top ten percent at the expense of the bottom 80 percent. Unsurprisingly, the impact can also be seen in significantly rising poverty levels in countries facing tighter austerity requirements.
How does the dataset measure the depth of IMF-required fiscal adjustment?
Over the last year, researchers at the GDP Center have created a new dataset on the depth of fiscal adjustment required in IMF agreements. By incorporating this new variable, the researchers pushed beyond explorations of who receives conditionality, to how lenient or harsh each agreement has been. This new data, which the working papers are based on, will be made public upon journal publication.
This dataset includes all IMF agreements since 2001 with binding fiscal adjustment targets (known as quantitative performance criteria, or QPCs) at the end of calendar years. By limiting the sample to end-of-year QPCs, it allows each fiscal adjustment requirement to be measured as a share of calendar-year GDP. These annual measures are then compared across the length of the agreement to produce cumulative, annualized fiscal adjustment, in percentage points of the borrower’s nominal GDP. Positive numbers indicate government budgets that were required to tighten (or become more positive), while negative numbers indicate agreements that allowed government budgets to loosen (or become more negative).
This dataset takes only the final level of each QPC, after any adjustments or revisions, and it ignores any that were waived because of extenuating circumstances. After all of these factors were taken into account, and after removing a few extreme outliers in unusual circumstances (for example, Iraq shortly after the ouster of Saddam Hussein), it resulted in a dataset of 335 QPCs from 154 IMF arrangements across 18 years.
How much fiscal adjustment did the IMF require from 2001-2018?
In the first of the two new working papers, “ IMF Austerity Since the Global Financial Crisis: New Data, Same Trend, and Similar Determinants ,” coauthors Rebecca Ray, Kevin P. Gallagher, and William Kring find a remarkable variability in the fiscal tightening (or loosening) required across IMF agreements. While required fiscal adjustments always averaged between one percent of GDP cut or added to borrowers’ budgets for every year in the sample, Figure 1 below shows that the arrangements include a wide variety of experiences, even after removing the outliers mentioned above.
Figure 1: IMF-imposed Fiscal Adjustment in % of Borrower GDP per year, 2001-2018
Source: Ray, Gallagher and Kring, 2020 , Figure 2 .
Some of this variation is due to the diversity of economic situations faced by IMF borrowers, like the type of arrangement they entered, or their income levels, economic growth, and inflation rates at the time of their IMF arrangement. When considered together with these factors through an ordinary least squares regession model, the IMF agreements coalesce around a narrower range. Figure 2 below shows the predicted fiscal adjustment levels and 95 percent confidence intervals across the dataset, resulting from that process:
Figure 2: Modeled IMF-Imposed Fiscal Adjustment in % of Borrower GDP per year, 2001-2018
Note: Bars represent 95 percent confidence intervals. Source: Ray, Gallagher and Kring, 2020 , Figure A1 .
These results run counter to recent research on the IMF rhetoric and the text of agreements, which often find that the agreements grew more lenient after the 2008/2009 financial crisis. In fact, Figure 3 below shows no significant trend at all across this time period, in terms of the fiscal adjustment actually required by the agreements. Average predicted fiscal adjustment appears to have dipped in 2008 and 2009 (though not statistically significantly so) before rebounding to its prior levels. In fact, the only year with predicted fiscal adjustment that is statistically significantly greater than zero is the most recent year in the dataset, 2018.
Which countries gets more austere or lenient IMF arrangements?
The same working paper also finds that IMF-required austerity wasn’t evenly distributed among all borrowers, or even all borrowers facing similar economic pressures. Even after taking into account each country’s economic situation, the authors find that countries’ foreign economic and diplomatic relationships mattered in setting the stage for the terms of IMF programs. Figure 3 shows the specific relationships that emerged as significant determinants of IMF austerity. For each variable, it shows the difference in IMF-required austerity that is associated with an increase of one standard deviation in each of the significant variables:
Figure 3: Significant Determinants of IMF-Required Fiscal Adjustment, 2001-2018
Note: Bars indicate 95 percent confidence intervals. Source: Ray, Gallagher and Kring, 2020, Fig. 3.
As Figure 3 above shows, three of these variables were associated with significantly more lenient (less austere) IMF agreements.
The strongest of these impacts is a country’s diplomatic relationship with Western Europe, measured as its average voting alignment with Germany, the UK, and France at the UN General Assembly (UNGA). An increase of one standard deviation in this variable was associated with IMF agreements that were less austere by a whopping 0.9 percent of GDP per year.
Borrowers’ trade relationship with Western Europe was also associated with significantly less austerity: an increase of one standard deviation in a country’s exports to France, Germany, and the UK (from 1.8 percent to 5.6 percent of GDP) was associated with an average of 0.5 percent of GDP less in required fiscal tightening per year.
Finally, aid (official development assistance, or ODA) received from sources outside of the rich countries that make up the Organization for Economic Co-operation and Development’s Development Assistance Committee (DAC) seems to act as a buffer on countries’ willingness to accept harsh IMF conditionality. An increase on one standard deviation in aid from non-DAC countries (from $25 to $54 per capita) is associated with QPCs that are an average of 0.5 percent of GDP less austere per year. It is worth noting that this non-DAC aid is most likely to come from China. This reinforces another recent GDP Center working paper showing that countries may approach China as an alternative to seeking IMF assistance.
In contrast, two additional variables are associated with greater austerity in IMF agreements: a country’s role as a host for foreign investment, generally, and from Western Europe specifically. An increase by one standard deviation in net FDI inflows (from 3.4 percent to 9.3 percent of GDP) is associated with QPCs that require 0.5 percent of GDP tighter fiscal adjustments: the same impact as an increase by one standard deviation in the FDI in-stocks from Western Europe (from 0.3 percent to 2.2 percent of GDP). These findings bolster the growing literature on tight fiscal policy being associated with the influence of foreign investors .
What happens after austerity is enacted?
Austerity often falls on the shoulders of the nation’s most vulnerable people.
With this in mind, an additional GDP Center working paper explores the impact of IMF-imposed fiscal adjustment on inequality and poverty, using the same dataset. In this new paper, “ Poverty, Inequality, and the International Monetary Fund: How Austerity Hurts the Poor and Widens Inequality ,” authors Thomas Stubbs, Alexander Kentikelenis, Rebecca Ray, and Kevin P. Gallagher find that greater IMF-imposed austerity is associated with increased inequality and poverty in borrower countries.
Figure 4 below summarizes the findings of ten separate regression models, showing the impact of IMF austerity on the income share of each income decile (each representing ten percent of the population), from the poorest ten percent (decile one) to the richest ten percent (decile ten).
The results show a statistically significant negative effect of fiscal adjustment on the income share of the bottom 80 percent of the population: income deciles one through eight. For the top ten percent — decile ten — the effect of the IMF adjustment coefficient turns positive and is large relative to the other deciles (coefficient, 0.198).
In other words, IMF-required austerity is significantly associated with the highest earners receiving more at the expense of the bottom 80 percent. The biggest losses are accrued by middle-class earners, in deciles six through eight, plausibly a product of wage, employment, and pension cuts for civil servants.
Figure 4: Impact of IMF-Required Fiscal Adjustment on Income Share to Each Decile, 2001-2018
Source: Stubbs et al, 2021, Fig. 1.
These results have serious implications for families facing poverty. Figure 5 below shows the results of a model of the impact of IMF-required austerity on the poverty rate at $2.50 per person, per day. This model varies IMF fiscal adjustment and averages the remaining covariates in the sample. It finds IMF-mandated austerity to be significantly associated with higher poverty rates.
For example, fixing IMF fiscal adjustment at five percentage points (requiring government budgets be tightened by five percent of GDP per year), our model would predict a poverty headcount at 27.35 percent of the population, compared to 24.83 percent with no adjustment.
Figure 5: Impact of IMF-Required Fiscal Adjustment on Poverty Rates, 2001-2018
Source: Stubbs et al, 2021, Fig. 2.
As the IMF holds its annual Spring Meetings the first week of April in Washington, D.C., it faces a changed world.
The COVID-19 pandemic has ravaged economies around the globe, with the poorest regions hit hardest : Sub-Saharan Africa and Latin America and the Caribbean each saw their regional economies shrink by over six percent last year, while emerging Asian economies (excluding China) shrank by eight percent.
Amidst the global economic instability, international investors fled developing economies, before returning after vaccines were announced, creating significant exchange rate instability, which can make a country’s dollar-denominated debt obligations unsustainable, even if they were within a normal range before the pandemic. It can also wreak havoc on a country’s balance of payments, creating just the type of international financial instability the IMF was created to address.
As the IMF responds to these crises, encouraging signs have emerged that the Fund may be treating this crisis with special care. The GDP Center’s IMF COVID-19 Recovery Index shows that IMF arrangements in 2020 and 2021 have begun to directly target maintaining or increasing health spending, for example, though rarely in binding ways.
But as these GDP Center working papers show, broader austerity matters as well. The IMF would be well served to take its recent progress and expand it to apply to austerity generally, or at the very least, work to ensure that required austerity does not worsen inequality and poverty in borrowing nations as they work to recover from the COVID-19 crisis.
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Further Resources on Poverty Measurement, Poverty Lines, and Their History
Introduction.
This page includes resources on the two slightly different versions of the U.S. (federal) poverty measure: the poverty thresholds and the poverty guidelines .
- The poverty thresholds are the original version of the federal poverty measure. They are updated each year by the Census Bureau . The thresholds are used mainly for statistical purposes — e.g., preparing estimates of the number of Americans in poverty each year.
- The poverty guidelines are the other version of the federal poverty measure. They are issued each year in the Federal Register by the Department of Health and Human Services . The guidelines are a simplification of the poverty thresholds for use for administrative purposes — e.g., determining financial eligibility for certain federal programs.
Key differences between the poverty thresholds and the poverty guidelines are outlined on our Frequently Asked Questions (FAQs>) page. See also the discussion of this topic on the Institute for Research on Poverty’s web site.
Background Paper on the Poverty Guidelines
Gordon M. Fisher, “ Poverty Guidelines for 1992 ,” Social Security Bulletin , Vol. 55, No. 1, Spring 1992, pp. 43-46 [ PDF Format ]
Besides presenting the guidelines for a particular year, this article is a background paper on the poverty guidelines. It describes the differences between the poverty guidelines and poverty thresholds, lists a number of federal programs that use the guidelines as an eligibility criterion, and shows how the guidelines are calculated from the thresholds each year.
Programs That Do — and Don’t — Use the Poverty Guidelines
The HHS poverty guidelines, or percentage multiples of them (such as 125 percent, 150 percent, or 185 percent), are used as an eligibility criterion by a number of federal programs, including those listed below. For examples of major means-tested programs that do not use the poverty guidelines, see the end of this response.
- Foster Grandparent Program
- Senior Companion Program
- Child and Adult Care Food Program (for free and reduced-price meals only)
- Expanded Food and Nutrition Education Program
- National School Lunch Program (for free and reduced-price meals only)
- School Breakfast Program (for free and reduced-price meals only)
- Special Supplemental Nutrition Program for Women, Infants, and Children (WIC)
- Supplemental Nutrition Assistance Program (SNAP) (formerly Food Stamp Program)
- Weatherization Assistance for Low-Income Persons
- AIDS Drug Assistance Program
- Assets for Independence Demonstration Program
- Children’s Health Insurance Program
- Community Health Centers
- Community Services Block Grant
- Family Planning Services
- Health Careers Opportunity Program
- Health Professions Student Loans — Loans for Disadvantaged Students
- Hill-Burton Uncompensated Services Program
- Job Opportunities for Low-Income Individuals
- Low-Income Home Energy Assistance Program (LIHEAP)
- Low Income Household Water Assistance Program (LIHWAP)
- Medicare – Prescription Drug Coverage (subsidized portion only)
- Migrant Health Centers
- PARTS of Medicaid (31 percent of eligibles in Fiscal Year 2004)
- Scholarships for Health Professions Students from Disadvantaged Backgrounds
- National Farmworker Jobs Program
- Senior Community Service Employment Program
- Workforce Investment Act Youth Activities
- Low-Income Taxpayer Clinics
- Legal Services for the Poor
Most of these programs are non-open-ended programs — that is, programs for which a fixed amount of money is appropriated each year. A few open-ended or “entitlement” programs that use the poverty guidelines for eligibility are the Supplemental Nutrition Assistance Program (formerly Food Stamps), the National School Lunch Program, certain parts of Medicaid, and the subsidized portion of Medicare – Prescription Drug Coverage.
Some state and local governments have chosen to use the federal poverty guidelines in some of their own programs and activities. Examples include financial guidelines for child support enforcement and determination of legal indigence for court purposes. Some private companies (such as utilities, telephone companies, and pharmaceutical companies) and some charitable agencies also use the guidelines in setting eligibility for their services to low-income persons.
Major means-tested programs that do not use the poverty guidelines in determining eligibility include the following:
- Supplemental Security Income (SSI)
- Earned Income Tax Credit (EITC)
- State/local-funded General Assistance (in most cases)
- Some parts of Medicaid
- Section 8 low-income housing assistance
- Low-rent public housing
The Official Federal Statistical Definition of Poverty
Statistical Policy Directive No. 14, “ Definition of Poverty for Statistical Purposes ” ( Federal Register , Vol. 43, No. 87, May 4, 1978, p. 19269)
In August 1969, the U.S. Bureau of the Budget (the predecessor of the U.S. Office of Management and Budget) designated the Census Bureau’s poverty thresholds as the federal government’s official statistical definition of poverty. This directive is the latest version of the document embodying that designation.
Mollie Orshansky’s Development of the Poverty Thresholds
Gordon M. Fisher, “ The Development and History of the Poverty Thresholds ,” Social Security Bulletin , Vol. 55, No. 4, Winter 1992, pp. 3-14 [ PDF Format ]
This article describes how Mollie Orshansky developed the poverty thresholds during the 1960’s, and how the thresholds have and have not been changed since then. For a 2-page summary of this article, see “ The Development and History of the U.S. Poverty Thresholds — A Brief Overview ,” GSS/SSS Newsletter [Newsletter of the Government Statistics Section and the Social Statistics Section of the American Statistical Association], Winter 1997, pp. 6-7. There is also an 88-page revision of the unpublished paper from which the Social Security Bulletin article was condensed.
Mollie Orshansky, “Counting the Poor: Another Look at the Poverty Profile,” Social Security Bulletin , Vol. 28, No. 1, January 1965, pp. 3-29 — reprinted in Social Security Bulletin , Vol. 51, No. 10, October 1988, pp. 25-51
This is the original article in which Orshansky presented the final version of her poverty thresholds. See selected articles and papers by Orshansky on the poverty thresholds and the poverty population, with a link to some of the articles (including “Counting the Poor…”). See also a chronological bibliography of Orshansky’s publications . The economy food plan used by Orshansky to develop the thresholds is included in a 1962 Agriculture Department report [PDF format - 58 pages].
Research on Alternative Approaches to Poverty Measurement
Recommendation of the Subcommittee on Updating the Poverty Threshold , August 2, 1973.
Memorandum from Milo B. Sunderhauf, Statistical Policy Division, Office of Management and Budget, to Robert Raynsford, Office of Management and Budget — Subject: Recommendations of the Subcommittee on Updating the Poverty Threshold. (Note that Mollie Orshansky was one of the members of this Subcommittee.)
Consolidated Report of Subcommittee Chairmen: Review of Poverty Statistics , September 4, 1973
Memorandum from Bette Mahoney, Chairman, Subcommittee on Measurement of Non-Cash Income, Milo B. Sunderhauf, Chairman, Subcommittee on Updating the Poverty Threshold, and Murray S. Weitzman, Chairman, Subcommittee on Measurement of Cash Income, THRU Robert W. Raynsford, Statistical Policy Division, Office of Management and Budget, to Paul F. Krueger — Subject: Consolidated Report of Subcommittee Chairmen: Review of Poverty Statistics.
In 1973, these subcommittees conducted a review of the federal statistics in these areas at the request of the Office of Management and Budget's Statistical Policy Division. This review was significant because many of the professionals who conducted it had been working with poverty and income concepts for years; they were familiar not only with these concepts themselves but also with the contexts in which they had been developed and (in a number of cases) with what had been done before the existing concepts were put in place. The recommendations of this review were not extensively publicized. In addition, they seem to have been eclipsed several years later by the Measure of Poverty report.
U.S. Department of Health, Education, and Welfare, The Measure of Poverty: A Report to Congress as Mandated by The Education Amendments of 1974 , Washington, D.C., U.S. Government Printing Office, April 1976
This report thoroughly explored the issues involved in developing and revising poverty measures, gathering extensive supporting information that was presented in the report itself and in 17 Technical Papers. The report did not recommend specific changes in the current poverty measure. The report and the technical papers are now available on the Census Bureau’s Web site.
Constance F. Citro and Robert T. Michael (editors), Measuring Poverty: A New Approach , Washington, D.C., National Academy Press, 1995
In May 1995, the Panel on Poverty and Family Assistance appointed by the National Research Council’s Committee on National Statistics issued this report, which proposed a new approach for developing an official poverty measure for the U.S. — although it did not propose a specific set of dollar figures. For further information on this report, contact the Committee on National Statistics, HA 192, National Research Council, 2101 Constitution Avenue, N.W., Washington, D.C. 20418 — telephone: (202) 334-3093; e-mail address: [email protected] ; or you may visit the web page for the report . The full text of the report is on the Census Bureau’s Poverty Measurement Web site.
Papers by David Betson on Poverty Measurement Issues
David M. Betson of the Notre Dame University Department of Economics wrote the following papers while he was a visiting scholar at the Office of the Assistant Secretary for Planning and Evaluation, HHS. (Dr. Betson was a member of the National Research Council's Panel on Poverty and Family Assistance.)
- Poor Old Folks: Have Our Methods of Poverty Measurement Blinded Us to Who is Poor? (November 1995) [PDF format - 29 pages]
- Effect of Home Ownership on Poverty Measurement (November 1995) [PDF format - 14 pages]
- "Is Everything Relative?" The Role of Equivalence Scales in Poverty Measurement (March 1996) [PDF format - 38 pages]
- In Search of an Elusive Truth. "How Much Do Americans Spend on Their Health Care?" (April 1997) [PDF format - 16 pages]
U.S. Census Bureau, Poverty Measurement Working Papers
These working papers, written since 1995, deal with issues relating to poverty measurement and experimental poverty measures. Papers in this series are arranged under the following topics: Measuring Poverty — Background and Overview; Who are the Poor? Using Different Measures; Poverty Thresholds; Medical Care; Housing Costs; Work-related Expenses and Child Care; Taxes and Unit of Analysis; and Other Approaches to Measuring Economic Well-being.
Kathleen Short, Thesia Garner, David Johnson, and Patricia Doyle, Experimental Poverty Measures: 1990 to 1997 , U.S. Census Bureau, Current Population Reports, P60-205, Washington, D.C., U.S. Government Printing Office, June 1999. [PDF format - 133 pages]
This report is the first in a series of Census Bureau reports presenting variants of poverty measures based on the recommendations of the Panel on Poverty and Family Assistance. This report also examines the marginal effects of varying individual elements (e.g., the equivalence scale) of the proposed poverty measures. More recent Census Bureau reports on experimental poverty measures can also be found on the Census Bureau’s Poverty web site.
National Research Council, Experimental Poverty Measures: Summary of a Workshop , Planning Group for the Workshop to Assess the Current Status of Actions Taken in Response to Measuring Poverty: A New Approach , Committee on National Statistics, Washington, D.C., The National Academies Press, 2005
In June 2004, the National Research Council’s Committee on National Statistics convened a workshop to assess the current state of research on various elements of experimental poverty measures based on the recommendations of the 1995 Panel on Poverty and Family Assistance. This report summarizes the discussions at the workshop. Eight papers presented at the workshop are available on the Committee on National Statistics web site. See also John Iceland, “ The CNSTAT workshop on experimental poverty measures, June 2004 ” in Focus , Vol. 23, No. 3, Spring 2005, pp. 26-30, for a 5-page summary of the workshop. [PDF format - 5 pages]
Douglas J. Besharov and Peter Germanis, Reconsidering the Federal Poverty Measure , University of Maryland Welfare Reform Academy, June 14, 2004. [PDF format - 24 pages]
Beginning in 2004, the U.S. Department of Commerce and the U.S. Department of Health and Human Services (ASPE) provided funding for a series of seminars to explore the limitations of the current federal poverty measure and to identify alternative approaches for measuring the material well-being of low-income Americans. Seminar participants included most of the senior government officials responsible for the relevant surveys, as well as academics broadly representative of different disciplines and political orientations. This paper provides a description of the seminar project. Working papers and summaries of individual seminars are available .
Papers by ASPE Staff Relating to the History of Poverty Lines
Gordon M. Fisher, “ From Hunter to Orshansky: An Overview of (Unofficial) Poverty Lines in the United States from 1904 to 1965 ” (October 1993 — revised August 1997)
A 7-page summary of this 98-page paper is also available.
Gordon M. Fisher, “ Is There Such a Thing as an Absolute Poverty Line Over Time? Evidence from the United States, Britain, Canada, and Australia on the Income Elasticity of the Poverty Line ” (October 1994 — revised August 1995)
Successive unofficial poverty lines developed as absolute poverty lines show a pattern of rising in real terms over time as the real income of the general population rises; this phenomenon has been termed “the income elasticity of the poverty line.” This 78-page paper assembles extensive historical evidence of this phenomenon not only from the U.S. but also from the three other countries named. For a brief summary of the U.S. evidence alone, see “ Relative or Absolute — New Light on the Behavior of Poverty Lines Over Time ,” GSS/SSS Newsletter [Joint Newsletter of the Government Statistics Section and the Social Statistics Section of the American Statistical Association], Summer 1996, pp. 10-12.
Gordon M. Fisher, " Standard Budgets (Basic Needs Budgets) in the United States Since 2006 ", August 2012
Gordon M. Fisher, “ An Overview of Recent Work on Standard Budgets in the United States and Other Anglophone Countries ”, January 2007.
Gordon M. Fisher, “ 'Enough for a Family to Live On?' — Questions from Members of the American Public and New Perspectives from British Social Scientists ” (a paper presented at the 23rd Annual Research Conference of the Association for Public Policy Analysis and Management in Washington, D.C.), November 2001. [PDF format - 50 pages]
This paper reviews four approaches to determining a socially acceptable minimum standard of living (poverty) that are being used in Britain and other European countries.
Gordon M. Fisher, “ Reasons for Measuring Poverty in the United States in the Context of Public Policy — A Historical Review, 1916-1995 ” (August 1999 — revised June 2000)
Gordon M. Fisher, “ How Many Americans Were Really in Poverty in 1947? Estimates of the U.S. Poverty Population Between 1947 and 1963 Under Two Contemporary (1949 and 1959) Definitions of Poverty ” (a paper presented at the Annual Meeting of the Economic History Association in Baltimore, Maryland), October 1999
As indicated by the title, this paper applies unofficial 1949 and 1959 definitions of poverty to income data for the 1947-1963 period, yielding poverty population estimates for those years. These estimates were included in the subchapter on poverty published in Historical Statistics of the United States (Millennial Edition) (2006). The paper also withdraws an unpublished 1985 set of poverty population estimates by the author which applied a 1960s definition of poverty--the current official definition--to income data for 1947-1959. The paper argues that it was inappropriate to apply a 1960s definition of poverty to income data for the 1940s and 1950s.
Gordon M. Fisher, “Setting American Standards of Poverty: A Look Back,” Focus [newsletter of the Institute for Research on Poverty], Vol. 19, No. 2, Spring 1998, pp. 47-52. [ This issue of Focus is available in Adobe Acrobat format (PDF) on the Institute for Research on Poverty’s Web site, 64 pages.]
This article summarizes the development and history of the current official poverty measure and also the history of unofficial poverty lines in the U.S. before 1965.
Gordon M. Fisher, "Disseminating the Administrative Version and Explaining the Administrative and Statistical Versions of the Federal Poverty Measure” Clinical Sociological Review, Vol. 15, No. 1, 1997.
Gordon M. Fisher, “ Poverty Lines and Measures of Income Inadequacy in the United States Since 1870: Collecting and Using a Little-Known Body of Historical Material ” (a paper presented at the 22nd Meeting of the Social Science History Association in Washington, D.C.), October 1997
Gordon M. Fisher, “ Some Popular Beliefs About the U.S. Poverty Line as Reflected in Inquiries from the Public ,” The Sociologist [Newsletter of the District of Columbia Sociological Society], Vol. 30, No. 2, October 1996, p. 6
For Further Questions
If you have further questions about poverty guidelines, poverty thresholds, or poverty lines that are not answered by the material on this page or by our Frequently Asked Questions (FAQs), you may contact:
5 Essays About Poverty Everyone Should Know
Poverty is one of the driving forces of inequality in the world. Between 1990-2015, much progress was made. The number of people living on less than $1.90 went from 36% to 10%. However, according to the World Bank , the COVID-19 pandemic represents a serious problem that disproportionately impacts the poor. Research released in February of 2020 shows that by 2030, up to ⅔ of the “global extreme poor” will be living in conflict-affected and fragile economies. Poverty will remain a major human rights issue for decades to come. Here are five essays about the issue that everyone should know:
“We need an economic bill of rights” – Martin Luther King Jr.
The Guardian published an abridged version of this essay in 2018, which was originally released in Look magazine just after Dr. King was killed. In this piece, Dr. King explains why an economic bill of rights is necessary. He points out that while mass unemployment within the black community is a “social problem,” it’s a “depression” in the white community. An economic bill of rights would give a job to everyone who wants one and who can work. It would also give an income to those who can’t work. Dr. King affirms his commitment to non-violence. He’s fully aware that tensions are high. He quotes a spiritual, writing “timing is winding up.” Even while the nation progresses, poverty is getting worse.
This essay was reprinted and abridged in The Guardian in an arrangement with The Heirs to the Estate of Martin Luther King. Jr. The most visible representative of the Civil Rights Movement beginning in 1955, Dr. King was assassinated in 1968. His essays and speeches remain timely.
“How Poverty Can Follow Children Into Adulthood” – Priyanka Boghani
This article is from 2017, but it’s more relevant than ever because it was written when 2012 was the worst economic crisis since the Great Depression. That’s no longer the case. In 2012, around ¼ American children were in poverty. Five years later, children were still more likely than adults to be poor. This is especially true for children of colour. Consequences of poverty include anxiety, hunger, and homelessness. This essay also looks at the long-term consequences that come from growing up in poverty. A child can develop health problems that affect them in adulthood. Poverty can also harm a child’s brain development. Being aware of how poverty affects children and follows them into adulthood is essential as the world deals with the economic fallout from the pandemic.
Priyanka Boghani is a journalist at PBS Frontline. She focuses on U.S. foreign policy, humanitarian crises, and conflicts in the Middle East. She also assists in managing Frontline’s social accounts.
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“5 Reasons COVID-19 Will Impact the Fight to End Extreme Poverty” – Leah Rodriguez
For decades, the UN has attempted to end extreme poverty. In the face of the novel coronavirus outbreak, new challenges threaten the fight against poverty. In this essay, Dr. Natalie Linos, a Harvard social epidemiologist, urges the world to have a “social conversation” about how the disease impacts poverty and inequality. If nothing is done, it’s unlikely that the UN will meet its Global Goals by 2030. Poverty and COVID-19 intersect in five key ways. For one, low-income people are more vulnerable to disease. They also don’t have equal access to healthcare or job stability. This piece provides a clear, concise summary of why this outbreak is especially concerning for the global poor.
Leah Rodriguez’s writing at Global Citizen focuses on women, girls, water, and sanitation. She’s also worked as a web producer and homepage editor for New York Magazine’s The Cut.
“Climate apartheid”: World’s poor to suffer most from disasters” – Al Jazeera and news Agencies
The consequences of climate change are well-known to experts like Philip Alston, the special rapporteur on extreme poverty and human rights. In 2019, he submitted a report to the UN Human Rights Council sounding the alarm on how climate change will devastate the poor. While the wealthy will be able to pay their way out of devastation, the poor will not. This will end up creating a “climate apartheid.” Alston states that if climate change isn’t addressed, it will undo the last five decades of progress in poverty education, as well as global health and development .
“Nickel and Dimed: On (not) getting by in America” – Barbara Ehrenreich
In this excerpt from her book Nickel and Dimed, Ehrenreich describes her experience choosing to live undercover as an “unskilled worker” in the US. She wanted to investigate the impact the 1996 welfare reform act had on the working poor. Released in 2001, the events take place between the spring of 1998 and the summer of 2000. Ehrenreich decided to live in a town close to her “real life” and finds a place to live and a job. She has her eyes opened to the challenges and “special costs” of being poor. In 2019, The Guardian ranked the book 13th on their list of 100 best books of the 21st century.
Barbara Ehrenreich is the author of 21 books and an activist. She’s worked as an award-winning columnist and essayist.
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About the author, emmaline soken-huberty.
Emmaline Soken-Huberty is a freelance writer based in Portland, Oregon. She started to become interested in human rights while attending college, eventually getting a concentration in human rights and humanitarianism. LGBTQ+ rights, women’s rights, and climate change are of special concern to her. In her spare time, she can be found reading or enjoying Oregon’s natural beauty with her husband and dog.
- Poverty Essay
Poverty in India Essay
500+ words poverty in india essay.
Poverty is defined as a condition in which a person or family lacks the financial resources to afford a basic, minimum standard of living. Poor people don’t have adequate income; they can’t afford housing, health facilities and education which are essential for basic survival. So, poverty can be understood simply as a lack of money, or more broadly, barriers to everyday human life. With the help of this poverty essay, students will understand the meaning of poverty, the major causes of poverty and the efforts taken to eliminate poverty in India. So, students must go through this poverty in India essay in depth to get ideas on how to write effective essays and score high marks in exams.
What Causes Poverty?
There are various factors that are responsible for poverty. The major causes are unemployment, illiteracy, increasing population, and lack of proper education and training. As people are not able to find work for themselves, they are not able to earn their livelihood. Due to this, they lack access to basic education, health care, drinking water and sanitation. They are unable to feed their families and children. The other causes of poverty include war, natural disasters, political instability, etc. For example, World War II impacted many countries and they had to suffer from poverty for a long time. It took a lot of effort for such countries to recover their normal state. Similarly, natural disasters affect some areas so badly that poverty and hunger arise.
How is Poverty Measured in India?
The minimum expenditure (or income) required to purchase a basket of goods and services necessary to satisfy basic human needs is called the Poverty Line. Poverty can be measured in terms of the number of people living below this line. It is measured by the State Governments and information is provided by Below Poverty Line (BPL) censuses. Different countries use different measures for measuring poverty but the basic concept remains the same. The definition of the poverty line remains the same, i.e, consumption required for maintaining the minimum standard of living in a country.
Efforts to Eliminate Poverty
Earning income is the first step towards poverty eradication. Poverty can be eliminated by empowering people, and by giving them a good education that will prepare them to have a better career and future. With the help of education, people can get good jobs which allow them to earn a good living. In this way, they will be able to provide their children with a better life. People should be given easy access to transportation, information, communication, technologies, and other public facilities and services to help remove poverty.
The government has also taken several steps to eradicate poverty in India. It has launched various programmes and schemes such as the Five Years Programme, Prime Minister’s Rozgar Yojana, Mahatma Gandhi National Rural Employment Guarantee Act, Swarna Jayanti Shahari Rozgar Yojana, Pradhan Mantri Jan-Dhan Yojana, Deen Dayal Antyodaya Yojana etc. These programmes help to generate wage employment for the poor, unskilled people living in rural areas. The government also has social security programmes to help a few specific groups such as poor women, elder people, and widows. Apart from these government initiatives, citizens of India have to take an active part in eliminating poverty because it can’t be achieved by just a few people. It needs the support of everyone.
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Frequently asked Questions on Poverty in India Essay
How can poverty in india be abolished completely.
Abolishing poverty in India completely can be challenging. Steps should be taken to ensure equality in education so that everyone gets equal opportunities to find better livelihoods. Proper sanitation and water facility 3. Economic security and development
When was the first plan implemented for Poverty abolition?
The fifth five-year plan was first implemented in the year 1974-79 and since then the government has taken several steps and made many reservations to take this plan forward.
What is the relation between Poverty abolition and economic development?
Poverty abolition and economic development go hand in hand with each other and they are interlinked to each other. Eradication of poverty automatically improves the overall economic situation of a country.
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Supplemental Poverty Measure The SPM rate in 2021 was 7.8 percent, a decrease of 1.4 percentage points from 2020. This is the lowest SPM poverty rate since estimates were first published and the third consecutive decline (Figure 4 and Table B-2).
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While the official poverty rate fell from 19.5 percent in 1963 to 10.5 percent in 2019, our absolute FPM rate fell from 19.5 to 1.6 percent. This reflects increases in full income throughout the distribution, with real median income more than doubling between 1963 and 2019, together with the expansion of government transfers and tax benefits ...
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Using the Supplemental Poverty Measure, the annual poverty rate projection for 2021 of 7.7 percent is well below the rate of 13.9 percent that we estimate for 2018. The projected poverty rate for children is 5.6 percent, for adults ages 18 to 64 it is 8.1 percent, and for people age 65 and older it is 9.2 percent.
These benefit changes allowed for more of the lowest-income families—historically, those from non-Hispanic Black, Hispanic, and American Indian and Alaska Native communities (Hardy 2022)—to benefit from the program (Center on Poverty and Social Policy at Columbia University, 2021). The Census's Supplemental Poverty Measure (SPM) showed ...
How is poverty measured? Poverty is measured in the United States by comparing a person's or family's income to a set poverty threshold or minimum amount of income needed to cover basic needs. People whose income falls under their threshold are considered poor. The U.S. Census Bureau is the government agency in charge of measuring poverty.
Source: Stubbs et al, 2021, Fig. 1. These results have serious implications for families facing poverty. Figure 5 below shows the results of a model of the impact of IMF-required austerity on the poverty rate at $2.50 per person, per day. This model varies IMF fiscal adjustment and averages the remaining covariates in the sample.
National Research Council, Experimental Poverty Measures: Summary of a Workshop, Planning Group for the Workshop to Assess the Current Status of Actions Taken in Response to Measuring Poverty: A New Approach, Committee on National Statistics, Washington, D.C., The National Academies Press, 2005
5 Essays About Poverty Everyone Should Know. Poverty is one of the driving forces of inequality in the world. Between 1990-2015, much progress was made. The number of people living on less than $1.90 went from 36% to 10%. However, according to the World Bank, the COVID-19 pandemic represents a serious problem that disproportionately impacts the ...
500+ Words Poverty in India Essay. Poverty is defined as a condition in which a person or family lacks the financial resources to afford a basic, minimum standard of living. Poor people don't have adequate income; they can't afford housing, health facilities and education which are essential for basic survival.