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- Guidance for Poverty Data Users /
How the Census Bureau Measures Poverty
Following the Office of Management and Budget's (OMB) Statistical Policy Directive 14, the Census Bureau uses a set of money income thresholds that vary by family size and composition to determine who is in poverty. If a family's total income is less than the family's threshold, then that family and every individual in it is considered in poverty. The official poverty thresholds do not vary geographically, but they are updated for inflation using the Consumer Price Index (CPI-U). The official poverty definition uses money income before taxes and does not include capital gains or noncash benefits (such as public housing, Medicaid, and food stamps).
For historical information, see the History of the Poverty Measure page in the About section of the Poverty subtopic site.
Money Income: Income Used to Compute Poverty Status
The income used to compute poverty status includes (before taxes):
- Unemployment compensation
- Workers' compensation
- Social Security
- Supplemental Security Income
- Public assistance
- Veterans' payments
- Survivor benefits
- Pension or retirement income
- Income from estates
- Educational assistance
- Child support
- Assistance from outside the household
- Other miscellaneous sources
Money income does not include:
- Capital gains or losses
- Noncash benefits (e.g. food stamps and housing subsidies)
- Tax credits
Poverty Thresholds: Measure of Need
Poverty thresholds are the dollar amounts used to determine poverty status.
The Census Bureau assigns each person or family one out of 48 possible poverty thresholds.
- Thresholds vary by the size of the family and age of the members.
- The same thresholds are used throughout the United States (they do not vary geographically).
- Thresholds are updated annually for inflation using the Consumer Price Index for All Urban Consumers (CPI-U).
- Although the thresholds in some sense reflect a family’s needs, they are intended for use as a statistical yardstick, not as a complete description of what people and families need to live.
To calculate total family income, the incomes of all related family members that live together are added up to determine poverty status. If an individual or group of individuals (such as housemates) are not living with family members, their own individual income is compared with their individual poverty threshold.
Thus, all family members have the same poverty status, and some families may be composed of single unrelated individuals.
If total family income:
- Is less than the poverty threshold for that family - that family and everyone in it is considered to be in poverty.
- Equals or is greater than the poverty threshold - the family is not considered to be in poverty.
People Whose Poverty Status Cannot Be Determined
Poverty status cannot be determined for people in:
- Institutional group quarters (such as prisons or nursing homes)
- College dormitories
- Military barracks
- Living situations without conventional housing (and who are not in shelters)
Additionally, poverty status cannot be determined for unrelated individuals under age 15 (such as foster children) because income questions are asked of people age 15 and older and, if someone is under age 15 and not living with a family member, we do not know their income. Since we cannot determine their poverty status, they are excluded from the “poverty universe” (table totals).
Family A has five members: two children, one mother, one father, and one great-aunt.
Step 1: Determine the family’s poverty threshold for that year
The family’s 2022 poverty threshold (below) is $35,801.
Step 2: Calculate the total family income for the same year
Suppose the members’ incomes in 2022 were:
- Child 1: $0
- Child 2: $0
- Mother: $13,000
- Father: $12,500
- Great-aunt: $11,000
Thus, Family A’s total income for 2022 was $36,500.
Step 3: Compare the family’s total income with the poverty threshold
The total family income divided by the poverty threshold is called the Ratio of Income to Poverty.
Income / Threshold = $36,500 / $35,801 = 1.02
The difference in dollars between family income and the family’s poverty threshold is called the Income Deficit (for families in poverty) or Income Surplus (for families above poverty).
Income – Threshold = $36,500 - $35,801 = $699
Since Family A’s total income was greater than their poverty threshold, they are considered not “in poverty” according to the official definition.
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What Is Poverty?
Understanding poverty, aspects of poverty, discrimination and poverty, how poverty is measured, how to reduce poverty.
- Poverty FAQs
The Bottom Line
What's Poverty? Meaning, Causes, and How to Measure
James Chen, CMT is an expert trader, investment adviser, and global market strategist.
Investopedia / Laura Porter
The term poverty refers to the state or condition in which people or communities lack the financial resources and essentials for a minimum standard of living . As such, their basic human needs cannot be met. Poverty-stricken people and families may go without proper housing, clean water, healthy food, and medical attention. Each nation may have its own criteria for determining the poverty line and counting how many of its people live in poverty. It's important to remember that poverty is a socioeconomic condition that is the result of multiple factors—not just income. These factors include race, sexual identity, sexual orientation, and little to no access to education, among others.
- Poverty is a state or condition in which a person or community lacks the financial resources and essentials for a minimum standard of living.
- Poverty-stricken people and families might go without proper housing, clean water, healthy food, and medical attention.
- Poverty is an individual concern as well as a broader social problem.
- Welfare programs are used by governments to help alleviate poverty.
- Poverty is the result of multiple factors, not simply income.
Poverty refers to the lack of adequate financial resources such that individuals, households, and entire communities don't have the means to subsist or acquire the basic necessities for a flourishing life. This means being so poor as to struggle to obtain food, clothing, shelter, and medicines.
Poverty is both an individual concern as well as a broader social problem. On the individual or household level, not being able to make ends meet can lead to a range of physical and mental issues. At the societal level, high poverty rates can be a damper on economic growth and be associated with problems like crime, unemployment , urban decay, education, and poor health.
Governments often put social welfare programs in place to help lift individuals, families, and communities out of poverty. Some countries have stronger welfare states (social safety nets) than others. The U.S., for instance, tends to be much more individualistic and shuns welfare programs. European countries, in comparison, have a much broader range of welfare programs and support for those in need.
Poverty in the U.S.
Poverty status in the United States is assigned to people who do not meet a certain income threshold, which is set by the Department of Health and Human Services (HHS) . Poverty rates in the United States, or the percentage of the U.S. population living in poverty, are calculated by the U.S. Census Bureau .
When measuring poverty, the U.S. Census Bureau excludes the following people:
- Institutionalized people
- People living in military quarters
- People living in college dormitories
- Individuals under the age of 15
According to the latest Census, 37.9 million people in the U.S. lived in poverty in 2021, up from 37.2 million in 2020.
Each year, the Census Bureau updates its poverty threshold statistics. The table below shows the 2022 income thresholds for those in poverty. Each column represents the number of people living in a household under the age of 18.
- In 2022, the poverty income threshold for a family of four with two children under the age of 18 is $27,750 per year.
- In 2022, for two people over age 65 with no children under 18, the poverty threshold comes in at $18,310 per year.
- We can see that the income level for the poverty threshold increases for families with more children under age 18.
The poverty thresholds, as well as the number of under-18 children in a home, are important because they help determine how government aid can be allocated, such as food assistance and medical care. The measurement for those in poverty uses pretax income or income before taxes are taken out by the Internal Revenue Service (IRS) .
Poverty has decreased in developed countries since the Industrial Revolution . Increased production reduced the cost of goods, making them more affordable, while advancements in agriculture increased crop yields , as well as food production.
The international poverty line is a monetary threshold under which an individual is considered to be living in poverty. This figure is calculated by taking the poverty threshold from each country—given the value of the goods needed to sustain one adult—and converting it into U.S. dollars. The current international poverty line is $2.15 per day.
Many people around the globe still struggle to make ends meet. According to the World Bank , an estimated 719 million people lived in extreme poverty—defined as surviving on less than the $2.15 per day line—by the end of 2020.
It's estimated that more than 40% of the world's population lives in poverty, with the United States scoring the highest among developed nations. According to a report from Frontiers, communities of color are more susceptible to poverty because of "racist notions of racial inferiority and frequent denial of the structural forms of racism and classism" globally and within the U.S.
COVID-19 was responsible for plunging roughly 100 million more people into extreme poverty, according to the World Bank.
Poverty and Children
The impact of poverty on children is substantial. Children who grow up in poverty typically suffer from severe and frequent health problems; infants born into poverty have an increased chance of low birth weight, which can lead to physical and mental disabilities.
In certain developing countries, poverty-stricken infants are nine times more likely to die in their first month compared to babies born in high-income countries. Those who live may have hearing and vision problems.
Children in poverty tend to miss more school due to sickness and endure more stress at home. Homelessness is particularly hard on children because they often have little to no access to healthcare and lack proper nutrition, which often results in frequent health issues.
What Causes Poverty?
Poverty is a difficult cycle to break and often passes from one generation to the next. It is often determined by socioeconomic status, ethnicity, gender, and geography. Many people are born into poverty and have little hope of overcoming it. Others may fall into poverty because of negative economic conditions, natural disasters , or surging living costs, as well as drug addiction, depression, and mental health issues.
Access to good schools, healthcare, electricity, clean drinking water, and other critical services remains elusive for many and is often determined by socioeconomic status, gender, ethnicity, and geography. Other root causes of poverty include:
- Limited to no job growth
- Poor infrastructure
- Conflict and war
- High cost of living
- Social barriers
- Lack of government support
For those able to move out of poverty, progress is often temporary. Economic shocks, food insecurity, and climate change threaten their gains and may force them back into poverty.
Typical consequences of poverty include alcohol and substance abuse, little to no access to education, poor housing and living conditions, and increased levels of disease. Heightened poverty is likely to cause increased tensions in society as inequality increases. These issues often lead to rising crime rates in communities affected by poverty.
As noted above, poverty isn't simply related to income levels. In fact, there are a number of factors that can push people into or below the poverty line. Discrimination is just one of those issues. Put simply, people are prevented from living with and enjoying certain rights because of who they are. Here's why.
In some cases, governments may put certain laws and regulations that prevent certain individuals or communities from accessing services, such as healthcare, education, or social services. They may also be denied access to the labor market and/or housing, which can prevent them from reaching a suitable standard of living. In other cases, deep-rooted societal beliefs can isolate individuals, families, and entire communities.
Some of the most common groups of people who may experience this type of discrimination include (but aren't limited to):
- People living with HIV/AIDS
- Black, Indigenous, and People of Color
- Women, including single mothers
- Members of the LGBTQ+ community
According to statistics from the Williams Institute at the UCLA School of Law, 21% of gay men experience poverty while 23% of lesbians are affected. The school found that same-sex couples are more likely to live in poverty than other couples and children of LGBTQ+ couples are particularly vulnerable. Black same-sex couples are twice as likely to live in poverty than other Black couples.
Poverty is commonly measured using income thresholds in many countries, including the United States. Centralized bodies like the Census Bureau collect data and update the information on an annual basis based on inflation . This information, which is reported through the Consumer Price Index for All Urban Consumers (CPI-U) , generally includes income thresholds compiled from different sizes and types of families/households. Each family member in a household that falls under the threshold is considered to be in poverty, according to the Census Bureau.
Certain types of individuals are not included in the count as their level of poverty cannot be determined. These groups include:
- People within certain group settings like prisons and nursing homes
- Individuals living in military barracks
- Those living in college dorms
- People under the age of 15 whose income cannot be determined
Keep in mind that using income thresholds is just one way that countries measure poverty. But there are other ways to determine who lives above and below the poverty line. Some countries may use an absolute figure like the one used by the World Bank. As noted above, the organization determined that people who live below the $2.15-per-day limit are in poverty.
The United Nations and the World Bank are major advocates of reducing world poverty. The World Bank has an ambitious target of reducing poverty to less than 3% of the global population by 2030. Some of the actionable plans to eliminate poverty include the following:
- Installing wells that provide access to clean drinking water
- Educating farmers on how to produce more food
- Constructing shelter for those in need
- Building schools to educate disadvantaged communities
- Providing enhanced access to better healthcare services by building medical clinics and hospitals
For poverty to be eradicated as the World Bank sets out to do, communities, governments, and corporations need to collaborate to implement strategies that improve living conditions for the world’s poor. Among these strategies may include boosting socioeconomic conditions, fighting and eliminating systemic racism, establishing minimum wages that align with the cost of living, providing paid leave, and promoting pay equity among other things.
What Countries Have the Highest Poverty Rates?
The countries with the highest poverty rates include Equatorial Guinea (76.8%), South Sudan (76.4%), Madagascar (70.7%), Guinea Bissau (69.3%), and Eritrea (69.0%).
Which States Have the Highest Poverty Rates?
The states with the highest poverty rates were Mississippi (18.7%), Louisiana (17.8%), New Mexico (16.8%), West Virginia (15.8%), and Arkansas (15.2%).
There is no single source of poverty. Poverty is often determined by socioeconomic status, ethnicity, gender, and geography. Many people are born into poverty and have little hope of overcoming it, while others may fall into this situation due to negative economic conditions, natural disasters, or surging living costs—as well as drug addiction, depression, and other mental health issues. Conflict and geopolitical unrest can also lead to poverty as families are displaced.
How Is Poverty Measured?
Like many other countries, poverty in the U.S. is measured by a set of income thresholds that vary by family size and composition. These thresholds are supplied by the Census Bureau and are updated annually to account for inflation, as measured by the Consumer Price Index for All Urban Consumers. Other countries do not use an absolute threshold, but instead a relative level of income below which the poverty line is established. For instance, a country may say that the bottom 10% of all earners constitute those in poverty.
According to the latest figures supplied by the U.S. Census Bureau, the states with the highest poverty rates are Mississippi, Louisiana, and New Mexico.
How Can Poverty Be Solved?
The answer to this question is complicated and nuanced. If it were easy or obvious, poverty would no longer be such a big issue. Social welfare programs and private philanthropy are ways to provide for those in poverty, along with access to essentials like clean water, good food, and adequate healthcare. However, more is needed. Programs that encourage impoverished individuals to obtain skills, jobs, and education are also important as a longer-term cure.
Poverty is defined as the state or condition where people and communities cannot meet a minimum standard of living because they lack the proper resources. These include (but aren't limited to) financial resources, basic healthcare and education, clean drinking water, and infrastructure. Living in the socioeconomic condition of poverty is a result of multiple factors not simply including race, sexual identity, sexual orientation, and access to education, among others. Organizations like the United Nations and the World Bank, which say that poverty will continue to grow well beyond 2030, urge nations to fight poverty by implementing policies and regulations that can drastically improve the quality of living for all communities.
U.S. Department of Health & Human Services. " Poverty Guidelines ."
U.S. Census Bureau. " Poverty - Surveys & Programs ."
U.S. Census Bureau. " How the Census Bureau Measures Poverty ."
United States Census Bureau. " Income, Poverty and Health Insurance Coverage in the United States: 2021 ."
U.S. Census Bureau. " Income and Poverty in the United States: 2020 ."
U.S. Census Bureau. " Poverty Thresholds ."
U.S. Department of Health & Human Services. " Programs that Use the Poverty Guidelines as a Part of Eligibility Determination ."
The World Bank. " Fact Sheet: An Adjustment to Global Poverty Lines ."
The World Bank. " Global Progress in Reducing Extreme Poverty Grinds to a Halt ."
Frontiers. " Poverty, Racism, and the Public Health Crisis in America ."
The World Bank. " Poverty ."
National Library of Medicine. " Distribution and Determinants of Low Birth Weight in Developing Countries ."
The World Bank. " A Child Under 15 Dies Every Five Seconds Around the World – UN Report ."
UNICEF. " Levels and Trends in Child Mortality ."
UCLA School of Law Williams Institute. " New Patterns of Poverty in the Lesbian, Gay, and Bisexual Community ."
The World Bank. " Ending Extreme Poverty ."
World Population Review. " Poverty Rate by Country 2023 ."
USDA. " Poverty ."
U.S. Census Bureau. " Percentage of People in Poverty by State Using 2- and 3-Year Averages: 2017-2018 and 2019-2020 ."
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- How Education and Training Affect the Economy 2 of 30
- Education vs. Experience: Which One Gets the Job? 3 of 30
- Unemployment Rate by State 4 of 30
- Can a Family Survive on the US Minimum Wage? 5 of 30
- The Economics of Labor Mobility 6 of 30
- Forced Retirement 7 of 30
- Predatory Lending: How to Avoid, Examples and Protections 8 of 30
- Unbanked Definition 9 of 30
- Underbanked 10 of 30
- Underinsurance Definition 11 of 30
- The History of Unions in the United States 12 of 30
- What Is Middle Class Income? The Latest Numbers Available 13 of 30
- What's Poverty? Meaning, Causes, and How to Measure 14 of 30
- Gini Index Explained and Gini Co-efficients Around the World 15 of 30
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- What Are the Criticisms of the Human Development Index (HDI)? 19 of 30
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What is poverty? Definition and Measurement
What is poverty definition and measurement.
How is poverty measured in the United States? The two federal poverty measures in the U.S.
Each year, the U.S. Census Bureau counts people in poverty with two measures. Both the official and supplemental poverty measures are based on estimates of the level of income needed to cover basic needs. Those who live in households with earnings below those incomes are considered to be in poverty.
The World Bank Group’s mission is to end extreme poverty and promote shared prosperity. In order to monitor progress and understand the types of poverty reduction strategies that could work, it is important to measure poverty regularly.
The international poverty line is set at $2.15 per person per day using 2017 prices. This means that anyone living on less than $2.15 a day is in extreme poverty. About 648 million people globally were in this situation in 2019.
The COVID-19 pandemic dealt the biggest setback to global poverty-reduction efforts since 1990, increasing the number of people in extreme poverty by about 70 million, to 719 million people. Rising energy and food crises, caused in part by the war in Ukraine, and the effects of climate change contribute to an uneven recovery.
To better understand whether the world is on track to end extreme poverty, and how individual countries are faring, we must regularly measure progress. Poverty measurement and analysis have been a key aspect of the World Bank’s mission for years, as is our work to share knowledge and methods for how to measure poverty more accurately and more frequently.
By measuring poverty, we learn which poverty reduction strategies work, and which do not. Poverty measurement also helps developing countries gauge program effectiveness and guide their development strategy in a rapidly changing economic environment.
Last Updated: Nov 30, 2022
Measuring poverty and communicating poverty reduction results are long-standing priorities for the World Bank. In 2015, we set up a Commission on Global Poverty to provide recommendations on how to measure and monitor global poverty more comprehensively. The Commission provided 21 recommendations. They included broadening the scope of poverty measurements to include non-monetary measures, introducing a societal headcount measure of global poverty, and publishing a global profile of the poor.
The World Bank Group has committed to adopting most of these recommendations. In 2017, we introduced two complementary global poverty lines, which can be used as a benchmark for countries across the world whose level of development makes the International Poverty Line — $2.15 per day — not relevant. The $3.65 and $6.85 per person, per day poverty lines complement, not replace, the International Poverty Line.
In 2018, the World Bank report Piecing Together the Poverty Puzzle broadened the ways we define and measure poverty, by:
- Presenting a new measure of societal poverty, integrating the absolute concept of extreme poverty and a notion of relative poverty reflecting needs across countries.
- Introducing a multi-dimensional poverty measure that is anchored on household consumption and the International Poverty Line, but broadens the measure by including information on access to education and utilities.
- Investigating the differences in poverty within households, including by age and gender.
Twice a year, the World Bank Group produces Poverty and Equity Briefs that highlight poverty, shared prosperity, and inequality trends in each country. In September 2019, the country Poverty Briefs also began to report data on multidimensional poverty indicators and progressively increased coverage to 144 countries (which appear in the latest PSPR).
In 2020, COVID-19 posed a new challenge to measuring the impact of the devastating pandemic, particularly on the poor and vulnerable. Surveys based on face-to-face interviews were hindered by social distancing protocols and limitations on mobility. Policy makers needed timely and relevant information on the impacts of the crisis as well as the effectiveness of their policy measures to save lives and support livelihoods. World Bank-supported phone surveys to monitor the impacts of COVID-19 on households and individuals were then implemented in 89 countries across all developing regions.
We are also working with country statistical offices to build local capacity and to help nations develop and implement their poverty surveys, as well as assess results.
On monitoring project impacts, the Bank Group has two main tools to improve and measure results in real-time: Survey of Well-being via Instant Frequent Tracking (SWIFT) and Iterative Beneficiary Monitoring (IBM) . These tools rely on mobile technology, and big and small data to produce information on specific project results and on consumption/income of project beneficiaries. IBM is currently mainstreamed in [more than 40] operations in FCV and non-FCV contexts. SWIFT plays an important role in linking poverty and sector-specific indicators through affordable data collection and analysis.
Together with our country clients, we are now developing and testing high-frequency survey methods that rely on mobile technology or prediction methods. Working with national statistical offices and non-governmental organizations, our Listening to Africa initiative is piloting the use of mobile phones to regularly collect information on living conditions in [six] African countries.
Official global, regional, and country poverty results are based on data that the World Bank compiles and disseminates through our Poverty and Inequality Platform .
The World Bank's advisory and technical support has led to survey and methodological improvements in many countries. Here are a few examples:
By combining population census and household surveys, we worked with the statistical office of the Republic of Serbia to develop a set of poverty maps that show variability in welfare across the country and estimate the poverty rates for small geographic areas, such as districts and municipalities. Similar efforts were carried out in Croatia .
Poverty in Tajikistan is seasonal and is linked to farm work and remittances. Given this nuance, the country introduced a new approach to assess and measure poverty that is based on international best-practices and relies on quarterly household budget survey. The new measure helps the government report on poverty both on a quarterly and annual basis.
Interactive poverty maps are a useful tool to visualize and compare poverty rates across geographic areas. Using three different datasets, the World Bank rolled out the interactive poverty maps for Bangladesh , which explore and visualize socioeconomic data at the district and the sub-district levels of the country. The World Bank has also produced a spatial database of Afghanistan , which visualizes data from reliable sources at the province and district level. And the World Bank partnered with the National Statistics and Information Authority of Afghanistan to produce the first set of poverty maps for Afghanistan for the provinces of Kabul and Herat.
Decades of civil war and political fragmentation have made Somalia one of the poorest countries in Sub-Saharan Africa. To better understand the impact of economic hardship on the lives of ordinary Somalis, the World Bank, together with the Somali statistical authorities created the Somali High Frequency survey and published the recent Somali Poverty and Vulnerability Assessment , which analyzes data and provides valuable insights about the underlying causes of poverty and the best strategies for fighting it. Voluntary video testimonials of Somalis were recorded and complemented the quantitative date to further zoom into their lives.
To fill the lack of reliable data in South Sudan, we have used an innovative questionnaire design for a high frequency survey to document the livelihoods, consumption patterns and perceptions of the people. In addition, we have started to collect video testimonials from people to capture the situation on the ground.
Last Updated: Apr 16, 2021
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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.
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Poverty: Meaning, Causes, Effects, and Control Measures
Category: Blog , Essays and Paragraphs , Social Issues On October 5, 2016 By Victor
Meaning: Poverty can be defined as the lack of basic needs that are necessary for one to lead a relatively comfortable life. Such requirements may include shelter, clothing, food, education, and healthcare.
Poverty can either be relative or absolute because whereas other people may be comfortable with their lives, they may be deemed to be living in poverty when compared against those who are extremely wealthy.
A person can also be described to be living in poverty when he or she is unable to make ends meet. It can range from not being able to afford things like a good meal or running behind on bill payments and the inability to service existing debts.
To many people, a life of poverty is one where an individual lacks money or is without material possession. Poor people mostly live from hand to mouth and have to seek for assistance to make ends meet.
Life is always a struggle for people who are poor. They experience different hardships and are often deprived of the simple joys and pleasures that make life worth living. A person living in poverty on many occasions does not have peace of mind because of always worrying about what tomorrow will bring.
It is a life filled with inadequacies and insufficiencies. From the shortage of resources to the lack of basic needs, it is a constant struggle to get by through each day.
Causes of Poverty
There are different situations that may cause an individual to live in poverty. Some of these situations are unique to every person while others are universal. These are some of the causes of poverty:
1. Over-population: When too many people live in a geographical location, they compete for the available resources. The chances are that the resources are not always going to be enough to support everyone. Those who miss out will have to struggle to make ends meet. Overpopulation can result in the unavailability of land which is an important factor of production. Even without formal employment, those who have land can cultivate crops for food and sale.
2. Illiteracy: Lack of education can lead to poverty in different ways. When people go to school, they become equipped with skills and techniques that make them employable. They can thus earn good incomes and lead good lives. On the other hand, people who have not gone to school will either be employed as casual laborers with minimum wages or completely be without a means of getting income. Education opens a path to success even for people who are born into low-income families. Illiteracy also means that an individual lacks the intellectual capacity to make sound financial decisions. It can result in poor investment moves or bad spending habits that cause poverty.
3. Casteism and Untouchability: Caste systems deny those who are considered as less worthy a fair shot at success. It condemns them to a mediocre kind of life even when they have the potential to be great and find success. It means that if one is born into the wrong caste, he or she will be confined to the living standards of it.
4. Gender inequality: This is still a major problem in the 21st century. Even though there have been some remarkable improvements in addressing the issue of gender equality, a lot of challenges still exist. The phenomenon of unequal pay based on gender has caused more women than men to live in poverty. The failure to educate the girl child by several communities around the world condemns them to a life of poverty. They have to depend on men to provide for them and sometimes get married just to escape poverty. Some societies do not let the girl child inherit property such as land from a parent. They, therefore, have no means to generate income and make a good life for themselves.
5. Economic inequality: Inequal distribution of wealth especially in countries where the ruling elite come from a certain region usually lives those who are not represented in government wallowing in poverty. They are denied basic infrastructures that are critical to the development and have to contend with the little resources available. This creates a cycle of poverty and many socio-economic problems.
6. Natural Causes: Environmental and geographical factors may also cause poverty. Floods, earthquakes, and droughts can cause devastations and economic hardships as well as poverty. People may lose their businesses, sources of income, and houses as a result of natural disasters. Change in weather patterns and soil degradation can sometimes lead to poor agricultural harvests. If the community depends on farming for income, it will be left without a viable way to generate money.
7. Labor exploitation: Unethical business practices like labor exploitation also result in poverty. There are business owners who in a bid to increase profit margins, pay workers very little amounts of wages. As they accumulate wealth, the poor people who break blood and sweat while earning them money live in very poor conditions.
8. Resistance to change: This can cause poverty in many ways. When the people of a country refuse to usher in a new and visionary leadership that has good plans to bring socio-economic development, the nation is left lagging behind in development. A lot of countries have been plagued by bad leadership and this has caused economic hardships among the citizens. Resisting change such as the need to educate girls, opening up the country to foreign direct investment and a call to embrace new ways of doing business can also cause poverty.
9. Unorganized Loans at higher interest rates in rural areas: Such loans that are paid at higher interest rates reduce profit margins and kill off small businesses. They also encourage consumerism, and this creates several financial problems especially for those living in rural areas. Unorganized loans can leave the borrower worse of than he or she was before taking the credit facility.
10. Wastage of resources: Improper utilization of resources by government agencies and individuals can later lead to poverty. People who are initially rich can also become poor through wasteful expenditure. This is greatly driven by the culture of consumerism.
Effects of Poverty
Poverty has so many negative effects on both the individual and the society. These are some fo the reasons why poverty is not a good thing:
1. Hinders economic prosperity of the nation: The economic growth of a country is mostly driven by the business ventures of its citizens. If many of them are poor, the country will be underdeveloped.
2. Crimes: It has been established that crime rates are usually higher in areas or countries with high levels of poverty compared to those that are experiencing rapid economic growth and good amounts of income per household.
3. Malnutrition: Insufficient food and the inability to afford a decent meal results in malnutrition. Many people who live in poverty forego several meals and sometimes when they eat, the food lacks essential nutrients necessary for good growth.
4. Health problems: Many people living in poverty are unable to afford good healthcare. They are therefore plagued by different health problems since they cannot afford treatment. The poor living conditions may also cause diseases.
5. Less liberty: They say money is not everything but nevertheless, it is important to have it. It can afford you the best things in life and give you different options to choose from. Poor people do not get to choose their professions because they have to make do with what is available. Many will get you a good education and make it possible to study the career of your choice.
6. Moral and self-esteem: This is something that is easy to observe in a social setup. Those who live in poverty usually feel like they do not have the moral authority to demand better services or ask that they are treated fairly. Many of them also suffer from low self-esteem because they think that they are not good enough.
7. Insufficient food and water: To eat, one has to have money to buy the food. That is one luxury that those who live in poverty do not have. Poor areas have insufficient food and lack clean water to use in the home.
8. Lack of basic amenities: Important public amenities such as good drainage systems, piped water, schools, health centers, and personal amenities like heating are things that those who live in poverty lack.
9. Stress: Increased social disturbances can cause stress. The mind will be at constant war thinking of where to get the next meal, what the future holds or how to overcome the different problems associated with poverty. A poor person rarely experiences peace of mind.
10. Feminization of poverty: This is where the burdens of poverty are borne by women. They are left with the responsibility of taking care of the children and holding the family together.
Control Measures / Solutions
How can poverty be controlled? These are some of the ways in which it can be done:
1. Free education: This opens up opportunities for many people and provides individuals as well as families with a means to escape poverty. It is the ideal way to break the cycle of poverty that has bedeviled several families.
2. Government grants: These can be in the form of free mid-day meals or even scholarships. It eases the financial pressure on families and allows them to direct the little money that they have towards business ventures.
3. Creation of job opportunities: A high rate of employment reduces the level of poverty in a country. When more people are employed, many households also earn incomes and live comfortably.
4. Vocation and Technical training: This is skill based training meant to equip individuals within the society with technical skills to enable them become entrepreneurs or professionally employed even without higher education. Such a move would be key in uplifting the lives of people in rural areas and reducing poverty levels.
5. Free medical care facilities: This would ensure that people living in poverty have good healthcare services. It would also help keep them healthy and strong to seek out money making opportunities. Staying healthy and active is very important in fighting poverty and improving living standards.
6. Education about family planning: One interesting factor is that a lot of people living in poverty have very large families compared to those who are considered to be well off. Taking care of a big family requires resources. There is thus a need to carry out civic education about the necessity of family planning.
7. Increase in earning capacity: Gradually and systematically increasing the minimum wage should be the objective of every government. This will increase the incomes earned and subsequently reduce poverty levels. There should also be laws that deter employees from paying workers less than they deserve.
8. Casteism and untouchability need to be abolished: No one should be condemned to a life of poverty and mediocrity at birth. It hinders the utilization of talents and denies well-deserving people the chance to take a shot at their dreams. To borrow an example from capitalism, everyone should be free to pursue financial success and be rewarded according to efforts.
9. Women empowerment: Gender inequality should be abolished if the society is to realize meaningful growth and development. Denying women the opportunity to pursue financial success does the community no good. If anything, it compounds the problems associated with poverty. Statistics has shown that regions with many economically empowered women are more developed than those with glaring gender disparities.
10. Low-cost loans: Cheap credit facilities will encourage the growth of small businesses and provide people, especially those in rural areas, with a means to escape poverty. Low-cost loans are essential for spurring economic growth in the local community.
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