Poverty in the United States

Two official measures of poverty

There are 2 basic versions of the federal poverty measure: the poverty thresholds (which are the primary version) and the poverty guidelines. The Census Bureau issues the poverty thresholds, which are generally used for statistical purposes—for example, to estimate the number of people in poverty nationwide each year and classify them by type of residence, race, and other social, economic, and demographic characteristics. The Department of Health and Human Services issues the poverty guidelines for administrative purposes—for instance, to determine whether a person or family is eligible for assistance through various federal programs.

The "Orshansky Poverty Thresholds" form the basis for the current measure of poverty in the U.S. Mollie Orshansky was an economist working for the Social Security Administration (SSA). Her work appeared at an opportune moment. Orshansky's article was published later in the same year that Johnson declared war on poverty. Since her measure was absolute (i.e., did not depend on other events), it made it possible to objectively answer whether the U.S. government was "winning" this war. The newly formed United States Office of Economic Opportunity adopted the lower of the Orshansky poverty thresholds for statistical, planning, and budgetary purposes in May 1965.

The Bureau of the Budget (now the Office of Management and Budget) adopted Orshansky's definition for statistical use in all Executive departments. The measure gave a range of income cutoffs, or thresholds, adjusted for factors such as family size, sex of the family head, number of children under 18 years old, and farm or non-farm residence. The economy food plan (the least costly of four nutritionally adequate food plans designed by the Department of Agriculture) was at the core of this definition of poverty.

At the time of creating the poverty definition, the Department of Agriculture found that families of three or more persons spent about one third of their after-tax income on food. For these families, poverty thresholds were set at three times the cost of the economy food plan. Different procedures were used for calculating poverty thresholds for two-person households and persons living alone. Annual updates of the SSA poverty thresholds were based on price changes in the economy food plan, but updates do not reflect other changes (food is no longer one-third of the after-tax income). Two changes were made to the poverty definition in 1969. Thresholds for non-farm families were tied to annual changes in the Consumer Price Index rather than changes in the cost of the economy food plan. Farm thresholds were raised from 70 to 85% of the non-farm levels.

In 1981, further changes were made to the poverty definition. Separate thresholds for "farm" and "female-householder" families were eliminated. The largest family size category became "nine persons or more."

Apart from these changes, the U.S. government's approach to measuring poverty has remained static for the past forty years.

Recent poverty rate and guidelines

The poverty guideline figures are not the figures the Census Bureau uses to calculate the number of poor persons. The figures that the Census Bureau uses are the poverty thresholds. The Census Bureau provides an explanation of the difference between poverty thresholds and guidelines. The Census Bureau uses a set of money income thresholds that vary by family size and composition to determine who is in poverty. The 2010 figure for a family of 4 with no children under 18 years of age is $22,541, while the figure for a family of 4 with 2 children under 18 is $22,162. For comparison, the 2011 HHS poverty guideline for a family of 4 is $22,350.

Relative measures of poverty

Another way of looking at poverty is in relative terms. "Relative poverty" can be defined as having significantly less income and wealth than other members of society. Therefore, the relative poverty rate is a measure of income inequality. When the standard of living among those in more financially advantageous positions rises while that of those considered poor stagnates, the relative poverty rate will reflect such growing income inequality and increase. Conversely, the relative poverty rate can decrease, with low income people coming to have less wealth and income if wealthier people's wealth is reduced by a larger percentage than theirs.

Some critics argue that relying on income disparity to determine who is impoverished can be misleading. The Bureau of Labor Statistics data suggests that consumer spending varies much less than income. In 2008, the poorest one fifth of Americans households spent on average $12,955 per person for goods and services (other than taxes), the second quintile spent $14,168, the third $16,255, the fourth $19,695, while the richest fifth spent $26,644. The disparity of expenditures is much less than the disparity of income.

Income distribution and relative poverty

Although the relative approach theoretically differs largely from the Orshansky definition, crucial variables of both poverty definitions are more similar than often thought. First, the so-called standardization of income in both approaches is very similar. To make incomes comparable among households of different sizes, equivalence scales are used to standardize household income to the level of a single person household. When compared to the US Census poverty line, which is based on a defined basket of goods, for the most prevalent household types both standardization methods show very similar results.

Poverty and demographics

In addition to family status, race/ethnicity and age also correlate with high poverty rates in the United States. Although data regarding race and poverty are more extensively published and cross tabulated, the family status correlation is by far the strongest.

Poverty and family status

According to the US Census, in 2007 5.8% of all people in married families lived in poverty, as did 26.6% of all persons in single parent households and 19.1% of all persons living alone. More than 75% of all poor households are headed by women (2012).

By race/ethnicity and family status, based on data from 2007

Among married couple families: 5.8% lived in poverty. This number varied by race and ethnicity as follows:
5.4% of all white persons (which includes white Hispanics),
10.7% of all black persons (which includes black Hispanics), and
14.9% of all Hispanic persons (of any race) living in poverty.

Among single parent (male or female) families: 26.6% lived in poverty. This number varied by race and ethnicity as follows:
22.5% of all white persons (which includes white Hispanics),
44.0% of all black persons (which includes black Hispanics), and
33.4% of all Hispanic persons (of any race) living in poverty.

Among individuals living alone: 19.1% lived in poverty. This number varied by race and ethnicity as follows:
18% of white persons (which includes white Hispanics)
28.9% of black persons (which includes black Hispanics) and
27% of Hispanic persons (of any race) living in poverty.

Poverty and race/ethnicity

The US Census declared that in 2014 14.8% of the general population lived in poverty:
10.1% of all white non-Hispanic persons
12.0% of all Asian persons
23.6% of all Hispanic persons (of any race)
26.2% of all African American persons
28.3% of Native Americans / Alaska Natives

As of 2010 about half of those living in poverty are non-Hispanic white (19.6 million). Non-Hispanic white children comprised 57% of all poor rural children.

In FY 2009, African American families comprised 33.3% of TANF families, non-Hispanic white families comprised 31.2%, and 28.8% were Hispanic.

Poverty among Native Americans

Poverty is also notoriously high on Native American reservations (see Reservation poverty). 7 of the 11 poorest counties in per capita income, including the 2 poorest in the U.S., encompass Lakota Sioux reservations in South Dakota. This fact has been cited by some critics as a mechanism that enables the "kidnapping" of Lakota children by the state of South Dakota's Department of Social Services. The Lakota People's Law Project, among other critics, allege that South Dakota "inappropriately equates economic poverty with neglect ... South Dakota's rate of identifying 'neglect' is 18% higher than the national average ... In 2010, the national average of state discernment of neglect, as a percent of total maltreatment of foster children prior to their being taken into custody by the state, was 78.3%. In South Dakota the rate was 95.8%."

Poverty in the Pine Ridge Reservation in particular has had unprecedented effects on its residents' longevity. "Recent reports state the average life expectancy is 45 years old while others state that it is 48 years old for men and 52 years old for women. With either set of figures, that's the shortest life expectancy for any community in the Western Hemisphere outside Haiti, according to The Wall Street Journal."

Poverty and age

The US Census declared that in 2010 15.1% of the general population lived in poverty:
22% of all people under age 18
13.7% of all people 19–21 and
9% of all people ages 65 and older

The Organization for Economic Co-operation and Development (OECD) uses a different measure for poverty and declared in 2008 that child poverty in the US is 20% and poverty among the elderly is 23%. The non-profit advocacy group Feeding America has released a study (May 2009) based on 2005–2007 data from the U.S. Census Bureau and the Agriculture Department, which claims that 3.5 million children under the age of 5 are at risk of hunger in the United States. The study claims that in 11 states, Louisiana, which has the highest rate, followed by North Carolina, Ohio, Kentucky, Texas, New Mexico, Kansas, South Carolina, Tennessee, Idaho and Arkansas, more than 20 percent of children under 5 are allegedly at risk of going hungry. (Receiving fewer than 1,800 calories per day) The study was paid by ConAgra Foods, a large food company.

Child poverty

In 2012, 16.1 million American children were living in poverty. Outside of the 49 million Americans living in food insecure homes, 15.9 million of them were children. In 2013, child poverty reached record high levels in the U.S., with 16.7 million children living in food insecure households. Many of the neighborhoods these children live in lack basic produce and nutritious food. 47 million Americans depend on food banks, more than 30% above 2007 levels. Households headed by single mothers are most likely to be affected. 30 percent of low-income single mothers cannot afford diapers. Inability to afford this necessity can cause a chain reaction, including mental, health, and behavioral problems. Some women are forced to make use of one or two diapers, using them more than once. This causes rashes and sanitation problems as well as health problems. Without diapers, children are unable to enter into daycare. The lack of childcare can be detrimental to single mothers, hindering their ability to obtain employment. Worst affected are Oregon, Arizona, New Mexico, Florida, and the District of Columbia, while North Dakota, New Hampshire, Virginia, Minnesota and Massachusetts are the least affected. 31 million low-income children received free or reduced-price meals daily through the National School lunch program during the 2012 federal fiscal year. Nearly 14 million children are estimated to be served by Feeding America with over 3 million being of the ages of 5 and under.

A 2014 report by the National Center on Family Homelessness states the number of homeless children in the U.S. has reached record levels, calculating that 2.5 million children, or one child in every 30, experienced homelessness in 2013. High levels of poverty, lack of affordable housing and domestic violence were cited as the primary causes.

Poverty and education

Poverty affects individual access to quality education. The U.S. education system is often funded by local communities; therefore the quality of materials and teachers can reflect the affluence of community. That said, many communities address this by supplementing these areas with funds from other districts. Low income communities are often not able to afford the quality education that high income communities do. Poor perceptions, by teachers, of families and communities in poverty can manifest itself in teachers who will not put forth the effort to teach and students who are thought to be opposed to learning; in both cases poor students are thought to be incapable. When a teacher assumes a child is linguistically deficient, they may look through a stigmatized lens when working with the student. This can create an atmosphere that can reify negative stereotypes and undermine student motivation. By the teacher not looking through such a lens, they will be able to reinforce the idea that all their students have an opportunity to increase their learning abilities, which can result in more classroom engagement and student motivation. Females in poverty are also likely to become pregnant at a young age, and with fewer resources to care for a child, young women often drop out of school. A reason for the gap in access to education is due to the fact that reforms in the instruction programs have not been implemented well or at all in high poverty schools. Due to these and other reasons the quality of education between the classes is not equal.

Some teachers will use the phrase “culture of poverty” as a taxonomy of lower socioeconomic students and will use child poverty as an excuse for why they are not successful with certain students. The culture of poverty acknowledges the past factors of the initial condition of poverty were results of racial segregation and discrimination, and substandard housing and education, ignoring personal responsibility, yet puts the blame on the “behaviors and attitudes of the poor”, as the cause of present poverty. This idea ignores the very fact that the current housing and education in poverty is still substandard and plays a large role in the cause of present poverty,. Some people point out that poverty is a choice; that single parent families are more often to be below the poverty line.

There are multiple misconceptions in regards to poverty. Research has undermined the idea that parents of low socioeconomic status do not value education, when in truth they hold the same attitudes as wealthy families. It is not an issue of value, but more so a problem of access. A parent from a lower socioeconomic class is likely to have more factors than a parent from a wealthy socioeconomic class that may affect their involvement with their child’s education. For instance a person living in poverty is more likely to work multiple jobs, as well as not having certain means of transportation, thus hindering their access to their child’s education. The teachers, faculty, and administrators of the schools have to take these real-life factors into consideration.

Food security

89 percent of the American households were food secure throughout the entire year of 2002, meaning that they had access at all times to enough food for an active, healthy life for all of the household members. The remaining households were food insecure at least some time during that year. The prevalence of food insecurity rose from 10.7% in 2001 to 11.1% in 2002, and the prevalence of food insecurity with hunger rose from 3.3% to 3.5%.

In 2007, 88.9% of American households were food secure throughout the entire year. The number of American households that were food secure throughout the entire year dropped to 85.4% in 2008. As of 2012, the prevalence of food insecurity has been essentially unchanged since 2008.

Factors in poverty

There are numerous factors related to poverty in the United States.

Concerns regarding accuracy

In recent years, there have been a number of concerns raised about the official U.S. poverty measure. In 1995, the National Research Council's Committee on National Statistics convened a panel on measuring poverty. The findings of the panel were that "the official poverty measure in the United States is flawed and does not adequately inform policy-makers or the public about who is poor and who is not poor."

The panel was chaired by Robert Michael, former Dean of the Harris School of the University of Chicago. According to Michael, the official U.S. poverty measure "has not kept pace with far-reaching changes in society and the economy." The panel proposed a model based on disposable income:

Understating poverty

Many sociologists and government officials have argued that poverty in the United States is understated, meaning that there are more households living in actual poverty than there are households below the poverty threshold. A recent NPR report states that as many as 30% of Americans have trouble making ends meet and other advocates have made supporting claims that the rate of actual poverty in the US is far higher than that calculated by using the poverty threshold. A study taken in 2012 estimated that roughly 38% of Americans live "paycheck to paycheck."

According to William H. Chafe, if one used a relative standard for measuring poverty (a standard that took into account the rising standards of living rather than an absolute dollar figure) then 18% of families were living in poverty in 1968, not 13% as officially estimated at that time.

As far back as 1969, the Bureau of Labor Statistics put forward suggested budgets for adequate family living. 60% of working-class Americans lived below one of these budgets, which suggested that a far higher proportion of Americans lived in poverty than the official poverty line suggested. These findings were also used by observers on the left when questioning the long-established view that most Americans had attained an affluent standard of living in the two decades following the end of the Second World War.

Using a definition of relative poverty (reflecting disposable income below half the median of adjusted national income), it was estimated that, between 1979 and 1982, 17.1% of Americans lived in poverty.

As noted above, the poverty thresholds used by the US government were originally developed during the Johnson administration's War on Poverty initiative in 1963–1964. Mollie Orshansky, the government economist working at the Social Security Administration who developed the thresholds, based the threshold levels on the cost of purchasing what in the mid-1950s had been determined by the US Department of Agriculture to be the minimal nutritionally-adequate amount of food necessary to feed a family. Orshansky multiplied the cost of the food basket by a factor of three, under the assumption that the average family spent one third of its income on food.

While the poverty threshold is updated for inflation every year, the basket of food used to determine what constitutes being deprived of a socially acceptable minimum standard of living has not been updated since 1955. As a result, the current poverty line only takes into account food purchases that were common more than 50 years ago, updating their cost using the Consumer Price Index. When methods similar to Orshansky's were used to update the food basket using prices for the year 2000 instead of from nearly a half century earlier, it was found that the poverty line should actually be 200% higher than the official level being used by the government in that year.

Yet even that higher level could still be considered flawed, as it would be based almost entirely on food costs and on the assumption that families still spend a third of their income on food. In fact, Americans typically spent less than one tenth of their after-tax income on food in 2000. For many families, the costs of housing, health insurance and medical care, transportation, and access to basic telecommunications take a much larger bite out of the family's income today than a half century ago; yet, as noted above, none of these costs are considered in determining the official poverty thresholds. According to John Schwarz, a political scientist at the University of Arizona:

The issue of understating poverty is especially pressing in states with both a high cost of living and a high poverty rate such as California where the median home price in May 2006 was determined to be $564,430. In the Monterey area, where the low-pay industry of agriculture is the largest sector in the economy and the majority of the population lacks a college education, the median home price was determined to be $723,790, requiring an upper middle class income only earned by roughly 20% of all households in the county.

Such fluctuations in local markets are, however, not considered in the Federal poverty threshold and thus leave many who live in poverty-like conditions out of the total number of households classified as poor.

In 2011, the Census Bureau introduced a new supplemental poverty measure aimed at providing a more accurate picture of the true extent of poverty in the United States. The SPM extends the official poverty measure by taking account of many of the government programs designed to assist low-income families and individuals that are not included in the current official poverty measure. According to this new measure, 16% of Americans lived in poverty in 2011, compared with the official figure of 15.2%. The new measure also estimated that nearly half of all Americans lived in poverty that year, defined as living within 200% of the federal poverty line.

Duke University Professor of Public Policy and Economics Sandy Darity, Jr. says, "There is no exact way of measuring poverty. The measures are contingent on how we conceive of and define poverty. Efforts to develop more refined measures have been dominated by researchers who intentionally want to provide estimates that reduce the magnitude of poverty."

Overstating poverty

Some critics assert that the official U.S. poverty definition is inconsistent with how it is defined by its own citizens and the rest of the world, because the U.S. government considers many citizens statistically impoverished despite their ability to sufficiently meet their basic needs. According to a heavily criticised 2011 paper by The Heritage Foundation research fellow Robert Rector, of the 43.6 million Americans deemed by the U.S. Census Bureau to be below the poverty level in 2009, the majority had adequate shelter, food, clothing and medical care. In addition, the paper stated that those assessed as below the poverty line in 2011 have a much higher quality of living than those who were identified by the census 40 years ago as being in poverty. For example, in 2005, 63.7% of those living in poverty had cable or satellite television. In some cases the report even said that people currently living in poverty were actually better off than middle class people of the recent past. For example, in 2005, 78.3% of households living in poverty had air conditioning, whereas in 1970, 36.0% of all households had air conditioning.

According to The Heritage Foundation, the federal poverty line also excludes income other than cash income, especially welfare benefits. Thus, if food stamps and public housing were successfully raising the standard of living for poverty stricken individuals, then the poverty line figures would not shift, since they do not consider the income equivalents of such entitlements.

A 1993 study of low income single mothers titled Making Ends Meet, by Kathryn Edin, a sociologist at the University of Pennsylvania, showed that the mothers spent more than their reported incomes because they could not "make ends meet" without such expenditures. According to Edin, they made up the difference through contributions from family members, absent boyfriends, off-the-book jobs, and church charity.

According to Edin: "No one avoided the unnecessary expenditures, such as the occasional trip to the Dairy Queen, or a pair of stylish new sneakers for the son who might otherwise sell drugs to get them some money or something, or the Cable TV subscription for the kids home alone and you are afraid they will be out on the street if they are not watching TV." However many mothers skipped meals or did odd jobs to cover those expenses. According to Edin, for "most welfare-reliant mothers food and shelter alone cost almost as much as these mothers received from the government. For more than one-third, food and housing costs exceeded their cash benefits, leaving no extra money for uncovered medical care, clothing, and other household expenses."

Fighting poverty

In the age of inequality, such anti-poverty policies are more important than ever, as higher inequality creates both more poverty along with steeper barriers to getting ahead, whether through the lack of early education, nutrition, adequate housing, and a host of other poverty-related conditions that dampen ones chances in life.

There have been many governmental and nongovernmental efforts to reduce poverty and its effects. These range in scope from neighborhood efforts to campaigns with a national focus. They target specific groups affected by poverty such as children, people who are autistic, immigrants, or people who are homeless. Efforts to alleviate poverty use a disparate set of methods, such as advocacy, education, social work, legislation, direct service or charity, and community organizing.

Recent debates have centered on the need for policies that focus on both "income poverty" and "asset poverty." Advocates for the approach argue that traditional governmental poverty policies focus solely on supplementing the income of the poor through programs such as Aid to Families with Dependent Children (AFDC) and Food Stamps. According to the CFED 2012 Assets & Opportunity Scorecard, 27 percent of households – nearly double the percentage that are income poor – are living in "asset poverty." These families do not have the savings or other assets to cover basic expenses (equivalent to what could be purchased with a poverty level income) for three months if a layoff or other emergency leads to loss of income. Since 2009, the number of asset poor families has increased by 21 percent from about one in five families to one in four families. In order to provide assistance to such asset poor families, Congress appropriated $24 million to administer the Assets for Independence Program under the supervision of the US Department for Health and Human Services. The program enables community-based nonprofits and government agencies to implement Individual Development Account or IDA programs, which are an asset-based development initiative. Every dollar accumulated in IDA savings is matched by federal and non-federal funds to enable households to add to their assets portfolio by buying their first home, acquiring a post-secondary education, or starting or expanding a small business.

Additionally, the Earned Income Tax Credit (EITC or EIC) is a credit for people who earn low-to-moderate incomes. This credit allows them to get money from the government if their total tax outlay is less than the total credit earned, meaning it is not just a reduction in total tax paid but can also bring new income to the household. The Earned Income Tax Credit is viewed as the largest poverty reduction program in the United States. There is an ongoing debate in the U.S. about what the most effective way to fight poverty is, through the tax code with the EITC, or through the minimum wage laws.

Government safety net programs put in place since the War on Poverty have helped reduce the poverty rate from 26% in 1967 to 16% in 2012, according to a Supplemental Poverty Model (SPM) created by Columbia University, while the official U.S. Poverty Rate has not changed, as the economy by itself has done little to reduce poverty. According to the 2013 Columbia University study which created the (SPM) method of measuring poverty, without such programs the poverty rate would be 29% today. An analysis of the study by Kevin Drum suggests the American welfare state effectively reduces poverty among the elderly but provides relatively little assistance to the working-age poor. A 2014 study by Pew Charitable Trusts shows that without social programs like food stamps, social security and the federal EITC, the poverty rate in the U.S. would be much higher. Nevertheless, the U.S. has the weakest social safety net of all developed nations. Sociologist Monica Prasad of Northwestern University argues that this developed because of government intervention rather than lack of it, which pushed consumer credit for meeting citizens' needs rather than applying social welfare policies as in Europe.