Poverty in the United States

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There is significant disagreement about poverty in the United States; particularly over how poverty ought to be defined. Using radically different definitions, two major groups of advocates have claimed variously (a) that the United States has eliminated poverty over the last century; or (b) that it has such a severe crisis of poverty that it ought to devote significantly more resources to the problem.

Much of the debate about poverty focuses on (a) statistical measures of poverty and (b) the clash between advocates and opponents of welfare programs and government regulation of the market. Measures of poverty can be either absolute or relative.


Measures of poverty

The official poverty measure

There are two 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 persons 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.[1]

Since the 1960's, the United States Government has defined poverty in absolute terms. When the Johnson administration declared "war on poverty" in 1964, it chose an absolute measure. The "absolute poverty line" is the threshold below which families or individuals are considered to be lacking the resources to meet the basic needs for healthy living; having insufficient income to provide the food, shelter and clothing needed to preserve health.

The "Orshansky Poverty Thresholds" form the basis for the current measure of poverty in the U.S. Mollie Orshansky was an economist working for the Social Security Administration (SSA). Her work appeared at an opportune moment. Orshansky's article was published later in the same year that Johnson declared war on poverty. Since her measure was absolute (i.e., did not depend on other events), it made it possible to objectively answer whether we were "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 in 1965. The measure gave a range of income cutoffs, or thresholds, adjusted for factors such as family size, sex of the family head, number of children under 18 years old, and farm or non-farm residence. The economy food plan (the least costly of four nutritionally adequate food plans designed by the Department of Agriculture) was at the core of this definition of poverty.

The Department of Agriculture found that families of three or more persons spent about one third of their after-tax income on food. For these families poverty thresholds were set at three times the cost of the economy food plan. Different procedures were used for calculating poverty thresholds for two person households and persons living alone. Annual updates of the SSA poverty thresholds were based on price changes in the economy food plan.

Two changes were made to the poverty definition in 1969. Thresholds for non-farm families were tied to annual changes in the Consumer Price Index (CPI) rather than changes in the cost of the economy food plan. Farm thresholds were raised from 70 to 85 percent 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.

Current poverty guidelines

2005 HHS Poverty Guidelines [2]

Persons in Family Unit 48 Contiguous States and D.C. Alaska Hawaii
1 $9,570 $11,950 $11,010
2 $12,830 $16,030 $14,760
3 $16,090 $20,110 $18,510
4 $19,350 $24,190 $22,260
For each additional person, add $3,260 $4,080 $3,750

SOURCEFederal Register, Vol. 70, No. 33, February 18, 2005, pp. 8373-8375.

Relative measures of poverty

Another way of looking at poverty is in relative terms. "Relative poverty" can be defined as having significantly less access to income and wealth than other members of society. In 1999, the income of a family at the poverty line was $17,020. This was 28.49 percent of the median income in the U.S. In 1959 a family at the poverty line had an income that was 42.64 percent of the median income. Thus a poor family in 1999 had relatively less income than a poor family in 1959.

Current poverty rate

Poverty Rate, 1973 to Present
Poverty Rate, 1973 to Present

The official poverty rate in the U.S. has increased for four consecutive years, from a 26-year low of 11.3% in 2000 to 12.7% in 2004. This means that 37.0 million people were below the official poverty thresholds in 2004. This is 5.4 million more than in 2000. The poverty rate for children under 18 increased from 16.2% to 17.8% over that period.

Perceived flaws in U.S. poverty measure

In recent years, there have been a number of concerns raised concerning the official U.S. poverty measure. In 1995, the National Research Council's Committee on National Statistics convened a panel on measuring poverty in the U.S. 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:

According to the panel's recommended measure, income would include, in addition to money received, the value of noncash benefits such as food stamps, school lunches and public housing that can be used to satisfy basic needs. The new measure also would subtract from gross income certain expenses that cannot be used for these basic needs, such as income taxes, child-support payments, medical costs, health-insurance premiums and work-related expenses, including child care.

Food security

Eighty-nine percent of American households were food secure throughout the entire year 2002, meaning that they had access, at all times, to enough food for an active, healthy life for all household members. The remaining households were food insecure at least some time during that year. The prevalence of food insecurity rose from 10.7 percent in 2001 to 11.1 percent in 2002, and the prevalence of food insecurity with hunger rose from 3.3 percent to 3.5 percent. This report, based on data from the December 2002 food security survey, provides statistics on the food security of U.S. households, as well as on how much they spent for food and the extent to which food-insecure households participated in Federal and community food assistance programs.

Causes of poverty

There are numerous perceived direct and indirect causes of poverty in the United States. They include:

  • Unfavorable economic conditions
  • Mental illness
  • Substance abuse
  • Poor education
  • Historic and ongoing racism: The gross disparities among impoverished people in the United States along racial lines has lead many to believe that historic and/or ongoing racism is responsible for much of the poverty in the United States today.
  • Limited job opportunities appear to exist for some races and ethnic groups. This is reflected by the low-income nature of large sections of the economy, as divided along racial/ethnic lines:
  • 21 percent of all children in the United States live in poverty, but 46 percent of African American children and 40 percent of Latino children live in poverty. (Center for the Future of Children, The Future of Children. Vo. 7, No 2, 1997).
  • Unstable home life - Such as abuse, or single parent families

Fighting poverty

There have been many governmental and nongovernmental efforts to make an impact on 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, immigrants, or the homeless. Efforts to alieviate poverty use a disparate set of methods, such as advocacy, education, social work, legislation, direct service or charity, and community organizing.

Politicians often make fighting poverty a central part of their political platforms. John Edwards has established an anti-poverty think tank in Chapel Hill, North Carolina, and works closely with ACORN and other organizations of low income families. George W. Bush has chosen to speak on promoting an ownership society.


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