Poverty

US Poverty: How Is It Defined?

Poverty is a real problem here in the United State and in the world at large. According to some estimates, 1.4 billion people in the earth suffer from extreme poverty – a condition that leaves them surviving on less than $1.25 a day.1 If these numbers represent reality, that means that roughly one in five human beings live on $1.25 or less a day.

To give this level of poverty some perspective – $1.25 turns into $456.25 a year for an individual. If we add up all 1.4 billion $465.25s we will find that at the maximum these 1.4 billion people live on is $623.75 billion year. We just recently passed a $700+ billion “bail-out” package for Wall Street.  That is how much money 1 in five of your human brothers and sisters live on.

But I didn’t want to talk about world poverty today or even about the United States economic policies. Instead, I wanted to talk about how we in America define poverty in a bureaucratic, statistical sort of way. This is very different from how the average Joe “six-pack”2 might define it. You see, I am sure that each person, class, and region has its own definition of what we might call “poverty.” I like to think of this as the level of living at which our friends, neighbors, or relatives would classify us as poor. This standard is generally fairly arbitrary and probably has more to do with social status than about actual poverty.  Let us call this “social poverty.”

Here in the US we define real poverty as anything below the US poverty threshold. As of 2007, the poverty threshold for a single person under the age of 65 was $10,590.  That amounts to $29.01 a day – the equivalent of roughly 4.5 hours of work at the federal minimum wage ($6.55 per hour).  If you earned less than that amount last year and you are the only member of your household, you are considered poor by the US Census Bureau – congratulations!

Being the sort that likes to know the beginning of things and how they work I got to questioning how this whole poverty threshold idea got started.  And how do you calculate what your family’s poverty threshold is?  The following is what I discovered.

History of the Poverty Threshold

It all begins with a female Polish immigrant from the Bronx and rich white dude from Texas.  The girl is a scholar by the name of Mollie Orshansky.  She had a long career as a government bureaucrat which eventually found her doing statistical work for the Social Security Administration (SSA) in 1958.  Her task was to analyze if people in America made enough money to support themselves and their families.

Five years later she reported her findings in a paper and the Orshansky Poverty Thresholds were born.  In her analysis, Orshansky relied heavily on calculations that determined the income required to provide a family with a nutritionally adequate diet.  This formed the center of her Threshold.  What was important about her calculations was that it measured poverty in an absolute fashion and did not take into consideration geographic subtleties.

What I mean by that is that the poverty threshold for a single male living in urban New York City was the same as the single male living in rural Alabama.  This made her calculations simple and easily used by a government for any “war on poverty” that might just happen to come up.

Enter rich white guy from Texas.  This rich white guy from Texas just happened to become president when another rich white guy from Massachusetts got shot in Texas.  These were not happy times.

Needless to say, LBJ, you know – that rich white guy from Texas – didn’t like poverty very much so he declared war on it in 1964. But he was stuck on how to tell if he was actually winning his war or if he was getting stuck in another proverbial quagmire (like Vietnam). He probably read a little, or at least his cabinet members did, and he came across Orshansky’s threshold and he said, “By Jove, we have it.” War was declared and the Orshansky Poverty Threshold was tweaked a bit and turned into the Poverty Threshold.

Here is a handy graph that shows both the rate of poverty in the US and the total numbers of people in poverty:

Poverty Rate In United States

Finding Your Family’s Poverty Threshold

In all, there are 48 different possible thresholds depending on your age and family size.   These numbers are updated annually based upon changes to the Consumer Price Index for All Urban Consumers (CPI-U) so they try to remain as up-to-date as best as they can.  But there is some dispute over how well the Poverty Threshold actually measures poverty on a case by case basis.

Just for fun let’s take a look at where we each land on this measure of statistical poverty. If you can’t read the numbers, click on the photo and you will go the US Census Bureau website where I lifted the chart:

Poverty Threshold Chart

My family of soon to be three would be considered in poverty if our household income was below $16,689. I currently make a little north of double that amount. So the wife and I are safe from being a statistic on the US Census Bureau’s poverty report.  Yippe!

If we did make less than $16,689 all the members living in my household would be considered in poverty – even my infant son.

How does your family stack up? Do you feel like you are poor but don’t classify as statistically poor? Do you technically classify as “poor” but certainly don’t feel that way?

  1. This information is a little dated, being now three years old. I am not personally aware of any more relevant or up to date information than this though. Taken from information found on the Extreme Poverty article on Wikipedia []
  2. An obvious reference to the definition of my abdomen. I don’t drink, after all. []

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