Poverty in the United States
From Wikipedia, the free encyclopedia
Poverty in the United States is cyclical in nature with roughly 13 to 17% living below the federal poverty line at any given point in time, and roughly 40% falling below the poverty line at some point within a 10 year time span. Most Americans (58.5%) will spend at least one year below the poverty line at some point between ages 25 and 75. There remains some controversy over whether the official poverty threshold over- or understates poverty.
The most common measure of poverty in the United States is the "poverty threshold" set by the U.S. government. This measure recognizes poverty as a lack of those goods and services commonly taken for granted by members of mainstream society. The official threshold is adjusted for inflation using the consumer price index.
Relative poverty describes how income relates to the median income, and does not imply that the person is lacking anything. In general the United States has some of the highest relative poverty rates among industrialized countries, reflecting both the high median income and high degree of inequality. In terms of pre-transfer absolute poverty rates, in 2000 the United States ranked tenth among sixteen developed countries, though it should be noted that 2000 was a 'trough' year and subsequently absolute poverty rates have increased.. The US does worse in post-transfer absolute poverty rates. According to a 2008 report released by the Carsey Institute at the University of New Hampshire, on average, rates of poverty are persistently higher in rural and inner city parts of the country as compared to suburban areas.
Measures of poverty
Measures of poverty can be either absolute or relative.
Two official measures of poverty
There are two 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.
Since the 1960s, 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 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.
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% 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
|Persons in Family Unit||48 Contiguous States and D.C.||Alaska||Hawaii|
|For each additional person, add||$3,740||$4,680||$4,300|
The official number of poor in the US in 2008 is 39.1 million people, greater in number but not percentage than the officially poor in Indonesia, which has a far lower Human Development Index and the next largest population after the United States.
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. Therefore, the relative poverty rate can directly be linked to 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 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. In 1959, a family at the poverty line had an income that was 42.64% of the median income. Thus, a poor family in 1999 had less income and therefore less purchasing power than wealthier members of society in 1959, and, therefore, "poverty" had increased. But, because this is a relative measure, this is not saying that a family in 1999 with the same amount of wealth and income as a family from 1959 had less purchasing power than the 1959 family.
In the EU and for the OECD, "relative poverty" is defined as an income below 60% of the national median equalized disposable income after social transfers for a comparable household. In Germany, for example, the official relative poverty line for a single adult person in 2003 was 938 euros per month (11,256 euros/year, $12,382 PPP. West Germany 974 euros/month, 11,688 euros/year, $12,857 PPP). For a family of four with two children below 14 years the poverty line was 1969.8 euros per month ($2,167 PPP) or 23,640 euros ($26,004 PPP) per year. According to Eurostat the percentage of people in Germany living at risk of poverty (relative poverty) in 2004 was 16% (official national rate 13.5% in 2003). Additional definitions for poverty in Germany are "poverty" (50% median) and "strict poverty" (40% median, national rate 1.9% in 2003). Generally the percentage for "relative poverty" is much higher than the quota for "strict poverty". The U.S concept is best comparable to "strict poverty". By European standards the official (relative) poverty rate in the United States would be significantly higher than it is by the U.S. measure. A research paper from the OECD calculates the relative poverty rate for the United States at 16% for 50% median of disposable income and nearly 24% for 60% of median disposable income (OECD average: 11% for 50% median, 16% for 60% median).
The 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. In Europe, the modified OECD equivalence scale is used, which takes the combined value of 1 for the head of household, 0.5 for each additional household member older than 14 years and 0.3 for children. When compared to the US Census poverty lines, which is based on a defined basket of goods, for the most prevalent household types both standardization methods show to be very similar.
Furthermore, the poverty threshold in Western-European countries is not always higher than the Orshansky threshold for a single person family. The actual Orchinsky poverty line for single person households in the US ($9645 in 2004) is very comparable to the relative poverty line in many Western-European countries (Belgium 2004: €9315), while price levels are also similar. The reason why relative poverty measurement causes high poverty levels in the US, as demonstrated by Förster, is caused by distributional effects rather than real differences in wellbeing among EU-countries and the USA. The median household income is much higher in the US than in Europe due to the wealth of the middle classes in the US, from which the poverty line is derived. Although the paradigm of relative poverty is most valuable, this comparison of poverty lines show that the higher prevalence of relative poverty levels in the US are not an indicator of a more severe poverty problem but an indicator of larger inequalities between rich middle classes and the low-income households. It is therefore not correct to state that the US income distribution is characterised by a large proportion of households in poverty; it is characterized by relatively large income inequality but also high levels of prosperity of the middle classes. The 2007 poverty threshold for a three member family is 17,070.
Poverty and demographics
In addition to family status, race/ethnicity and age also correlate with poverty 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.
By race/ethnicity and family status.
Among unrelated individuals and people living alone: 19.1% of all persons, including
18% of white persons 
27.9% of black persons  and
27% of Hispanic persons of any race  lived in poverty
Poverty and race
Poverty and age
The US Census declared that in 2007 12.5% of all people including
- 18% of all people under age 18
- 10.9% of all people 19-64, and
- 9.7% of all people ages 65 and older, lived in poverty 
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.The study was paid by ConAgra Foods, a large food company.
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% in 2001 to 11.1% in 2002, and the prevalence of food insecurity with hunger rose from 3.3% to 3.5%.
Factors in poverty
There are numerous factors related to poverty in the United States.
- Tax levels Cross-country data shows an inverse correlation between tax levels as a share of GDP and child poverty.
- Limited job opportunities appear to exist for significant subgroups of 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% of all children in the United States live in poverty, but 46% of African American children and 40% of Latino children live in poverty.
- The Heritage Foundation speculates that illegal immigration increases job competition among low wage earners, both native and foreign born. Additionally many first generation immigrants, namely those without a high school diploma, are also living in poverty themselves.
- In 1991, 8.3% of children in two-parent families were likely to live in poverty; 19.6% of children lived with father in single parent family; and 47.1% in single parent family headed by mother.
Much of the debate about poverty focuses on statistical measures of poverty and the clash between advocates and opponents of welfare programs and government regulation of the free market. Since measures can be either absolute or relative, it is possible that advocates for the different sides of this debate are basing their arguments on different ways of measuring poverty. It is often claimed that poverty is understated, yet there are some who also believe it is overstated; thus the accuracy of the current poverty threshold guidelines is subject to debate and considerable concern.
In 2007, 46% of poor households in the US owned their own homes, 30% had two or more cars, and 63% received cable or satellite TV..
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:
|“||According to the panel's recommended measure, income would include, in addition to money received, the value of non-cash 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.||”|
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 much 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. While the poverty threshold is updated for inflation every year, the basket of goods used to determine what constitutes being deprived of a socially acceptable miniumum standard of living has not been updated since 1955. As a result, the current poverty line only takes goods into account that were common more than 50 years ago, updating their cost using the Consumer Price Index. Mollie Orshansky, who devised the original goods basket and methodology to measure poverty, used by the U.S. government, in 1963-65, updated the goods basket in 2000, finding that the actual poverty threshold, i.e. the point where a person is excluded from the nation's prevailing consumption patterns, is at roughly 170% of the official poverty threshold. According to John Schwarzt, a political scientist at the University of Arizona:
|“||The official poverty line today is essentially what it takes in today's dollars, adjusted for inflation, to purchase the same poverty-line level of living that was appropriate to a half century ago, in 1955, for that year furnished the basic data for the formula for the very first poverty measure. Updated thereafter only for inflation, the poverty line lost all connection over time with current consumption patterns of the average family. Quite a few families then didn't have their own private telephone, or a car, or even a mixer in their kitchen... The official poverty line has thus been allowed to fall substantially below a socially decent minimum, even though its intention was to measure such a minimum.||”|
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. With half of all homes being priced above the half million dollar mark and prices in urban areas such as San Francisco, San Jose or Los Angeles being higher than the state average, it is almost impossible for not just the poor but also lower middle class worker to afford decent housing, and no possibility of home ownership. 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 which only roughly 20% of all households in the county boast. 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.
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, 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."
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 AFCD and Food Stamps. These programs do little, if anything, to help the poor build assets and begin to lift themselves out of poverty. Some have proposed creating a government matched savings plan (similar to the private 401K) system to provide a savings incentive to poor and lower-income individuals and families.
Negative income tax
From 1968 to 1979 a massive social experiment was undertaken in the U.S.: The Negative Income Tax Experiments of the 1970s in the USAThe four experiments were in:
- Urban areas in New Jersey and Pennsylvania from 1968-1972 (1300 families).
- Rural areas in Iowa and North Carolina from 1969-1973 (800 families).
- Gary, Indiana from 1971-1974 (1800 families).
- Seattle and Denver, from 1970-1978 (4800 families).
Campaign to Reduce Poverty in the United States
Catholic Charities USA released the : "Campaign to Reduce Poverty in America" based on its paper Poverty in America: A Threat to the Common Good in January 2007.
From Poverty to Prosperity
In April 2007 The Center for American Progress, a liberal think tank, released a report : "From Poverty to Prosperity: A National Strategy to Cut Poverty in Half". It recommended 12 steps to cut poverty in half by 2017, including raising the minimum wage, expanding the Earned Income Tax Credit, and promoting unionization by enacting the Employee Free Choice Act.
Citing data from the U.S. Census Bureau in a 2005 editorial, economist Walter E. Williams of George Mason University wrote that the poverty rate among single-parent black families was 39.5%, while it was only 9.9% among married-couple black families. Among white families, the comparable rates were 26.4% and 6%.
- Income in the United States
- Income inequality in the United States
- The Other America by Michael Harrington (ISBN 0-684-82678-X)
- Two Americas
- Lowest-income counties in the United States
- International Ranking of Household Income
- List of Average Wages per Country
- Human Poverty Index
- Mississippi Teacher Corps
- Poverty by country
- Federal assistance in the United States
- Basic Income
- Negative Income Tax
- Tipping Point Community
- Redistributive change
- De-industrialization crisis
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- ^ NOTE: Data in paragraph do not agree with official U.S. Census data, which show poverty rate for families rising from 8.7% in 2000 to 10.2% in 2004, then declining slightly to 9.8% in 2007.Note#2: The Poverty Threshold is (correct me if I'm wrong on any point) NEVER measured according to the HHS Poverty Guidelines.The HHS Poverty Guidelines are calculated from the Poverty Thresholds, also known as "the federal official poverty line" in accordance with Title 42 Sec. 9902 (2) of The Federal Code. The Thresholds are provided by The Office of Management and Budget as the starting point which are taken from years prior to the current Threshold figures and are multiplied by a percentage change in the CPI (Consumer Price Index) measured from the earlier Thresholds' year of publication to the present. The average difference between the thresholds and this result is then added back to the original Threshold amounts to produce the HHS Poverty Guideline Table as displayed below. See here for details:http://aspe.hhs.gov/poverty/09computations.shtmlhttp://aspe.hhs.gov/poverty/faq.shtml#differenceshttp://www.law.cornell.edu/uscode/html/uscode42/usc_sec_42_00009902----000-.htmlThe Poverty Threshold Table for 2008: http://www.census.gov/hhes/www/poverty/threshld/thresh08.html
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- ^ BPS:Miskin
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- ^ a b c d http://pubdb3.census.gov/macro/032008/pov/new02_100_09.htm
- ^ a b http://pubdb3.census.gov/macro/032008/pov/new01_100_03.htm
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Study: 11 Percent Of U.S. Households Lack Food For Healthy Lifestyle" ("SHTML). Health. CBS NEWS. 2009-05-07. http://www.cbsnews.com/stories/2009/05/07/health/main4998190.shtml. Retrieved 2009-05-08.
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- ^ However many mothers skipped meals or did odd jobs to cover those expenses. According to Edin, "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."Devising New Math to Define Poverty by Louis Uchitelle, New York Times. 1999-10-18. Accessed: 2006-06-16
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- ^ Ammunition for poverty pimps Walter E. Williams, October 27, 2005
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- U.S. Census Bureau Poverty Definition
- U.S. Census Bureau Poverty in the United States
- Why Poverty Doesn't Rate, American Enterprise Institute
- Social Solutions to Poverty: America's Struggle to Build a Just Society. Scott Myers-Lipton, (2006).
- Child Poverty and Tax: a simple graph of child disposible income disparity in OECD countries against tax burdens.
- F.H.C. Ministries Charity is not Reform!
- From Poverty to Prosperity: A National Strategy to Cut Poverty in Half, The Center for American Progress, April 2007.
- Explanation of poverty definition by economist Ellen Frank in Dollars & Sense magazine, January/February 2006
- "Deciding Who's Poor" by economist Barbara Bergmann in Dollars & Sense magazine, March/April 2000
- 37 million poor hidden in the land of plenty
- David Walls, Models of Poverty and Planned Change
- U.S. Government Does Relatively Little to Lessen Child Poverty Rates
- U.S. Department of Health & Human Services Poverty Guidelines, Research, and Measurement
- Cities Tolerate Homeless Camps by Jennifer Levitz, The Wall Street Journal, August 11 2009
- The Forgotten Americans PBS series by Hector Galan about colonias.
- Americans living in Third World conditions This article discusses the living conditions of people inhabiting colonias (with pictures).