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Poverty in the United States
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The most common measure of poverty in the United States is the "poverty line" 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.
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The most common measure of poverty in the United States is the "poverty line" 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. Poverty in the United States is cyclical in nature with roughly 12% 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.
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 considerably worse in post-transfer absolute poverty rates.
Those under the age of 18 were the most likely to be impoverished. In 2006, the poverty rate for minors in the United States was the highest in the industrialized world, with 21.9% of all minors and 30% of African American minors living below the poverty threshold. Moreover, the standard of living for those in the bottom 10% was lower in the U.S. than other developed nations except the United Kingdom, which has the lowest standard of living for impoverished children in the developed world. According to a 2008 report released by the Carsey Institute at the University of New Hampshire, on average, rates of child poverty are persistently higher in rural parts of the country relative to suburban areas and share similar rates with many central cities.
Measures of poverty
Measures of poverty can be either absolute or relative.
The official measure 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 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% 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 official poverty rate in the U.S. increased for four consecutive years, from a 26-year low of 11.3% in 2000 to 12.7% in 2004, then declined somewhat to 12.3% in 2006. This means that 36.5 million people (approx 1 in 8 Americans) were below the official poverty thresholds in 2006, compared to 31.1 million in 2000, and that there was an increase of 4.9 million poor from 2000 to 2006 while the total population grew by 17.5 million. The poverty rate for children under 18 years old increased from 16.2% to 17.8% from 2000 to 2004 and had dropped to 17.4% in 2005 and 2006.
The 2007-2008 poverty threshold was measured according to the HHS Poverty Guidelines which are illustrated in the table below.
| Persons in Family Unit | 48 Contiguous States and D.C. | Alaska | Hawaii |
|---|
| 1 | $10,400 | $13,000 | $11,960 | | 2 | $14,000 | $17,500 | $16,100 | | 3 | $17,600 | $22,000 | $20,240 | | 4 | $21,200 | $26,500 | $24,380 | | 5 | $24,800 | $31,000 | $28,520 | | 6 | $28,400 | $35,500 | $32,660 | | 7 | $32,000 | $40,000 | $36,800 | | 8 | $35,600 | $44,500 | $40,940 | | For each additional person, add | $3,600 | $4,500 | $4,140 |
SOURCE: Federal Register, Vol. 73, No. 15, January 23,
2008, pp. 3971–3972.
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 relatively less income and therefore relatively 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, "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.
Secondly, if the of 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 America. 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 married families:
5.8% of all people including
5.4% of white persons,
8.3% of black persons, and
14.9% of Hispanic persons (of any race) were in poverty.
Among single parent families:
26.6% of all persons, including
30% of white persons,
44% of black persons, and
33% of Hispanic persons (of any race) were in poverty.
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
The US Census declared that in 2007
- 12.5% of all people, including
- 10.5% white people
- 24.5% black people
- 21.5% all Hispanic people of any race, lived in poverty.
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 Organisation 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%.
Human poverty index
The United Nations Development Programme, uses the human poverty index in order to assess the development with regards to poverty among OECD countries. The index takes the likelihood of a child not surviving to age 60, functional illiteracy rate, long-term unemployment and the population living on less than 50% of the median national income into account. While the United States has the second lowest long-term unemployment rate in the developed world, it has the highest percentage of children who are not likely to live to age 60 and persons living on less than 50% of the national median income and the third highest percentage of adults lacking functional literacy skills.
Other international comparisons
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% in 2001 to 11.1% in 2002, and the prevalence of food insecurity with hunger rose from 3.3% to 3.5%.
Factors of poverty
There are numerous factors related to poverty in the United States.
Sociological factors
Some poverty in the United States is the result of social institutions which contribute to and sustain poverty. Some claim that poverty is also the product of deindustrialization. As the U.S. shifts from a manufacturing, industrial society to a service-oriented, high-tech society, many of the blue-collar jobs that required little education but paid well are disappearing or being outsourced. Rural areas, such as Appalachia, suffer losses of mining jobs.
Other factors in poverty
- 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.
Controversy
There has been 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 dispute whether or not more resources are needed to help lessen poverty. Liberals consistently claim that more resources are needed to alleviate poverty. Conservatives often argue that the condition of the poor does not presently require more resources but rather an allocation that encourages a temporary dependence upon the American social safety net.
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 a 2003 editorial in The Washington Times, Bruce Bartlett wrote, "In a supplementary report that got no press attention, the Census Bureau looked at some of these new necessities and their ownership by the poor. It turns out many poor people today own appliances that were considered luxuries when I grew up, and some that would still be considered luxuries today. For example, 91 percent of those in the lowest 10 percent of households -- all officially poor -- own color TVs, 74 percent own microwave ovens, 55 percent own VCRs, 47 percent own clothes dryers, 42 percent own stereos, 23 percent own dishwashers, 21 percent own computers and 19 percent own garbage disposals. When I grew up in the 1950s, only the wealthy owned color TVs, clothes dryers, stereos, dishwashers and disposals. These were all considered luxuries. We got by with black-and-white TVs, hanging our wet clothes on a line to dry, washing dishes by hand and throwing our potato peels in a pail instead of down the drain. So did most other middle-class families. Not even the wealthiest people owned microwave ovens, VCRs or computers."
However, as noted in "EU versus USA", only 11% of those in the general UK population own a dishwasher, and the penetration rate of microwave ovens in the EU is generally well under 30% . The report goes on to note that 46% of poor households in the US own their own home, and 30% have two or more cars, and 63% have 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:
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 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.
Overstating poverty
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."
Moreover, Swedish free market think tank Timbro point out that lower-income households in the U.S. tend to own more appliances and larger houses than many middle-income Western Europeans.
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, 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 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 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 . 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.
Marriage
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%.
See also
Further reading
External links
- U.S. Census Bureau
- U.S. Census Bureau
- , American Enterprise Institute
- Scott Myers-Lipton, (2006).
- Source:
- F.H.C. Ministries
- , The Center for American Progress, April 2007.
- by economist Ellen Frank in Dollars & Sense magazine, January/February 2006
- by economist Barbara Bergmann in Dollars & Sense magazine, March/April 2000
- David Walls,
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