Poverty line in the United States

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In the United States, official statistics on poverty and the official poverty line are kept by the US Census Bureau. Other federal and state agencies, however, use other definitions of poverty, for example, to do means testing for welfare programs.

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History

The first official poverty line for the United States was developed by Mollie Orshansky for the Social Security Administration in 1964. It was amended, then later adopted for the Lyndon Johnson administration's War on Poverty as a general statistic on poverty. Orshansky's definition calculated the minimum amount of income a family unit would need to purchase food for all family members to eat the cheapest nutritionally acceptable diet described by the United States Department of Agriculture. She then multiplied that number by three, the average percentage that U.S. families spent on food. Orshansky did not intend this figure to measure the minimum income necessary for survival. Rather, she meant this as a statistical tool in order to facilitate the studying of issues of poverty. (From Fisher, 1992)

The U.S. Census Bureau now reports:

If a family's total income is less than that family's threshold, then that family, and every individual in it, is considered poor. The official poverty thresholds do not vary geographically, but they are updated annually for inflation using the Consumer Price Index (CPI-U). The official poverty definition counts money income before taxes and does not include capital gains and noncash benefits (such as public housing, Medicaid, and food stamps).

Official figures report that the cash income level of about ten percent of Americans places them below the poverty line. However, these figures cannot be directly compared with official figures in other countries, as each country uses different measurements.

Controversy

The US poverty line is controversial, with some advocates claiming it understates poverty in the US and other advocates claiming it overstates poverty.

For instance, it has been pointed out that many of the lowest ten percent of U.S. households, all officially denominated as poor, have possessions which were considered luxuries, or in some cases nonexistent, fifty years ago. [1] (http://www.washtimes.com/commentary/20031005-111129-3478r.htm)

  • color televisions, 91%
  • microwave ovens, 74%;
  • VCR's, 55%;
  • clothes dryers, 47%;
  • stereos, 42%;
  • dishwashers, 23%;
  • computers, 21%;
  • garbage disposers, 19%

Certain commentators have questioned the placement of the poverty line, asking whether people with access to such resources should be denominated as poor.

Critics point out that while some of these items are not necessities they are much easier to produce today than fifty years ago, making them inexpensive. In the 1950’s, a microwave cost more than two years of low-income rent; today one can be had for a fraction of one month’s rent. Furthermore, present conditions are compared to an arbitrary time period. If one chooses an earlier period, many more items would become luxuries or nonexistent (i.e. refrigerators, electric lights, gas ranges, etc.).

2003

On August 26 2004 the U.S. Census Bureau reported its poverty report over 2003. The official poverty rate was up to 12.5% from 12.1% in 2002. The total number of people below the poverty line rose by 1.3 million to 35.9 million.

Since 2000 the total number of people below the poverty line has increased by about 5 million.

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References

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