Last year, 11.6% of people in the U.S. lived below the federal poverty line, a number that has ticked up in recent years, according to the Census Bureau.
Experts say those numbers may be even higher because the poverty line formula is outdated and incomplete – and highlights just a fraction of the financial hardship faced across the country.
The main way we measure poverty in the U.S. hasn’t been updated since the 1960s, when the federal government created the poverty line. The official poverty line as currently defined by the Census Bureau is “three times the cost of a minimum diet in 1963” – meaning it’s measured by how much families spent on food five decades ago.
“We spend the bulk of our income on shelter now, on housing, and we don’t spend the bulk of our income on food anymore. And so just conceptually, it’s really out of date,” said Beth Jarosz, a U.S. programs director at the Population Reference Bureau.
At a time that has seen record inflation and soaring housing costs, it’s even more important poverty is measured accurately and low-income families access benefits that can help them, said Timothy Smeeding, a leading expert on the poverty line and professor of public affairs and economics at University of Wisconsin-Madison.
“Just being over the poverty line isn’t enough to really help a kid reach the middle class or for a kid to grow well. You need lots of help,” Smeeding told USA TODAY.
Here’s what you need to know:
What is the poverty line?
The official poverty measure is based on a family’s income before taxes, according to the Census Bureau.
For a family of four, it was $27,479 in 2021. The line is the same in all 48 contiguous states so it does not take into account cost of living that varies by region.
The official poverty measure has been adjusted slightly for inflation through the years, but it remains “mostly unchanged,” the Census Bureau says.
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Why is the poverty line important?
The poverty line is used as a measuring stick for people in need to receive benefits for housing, food stamps, free school lunches, Medicaid, utility assistance and subsidized child care.
Even though it “makes no sense” that the poverty line doesn’t account for different costs of living, the government still needs “something that is a bar for people’s resources,” said Elaine Waxman, a senior fellow at the Urban Institute who researches government subsidized benefits.
Over the past decade, the federal government has spent hundreds of billions of dollars each year on benefits and services for people with low incomes, according to the Congressional Research Service.
The enormous amount of benefits currently tied to the poverty line means no other measure is going to “replace” it anytime soon, Smeeding said.
Who created the poverty line?
In 1963, a government worker named Mollie Orshansky created the first version of poverty thresholds as part of her work researching childhood poverty for the Social Security Administration.
Orshansky, using USDA data, found families of three or more “spent approximately one-third” of their cash income on food.
She then calculated the poverty threshold for a family by multiplying the cost of a basic food budget by three, according to Social Security Administration archives.
In 1964, Orshansky extended her poverty thresholds to include people without children, and in August 1969 her thresholds became the federal government’s definition of poverty.
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Why hasn’t the poverty line been updated?
There is a lot of “inertia” behind the poverty line, since it’s what the federal government has been using to measure need and give benefits for decades, Jarosz said.
Elected officials haven’t raised the poverty line because they haven’t wanted to be responsible for broadening the definition of poverty and increasing the number of Americans below the line, she said.
“What government wants to be responsible for changing the definition so that twice as many people now are in poverty?” Jarosz said.
Politicians also haven’t updated the poverty line to reflect varying housing costs in different localities, because that could be viewed as unfair to people living in a few regions with the lowest housing costs, mainly the rural South and Midwest, Smeeding said.
“There would be some winners and some losers,” he said, if the poverty line were adjusted based on regions of the country.
Do people still qualify for aid even if they are technically above the federal poverty line?
It all depends on what state you live in, Waxman said.
“It’s very much an accident of where you live sometimes as to whether you can get things,” she said.
For some programs in certain states, you can be at twice the amount of the official poverty measure and be eligible.
Measuring eligibility for benefits in “multiples” of the poverty line is the biggest way the federal government is able to avoid updating the poverty line itself, Jarosz said.
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Is there a better way to measure poverty?
There are other ways to calculate someone’s ability to meet basic needs that are not tied to benefits like the official poverty line, Jarosz said.
Since 2011, the Census Bureau has released data on something called the Supplemental Poverty Measure, which takes cost of living into account.
The Supplemental Poverty Measure lets you “see all these variants, all these huge differences,” in what it takes to make ends meet in different parts of the country, Smeeding said.
But by definition, the measure can’t be used to determine eligibility for programs because it already factors in the positive impact of government benefits.
Living wage estimates are another way to measure how much resources are needed to meet basic expenses in different cities, Jarosz said.
But, “again, it’s like researchers and government officials finding ways to address this that haven’t actually changed the threshold itself,” she said.
Story Credit: usatoday.com