Federal Poverty Measure

 

Image Source: National Center for Children in Poverty

Introduced by Mollie Orshansky in 1964 and adopted by former President Lyndon B. Johnson, the current official U.S. poverty measure classifies those who fall below a standard of need and sets eligibility thresholds for public programs (e.g., food stamps). Because the average American household spent one-third of their income on food, this guideline is equivalent to three times the amount of a low-cost diet during this period, adjusted by inflation over time. This measure calculates a family’s pre-tax cash income to determine one’s status in regards to poverty, either above or below the standard. Although this index serves as a nationally uniform figure across the United States and allows for comparisons amongst its areas, it is both outdated and flawed.
The threshold used to determine those who are impoverished is based solely on food, which is only one of the many necessities a family must provide for. Families must also provide for housing, childcare, transportation, and healthcare expenses, living costs that have increased tremendously since the 1960s. Moreover, calculating pre-tax cash income is not an accurate resource to indicate which families fall below a standard of need; taxes have also increased since the index’s development. The current poverty measure also does not factor in value of non-cash benefits such as food stamps and housing assistance when totaling family income. Furthermore, regional variation in the cost of living is ignored yet plays a significant role in determining budgetary costs.
Today, millions of people living above the poverty line cannot meet their basic needs. However, it is quite difficult for one to be considered impoverished and further receive subsidies needed under the federal poverty measure. Thus, alternative ways of measuring poverty have been developed over the last few decades: the self-sufficiency standard, supplemental poverty measure.

For further reading:

Glossary, UD: Measuring Poverty

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