How is poverty measured in the United States?
State and Local Data
Depth of Poverty
Supplemental Poverty Measure
History of Revising the Measure
Wisconsin Poverty Measure
The U.S. Census Bureau determines poverty status by comparing pre-tax cash income against a threshold that is set at three times the cost of a minimum food diet in 1963, updated annually for inflation using the Consumer Price Index (CPI; see the last section of this FAQ for an explanation of the CPI), and adjusted for family size, composition, and age of householder. "Family" is defined by the official poverty measure as persons living together who are related by birth, marriage, or adoption. Thresholds do not vary geographically. The Census Bureau has created an infographic to explain "How Census Measures Poverty."
The poverty threshold serves different purposes, including tracking poverty over time, comparing poverty across different demographic groups, and as the starting point for determining eligibility for a range of federal assistance programs. (To learn more about using the poverty thresholds, or their administrative counterpoint, the poverty guidelines, for determining program eligibility, see FAQ #1.)
In 2014, the most recent year for which data are available, the poverty threshold for a family of four was $24,230. The official national poverty rate was 14.8 percent. There were 46.7 million people in poverty.
In 1959, when the official government poverty series began, poverty was at 22 percent. Before that time, unofficial estimates by researchers found a poverty rate in 1914 of 66 percent; 78 percent in 1932; 32 percent in 1947; and 24 percent in 1958. Figure 1 shows more recent poverty rates, in 1968, 1990, and 2014, by age, race, and Hispanic origin, using the official measure. Especially notable trends are the consistent increase in child poverty, the dramatic decrease in elder poverty, and poverty rates among African Americans and persons of Hispanic heritage that are two and a half to three times higher than whites' poverty rates.
Source: U.S. Census Bureau, Current Population Survey, Annual Social and Economic Supplement.
Note: CPS ASEC data on poverty among persons self-identified as Asian before 2003 are not available. "Hispanic" denotes Latin American descent (typically Cuban, Mexican, or Puerto Rican) but carries no racial designation.
The official poverty estimates are drawn from the Current Population Survey Annual Social and Economic Supplement (CPS ASEC), which is conducted in February, March, and April with a sample of approximately 100,000 addresses per year. The CPS ASEC questionnaire asks about income from more than 50 sources and records up to 27 different income amounts. The Census Bureau also reports income and poverty estimates from a number of other major national household surveys and programs.
Researchers and policymakers have long criticized the official poverty measure for a number of reasons. However, in spite of its shortcomings, detailed below, its salience in policymaking is noted by the economists Bruce D. Meyer and James X. Sullivan:
Few economic indicators are more closely watched or more important for policy than the official poverty rate. The poverty rate is often cited by policymakers, researchers, and advocates who are evaluating social programs that account for more than half a trillion dollars in government spending.
Principal criticisms of the official poverty measure include:
- Its "headcount" approach identifies only the share of people who fall below the poverty threshold, but does not measure the depth of economic need;
- It does not reflect modern expenses and resources, by excluding significant draws on income such as taxes, work expenses, and out-of-pocket medical expenses, and excluding potentially sizable resources such as in-kind benefits (e.g., food assistance);
- It does not vary by geographic differences in cost of living within the contiguous United States;
- It is not adjusted for changes in the standard of living over time; and
- Its strict definition of measurement units—"family"—as persons living in the same household who are related by birth, marriage, or adoption does not reflect the nature of many 21st century households, including those made up of cohabitors, unmarried partners with children from previous relationships, and foster children.
While the official measure remains the official national poverty statistic, the Census Bureau has been estimating poverty using a number of experimental measures as well, since the mid-1990s. See Poverty: Experimental Measures on the Census Bureau's website for more about these approaches.
The most recent and prominent experimental measure, the Supplemental Poverty Measure—a work-in-progress that will supplement but not replace the official measure—is discussed below, after discussion of data sources for estimating poverty at the state and local levels.
For poverty estimates at the state and local levels, researchers recommend consulting the Census Bureau's American Community Survey (ACS), the largest household survey in the United States, which is part of the 2010 Decennial Census Program. In contrast to the decennial Census, the ACS is conducted annually, although often data from two, three, or five years are averaged together to increase the precision of estimates for smaller geographic areas.
The most recent ACS brief on poverty covers 2012 and 2013 and was issued in September 2014. The ACS surveys approximately 3 million addresses per year through mail, telephone, and in-person interviews. It provides demographic, social, economic, and housing data for the nation, states, congressional districts, counties, and other localities.
The Census Bureau describes the ACS as "an ongoing survey that provides data every year—giving communities the current information they need to plan investments and services. Information from the survey generates data that help determine how more than $400 billion in federal and state funds are distributed each year."
In addition to providing current small-area information about people's age, sex, family and relationships, income and benefits, disabilities, and veteran status; and the poverty rate, which is an estimate of the proportion of people with income below their poverty threshold; the ACS (and the CPS) also gauges the depth of poverty (see below).
The Census Bureau expresses depth of poverty in an income-to-poverty ratio, which measures how close a family's or individual's income is to their poverty threshold, measuring the depth of poverty for those below their threshold, and the nearness to poverty for those above their threshold. (For current thresholds, see FAQ #1.) Either the ACS or the CPS can be used to measure the depth of poverty; in this discussion we refer first to ACS overall income-to-poverty ratios by state (Table 1), and then to CPS national income-to-poverty ratios by age, sex, race/ethnicity, and family status (Table 2).
Families and individuals with an income-to-poverty ratio of less than 100 percent are identified as in poverty. An income-to-poverty ratio of 100 to 124 percent—constituting "near poverty" by the Census Bureau—indicates a family's or person's income is at or no more than 24 percent above their poverty threshold. An income-to-poverty ratio of 50 percent indicates a family or person is living with income that is half of their poverty threshold, which is considered as "deep poverty."
Table 1 below shows the percentage of people by specified income-to-poverty ratios for the United States and by state in 2013. The table shows that among the states, New Hampshire (11.9 percent) had the lowest proportion of people with income-to-poverty ratios of less than 125 percent. The states with the highest proportion of people with income-to-poverty ratios of 50 percent (deep poverty) were Mississippi (10.7 percent), New Mexico (10.2 percent), and Louisiana (9.0 percent). The national deep poverty rate was 7.0 percent; Wisconsin's was 5.7 percent.
Table 1. Percentage of People by Income-to-Poverty Ratio in the Past 12 Months by State, 2013
|State||Under 50.0 Percent||50.0 to 99.9 Percent||100.0 to 124.9 Percent|
|District of Columbia||10.3||8.6||4.1|
|Source: A. Bishaw and K. Fontenot, "Poverty: 2012 and 2013," American Community Survey Briefs, ACSBR/13-01, U.S. Census Bureau (September 2014). Available at https://www.census.gov/content/dam/Census/library/publications/2014/acs/acsbr13-01.pdf.
Note: Details may not sum to totals because of rounding.
Table 2 presents specified 2014 national income-to-poverty ratios by age, sex, race/ethnicity, and family status using CPS data. It shows, for example, that 6.6 percent of all people had income below one-half of their poverty threshold, often called deep poverty. Approximately one in three persons—33.4 percent—had income under 200 percent of their threshold. Of children under age 18, nearly 10 percent—9.3 percent—had income below one-half of their poverty threshold; and 42.9 percent of children lived in families with income below 200 percent of their poverty threshold.
|Table 2. People with Income Below Specified Ratios of Their Poverty Thresholds in the U.S. by Selected Characteristics, 2014|
|Characteristic||Under 50 Percent||Under 100 Percent||Under 125 Percent||Under 150 Percent||Under 200 Percent|
|Under 18 years||9.3||21.1||27.0||32.5||42.9|
|18 to 64 years||6.4||13.5||17.5||21.7||30.0|
|65 years and older||3.2||10.0||15.2||21.1||32.5|
|Race and Hispanic Origin|
|White, not Hispanic||4.6||10.1||13.6||17.4||25.2|
|Hispanic (any race)||9.6||23.6||31.5||38.4||51.6|
|Related children under 18||8.9||20.7||26.6||32.1||42.4|
|Related children under 6||10.9||23.4||30.0||35.8||46.0|
|In unrelated subfamilies||23.9||42.9||53.5||60.4||73.7|
|Source: U.S. Census Bureau, Current Population Survey, 2015 Annual Social and Economic Supplement.
Note: Details may not sum to totals because of rounding. "Unrelated subfamilies" are families that live in the household of someone else.
The Census Bureau introduced the Supplemental Poverty Measure or SPM in 2010 to provide an alternative view of poverty in the United States that better reflects life in the 21st century, including contemporary social and economic realities and government policy. As its name suggests, the SPM supplements but does not replace the official poverty measure, which remains the nation's source for official poverty statistics and for determining means-tested program eligibility.
The SPM was designed to address the official poverty measure's shortcomings, described above, which were assessed by a National Academy of Sciences (NAS) poverty measurement panel convened in 1992 that made recommendations for improvement (see below). The SPM incorporates much of the NAS methodology with modifications that were suggested by subsequent research.
In their research brief, "A Consumer's Guide to Interpreting Various Poverty Measures," Census Bureau Chief of the Social, Economic, and Housing Statistics Division David Johnson and Lee Rainwater Distinguished Professor of Public Affairs and Economics at the University of Wisconsin–Madison Timothy Smeeding (who served as Director of IRP from 2008–2014) note, "The Supplemental Poverty Measure combines the best and most agreed upon elements of the research based on expert opinion and on the [Census Bureau's] experimental series."
In a side-by-side comparison of the official poverty measure and the SPM, the Census Bureau notes their differences in measurement units, poverty threshold, threshold adjustments (e.g., by family size), updating thresholds, and what counts as resources, summarized in Table 3 below.
|Table 3. Poverty Measure Concepts: Official Poverty Measure and Supplemental Poverty Measure|
|Official Poverty Measure||Supplemental Poverty Measure|
|Measurement Units||Families or unrelated individuals||Families, including any coresident unrelated children who are cared for by the family (such as foster children) and any cohabitors and their relatives, or unrelated, noncohabiting individuals|
|Poverty Threshold||Three times the cost of a minimum food diet in 1963||The mean of expenditures on food, clothing, shelter, and utilities (FCSU) over all two-child consumer units in the 30th to 36th percentile range multiplied by 1.2|
|Threshold Adjustments||Vary by family size, composition, and age of householder||Geographic adjustments for differences in housing costs by tenure and a three-parameter equivalence scale for family size and composition|
|Updating Thresholds||Consumer Price Index: All items||Five-year moving average of expenditures on FCSU|
|Resource Measure||Gross before-tax cash income||Sum of cash income, plus noncash benefits that families can use to meet their FCSU needs, minus taxes (or plus tax credits), minus work expenses, minus out-of-pocket medical expenses and child support paid to another household|
Source: K. Short, The Supplemental Poverty Measure: 2014, Current Population Reports, P60-254, September 2015, U.S. Census Bureau. See also David S. Johnson and Timothy M. Smeeding, 2012, "A Consumer's Guide to Interpreting Various U.S. Poverty Measures," Fast Focus No. 14-2012.
Note: "Family" as defined by the Census Bureau is "a group of two people or more related by birth, marriage, or adoption and residing together; all such people (including related subfamily members) are considered as members of one family." See http://www.census.gov/cps/about/cpsdef.html.
A comparison of official and SPM poverty rates in 2014 for the total population and among three age groups: under age 18, adults ages 18 to 64, and elders age 65 and over, is shown in Figure 2. Analysts attribute the differences in rates between the two measures among the populations to several factors, including the generally higher thresholds set by the SPM.
For most groups, SPM poverty rates were higher than official poverty rates; children are an exception with 16.7 percent poor using the SPM and 21.5 percent poor using the official measure. Analysts attribute the lower SPM child poverty rate to the measure's inclusion of noncash benefits such as Supplemental Nutrition Assistance Program (SNAP, formerly Food Stamps) benefits.
The much higher SPM poverty rates for people age 65 and older—14.4 percent vs. 10.0 percent using the official measure—partially reflect that the official thresholds are set lower for families with householders in this age group, while the SPM thresholds do not vary by age. In addition, the SPM rate is higher for people age 65 and older because it includes out-of-pocket medical expenditures, which are typically high for the elderly, whereas the official measure does not take them into account.
|Source: U.S. Census Bureau, 2015 Current Population Survey Annual Social and Economic Supplement.|
Read more about the development of the Supplemental Poverty Measure, the most recent SPM report, and ongoing research on SPM development. Papers on the SPM thresholds that emphasize the imputations needed to incorporate noncash benefits in the expenditure distributions also may be of interest.
In 1992, the National Academy of Sciences (NAS) study panel, the Panel on Poverty and Family Assistance, was established at the request of Congress to conduct a comprehensive examination of poverty measurement in the United States. Their charge was to evaluate the official poverty measure to see if it was still serving its intended purposes and whether the panel of experts thought it could be improved.
Among the panel members were two former IRP Directors, Robert M. Hauser (Vilas Research Professor of Sociology, University of Wisconsin–Madison) and Sheldon Danziger (President, Russell Sage Foundation); IRP Affiliate Franklin Wilson (Professor of Sociology, Emeritus, University of Wisconsin–Madison); and an off-campus IRP Affiliate, David M. Betson (Associate Professor of Public Policy and Economics, University of Notre Dame).
In 1995, the NAS panel issued a final report and recommendations for change in the monograph titled Measuring Poverty: A New Approach. There were no changes made to the official measure in response to the recommendations, although the report served as the foundation for subsequent research and has informed ongoing development of the Supplemental Poverty Measure.
The panel recommended the following:
The official U.S. poverty thresholds should comprise a budget for the three basic categories of food, clothing, shelter (including utilities), and a small additional amount to allow for other needs (e.g., household supplies). Actual expenditure data should be used to develop a threshold for a reference family of four—two adults and two children. Each year, that threshold should be updated to reflect changes in spending on food, clothing, and shelter over the previous 3 years and then adjusted for different family types and geographic areas of the country. The resources of a family or individual that are compared with the appropriate threshold to determine poverty status should be consistently defined to include money and near-money disposable income; that is, resources should include most in-kind benefits and exclude taxes and certain other nondiscretionary expenses (e.g., work expenses).
The procedure for updating the poverty thresholds over time is an integral part of the proposed measure…. We propose a regular updating procedure to maintain the time series of poverty statistics. We also recommend a conservative updating procedure that adjusts the thresholds for changes in consumption that are relevant to a poverty budget, rather than for changes in total consumption.
At the time of their release in 1995 and for a decade and a half thereafter, the NAS panel's recommendations did not lead to changes in federal legislation necessary to revise the official poverty measure.
In 2004, the Committee on National Statistics hosted a workshop to review federal research on alternative methods for measuring poverty using an income poverty measure. The workshop was requested by the U.S. Office of Management and Budget to assess progress in moving towards a new measure of income poverty as recommended by the 1992 NAS Panel on Poverty and Family Assistance, whose recommendations were released in 1995.
The workshop provided a forum for comment on methods developed for key components of the CNSTAT Panel's proposals and the degree of support for such methods. The roster was as follows: Timothy Smeeding (co-chair), Lee Rainwater Distinguished Professor of Public Affairs and Economics, University of Wisconsin–Madison and former Director of IRP; Barbara Wolfe, Richard A. Easterlin Professor of Public Affairs, Economics, and Population Health Sciences, and former Director of both IRP and the La Follette School of Public Policy, University of Wisconsin–Madison; Rebecca Blank (co-chair), Chancellor of the University of Wisconsin–Madison and IRP Affiliate; David M. Betson, Associate Professor of Economics and the former Director of the Hesburgh Program in Public Service at the University of Notre Dame; and Graham Kalton, Chairman of the Board of Westat, Incorporated, an employee-owned research corporation.
Workshop participants summarized their discussions as follows:
Our major conclusion is that the current measure needs to be revised: it no longer provides an accurate picture of the differences in the extent of economic poverty among population groups or geographic areas of the country, nor an accurate picture of trends over time. The current measure has remained virtually unchanged over the past 30 years. Yet during that time, there have been marked changes in the nation's economy and society and in public policies that have affected families' economic well-being, which are not reflected in the measure.
Discussion of the official poverty measure's shortcomings and ways to improve it led to the realization that states and localities would benefit from having a better gauge of their own area's economic disadvantage. Among the researchers taking the lead in the development of more accurate and timely state- and local-level measures were researchers and programming staff at IRP, led by Timothy Smeeding and Urban Institute Senior Fellow and IRP Visiting Scholar Julia Isaacs.
They devised the Wisconsin Poverty Measure (WPM) in order to tell not only which people and families are poor, but also to gauge the influence of public policies on poverty. The WPM is suitable for estimating the costs and antipoverty effects of legislation that expands noncash benefits or provides tax credits to low-income citizens. It can tell state policymakers how much additional poverty occurs from program cutbacks or tax increases as well.
The WPM was the first state-level poverty measure effort of its kind in the nation and was developed to serve as a model for other states and localities seeking to develop their own more meaningful measure to assess poverty and policies in ways that reflect the characteristics and policy interests of their own state. (See FAQ #4, "Who is poor in Wisconsin?" for the latest Wisconsin poverty estimates.)
 The Census Bureau cautions that the thresholds should be interpreted as a "statistical yardstick" rather than as a complete accounting of how much income people need to live. They were intended to define and quantify poverty in America and to record changes in the number of persons and families in poverty and their characteristics over time. See FAQ #1, What are poverty thresholds and poverty guidelines?, for a more detailed discussion of this topic.
 R. D. Plotnick, E. Smolensky, E. Evenhouse, and S. Reilly, "The Twentieth-Century Record of Inequality and Poverty in the United States," in The Cambridge Economic History of the United States, Vol. 3, eds. S. L. Engerman and R. E. Gallman (Cambridge: Cambridge University Press, 2000), 249-299; G. Fisher, "Estimates of the Poverty Population under the Current Official Definition for Years before 1959," mimeograph, Office of the Assistant Secretary for Planning and Evaluation, U.S. Department of Health and Human Services, 1986.
 B. D. Meyer and J. X. Sullivan, "Identifying the Disadvantaged: Official Poverty, Consumption Poverty, and the New Supplemental Poverty Measure," Journal of Economic Perspectives 26, No. 3 (2012).
 The ACS uses a different method to determine a family's or individual's poverty threshold than that used for the CPS ASEC. Poverty thresholds are determined by multiplying the base year poverty threshold (1982) by the average of monthly Consumer Price Index values for the 12 months preceding the survey month (since the ACS is a continuous survey). For information, see "How Poverty Is Calculated in the ACS" at http://www.census.gov/hhes/www/poverty/poverty-cal-in-acs.pdf.
 Note that the national poverty estimates from the ACS may differ somewhat from the official poverty rate based on the CPS data, because of methodological differences in the two surveys (e.g., sampling frame, amount of detail asked about income, and time period covered).
 David S. Johnson and Timothy M. Smeeding, 2012, "A Consumer's Guide to Interpreting Various U.S. Poverty Measures," Fast Focus No. 14-2012. For more about experimental poverty measures employed over time by the Census Bureau, see http://www.census.gov/hhes/povmeas/.
 J. Iceland, rapporteur, Experimental Poverty Measures: Summary of a Workshop (Washington, D.C.: National Academies Press, 2005). Available at http://www.nap.edu/read/11166/chapter/1.