How is Poverty Measured in the United States?

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During the mid-1960s, Mollie Orshansky, a social science research analyst at the Social Security Administration (SSA), began publishing articles with poverty statistics for the United States, using a poverty measure that she had developed. Like any poverty measure, Orshansky's measure had two components--a set of poverty lines or income thresholds, and a definition of family income to be compared with those thresholds.  Orshansky developed her poverty thresholds by taking the cost of a minimum adequate diet for families of different sizes and multiplying the cost by three to allow for other expenses. (The minimum diet she used was the Economy Food Plan, the cheapest of four food plans issued by the U.S. Department of Agriculture. The factor of three was derived from a 1955 Agriculture Department survey.) Poor families were those whose yearly income was below the threshold for a family of a given size.

For the base year 1963, Orshansky's weighted average poverty threshold for a family of four was $3,128. She used the Census Bureau's definition of income--before-tax money income.

In 1965 the U.S. Office of Economic Opportunity adopted the SSA thresholds as a working definition of poverty for statistical purposes and for program planning. In 1969 the U.S. Bureau of the Budget (now the U.S. Office of Management and Budget) issued a directive that made the thresholds the federal government's official statistical definition of poverty.

In 1967, the Census Bureau began to publish annual poverty statistics calculating the number and percentage of persons in poverty (the poverty population and the poverty rate) by comparing the Orshansky thresholds to families' before-tax money income, using data from the Current Population Survey that is taken every year in March. For these tabulations, the thresholds are updated annually for price changes and so are not changed in real (constant-dollar) terms; in other words, the 2005 weighted average poverty threshold of $19,971 for a family of four represents the same purchasing power as the corresponding 1963 threshold of $3,128.

In 2005, the Census Bureau fully implemented a new survey, the largest household survey in the United States, called the American Community Survey (ACS). The ACS collects detailed demographic, socioeconomic, and housing information, like the long-form questionnaire of the Decennial Census, from about 3 million addresses per year.

In August 2007, the Census Bureau published a report of the findings, “Income, Earnings, and Poverty Data from the 2006 ACS.”

The 2005 estimates cover all geographical areas with a population of 65,000 or more; 3-year average estimates begin in 2008 for areas and subpopulations as small as 20,000; and beginning in 2010, the ACS will use 5-year averages to provide estimates for all areas down to census tracts/block groups.

While the official poverty rate for the entire United States is based on data from the Current Population Survey Annual Social and Economic Supplement (CPS ASEC), the ACS is a reliable source of annual survey estimates of poverty for states and for substate areas with populations of 65,000 or more. To learn more, read a fact sheet the Census Bureau prepared to describe the differences between the income and poverty estimates from the ACS and the CPS ASEC

For further reading: Gordon M. Fisher, "The Development and History of the Poverty Thresholds," Social Security Bulletin 55, no. 4 (Winter 1992):3-14 (a two-page summary is available on the Department of Health and Human Services' Poverty Guidelines web site); and Focus 19:2: Revising the Poverty Measure (pdf, 64 pp.).

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