Who is poor?
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National poverty data are calculated using the official Census definition of
poverty, which has remained fairly standard since it was introduced in the
1960s and is useful for measuring progress against poverty. Under this definition,
poverty is determined by comparing pretax cash income with the poverty
threshold, which adjusts for family size and composition. In 2006, according to the official measure,
36.5 million people, 12.3 percent of the total U.S. population, lived in poverty
(Table
1).
Is poverty different for different groups in the population?
The poverty rate represents an average over the entire population, and does
not really tell us who, in particular, is well off, who is worse off. For
that, it is necessary to examine poverty levels for particular groups. Most
notably, blacks and Hispanics have poverty rates that greatly exceed the average.
The poverty rate for all blacks and Hispanics remained near 30 percent during
the 1980s and mid-1990s. Thereafter it began to fall. In 2000, the rate for
blacks dropped to 22.1 percent and for Hispanics to 21.2 percent—the
lowest rate for both groups since the United States began measuring poverty.
The
Current Population Survey, from which the poverty statistics are drawn,
implemented a new question in 2003 to collect information on race, allowing
individuals to report one or more races. There is no way of knowing how people
who reported more than one race would have reported their race under the old
question. Table
1 shows that those who defined themselves as black only or as black
and some other race had the highest poverty rates—24.3 percent.
Among those of Hispanic origin, who can be of any race, the poverty rate
was 20.6 percent. The poverty rate for Asians was 10.3 percent.
Among children
under age 18, 17.4 percent, 12.8 million children, lived in poverty.
(See Table
1 and also the FAQ, How Many Children Are Poor?)
The poverty rate for those over 65, which in 1959 exceeded the overall
poverty rate, fell below it beginning in 1982. In 2006, poverty fell
slightly for this group—the rate was 9.4 percent.
The poverty rate for whites who were not Hispanic was below the overall
poverty rate from 1959 through 2003. In 2006 it was 8.2 percent.
In 2006, the poverty rate for families was 9.8 percent, comprising
7.7 million families. Of all family groups, poverty is highest among those
headed by single women. In 2006, 28.3 percent of all female-headed families
(4.1 million families) were poor, compared to 4.9 percent of married-couple
families (2.9 million families).
Poverty levels also differ depending on where people live. The metropolitan
poverty rate differs greatly between suburbs and the central city. In 1979,
the average central city poverty rate was 15.7 percent; at its highest point,
in 1993, it was 21.5; by 2006 it was 16.1 percent, almost twice the rate
for the suburbs (9.1 percent). Poverty in rural areas is
not negligible either; in 2006, 15.2 percent of people living outside metropolitan
areas (that is, in the countryside and small country towns) were poor.
The poverty rate also varies by region and within regions. In 2006
it was greatest in the South, at 13.8 percent, and statistically the same in
the Midwest, Northeast, and the West at 11.2, 11.5, and 11.6 percent, respectively.
Adjoining states may have radically different levels of poverty. In 2006, the
poverty rate in the state of Maryland was 7.8 percent—yet
in the adjacent District of Columbia, it stood at 19.6 percent.
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Has poverty changed over time?2
In the late 1950s, the overall poverty rate for individuals in the United States
was 22 percent, representing 39.5 million poor persons. Between 1959 and 1969,
the poverty rate declined dramatically and steadily to 12.1 percent. As a result
of a sluggish economy, the rate increased slightly to 12.5 percent by 1971.
In 1972 and 1973, however, it began to decrease again. In 1973, the poverty
rate was 11.1 percent. At that time roughly 23 million people were poor.
In 1975 the poverty rate increased to 12.3 percent. It then oscillated
around 11.5 percent for the next few years. After 1978, however, the rate
rose steadily, reaching 15.2 percent in 1983. Thereafter it remained
mostly higher than 13 percent. In 1993 it reached a new high of 15.1 percent,
and then began to fall slowly. In 2000, 31 million people were poor (11.3 percent
of the population). In 2001 the number of poor and the poverty rate both rose
as economic difficulties moved into recession, and the rate continued to
rise; in 2003, 35.8 million people were poor by the
official measure of poverty. By 2005, the number had risen to 37 million people
(12.6 percent of the population). In 2006, the number declined slightly, to
36.5 million people (12.3 percent of the population).
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Poverty using different measures of income
The existing official measure of poverty has been widely criticized. Under
the procedures by which the official poverty rate is calculated, only cash
income is counted in determining whether a family is poor; cash welfare programs
count, but benefits from noncash programs, such as food stamps, medical care,
social services, education and training, and housing are not included. Taxes
paid, such as Social Security payroll taxes, and tax credits, such as the
Earned Income Tax Credit, are also excluded from poverty calculations. Because
government spending on means-tested noncash benefits and tax credits has increased
more rapidly than spending on means-tested cash benefits over the years, ignoring
noncash benefits is an increasingly serious omission if we want a broad picture
of the impact of government programs on poverty.
In 1995 a panel of the National Academy of Sciences (NAS) published an influential
report on revising the poverty measure (Measuring
Poverty: A New Approach, edited by Constance F. Citro and Robert
T. Michael). The Census Bureau has calculated alternative poverty rates
using various experimental adjustments to the official poverty rate. It
has, for example, expanded the definition of income to take into account
some noncash income, including government benefits. The experimental poverty
measures are the subject of an issue of the IRP newsletter Focus (volume
19, no. 2, Spring 1998,
"Revising the Poverty Measure",
pdf, 64 pp.), were discussed in an April
1999 IRP conference, and were the topic of a June
2004 workshop hosted by the Committee on National Statistics of the NAS.
Papers presented at the workshop reviewed the effects of possible changes
in the measure, drawing on the decade of research that has followed the
publication of Measuring Poverty.
The Census Bureau's poverty report for 2002 estimated the effects of government
programs on poverty using experimental measures. For example, it compared the
official measure of poverty with measures based on recommendations of the 1995
NAS panel. The panel suggested, among other changes, adjusting the poverty measure
to account for geographic differences in housing costs, counting noncash benefits
as income, and subtracting from income some work-related, health, and child
care expenses. Using alternative definitions of poverty based on the NAS study,
the poverty rate for 2002 was in general higher than under the official measure,
depending on the particular definition of medical costs and on whether geographic
differences were taken into account (see the 2002 Poverty Report, Table
7, "Alternative Poverty Estimates"). Not all groups are affected
uniformly, however, when the poverty definition changes.
There is considerable disagreement on the best way to incorporate medical
care in a measure of poverty, even though medical costs have great implications
for poverty rates. But costs differ greatly depending upon personal health,
preferences, and age, and family costs may be very different from year
to year, making it hard to determine what exactly should be counted. Subtracting
out-of-pocket costs from income is one imperfect approach, but if someone's
expenses are low because they are denied care, then they would usually
be considered worse off, not better off. If the value of Medicaid or Medicare
benefits is included, should not the value of private insurance also be
included? And although poor persons are clearly better off with medical
coverage, such benefits, unlike cash, cannot be used by recipients to meet
other needs of daily living.
Including the value of housing is equally controversial. How should the respective
value of rented and owned housing be measured? Including the equity value of
housing would alter the distribution of poverty according to age, because of
the large numbers of elderly who are homeowners.
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State poverty rates
Table 2 presents poverty rates
by state for 2004–2006 and earlier years, based on 3-year averages
(state poverty rates in a single year are not very reliable, owing to small
sample sizes; thus the latest available rates are for 2004–2006). The
District of Columbia and three states had poverty rates 17 percent or
over: Louisiana, Mississippi, and New Mexico. The poverty rate was
lowest in New Hampshire—5.5
percent.
Note: This discussion has been adapted from the U.S. Bureau
of the Census, Poverty
in the United States: 2002, Series P60-222, and Income,
Poverty, and Health Insurance Coverage in the United States: 2003,
2004 and 2005, Series
P60-226, 229 and 231;
and U.S. Census Bureau Current Population Survey, 2005 to 2007 Annual Social
and Economic Supplements; it also uses information from the Green
Book, 2004, Appendix H, which presents statistics on poverty in the United
States.
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Endnotes
1The Census Bureau has revised its method of estimating
the poverty threshold four times—in 1966, 1974, 1979, and 1981. These revisions
changed the estimate of the poverty rate. The first two revisions slightly
reduced the estimated number of poor, whereas the more recent revisions slightly
increased the number. In 1984, the Census Bureau also revised its method of
imputing missing values for interest income, which slightly lowered the estimated
poverty rate. Thus data on income and poverty in later years may not be comparable
to data in earlier years because of the changes in the methods used by the
Census Bureau to process survey results.
2All poverty trend information is based upon published
Census Bureau data contained in Current Population Reports, Series
P-60, Nos. 124, 140, 145, 149, 154, 157, 161, 166, 168, 174, 180, 185,
207, 210, 214, 219, 222, 226, 229, 231, and 233. These figures may differ
from those in the Green Book. Data for blacks, the aged, and nonaged
population were not available for the years 1961-65.
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