Who is poor?
Poverty using different measures of income
State poverty rates
Official national poverty data are calculated using the Census Bureau definition of poverty. This measure has remained mostly unchanged since it was introduced in the 1960s, other than to be annually adjusted for inflation using the Consumer Price Index, and is useful for measuring long-term poverty trends. The Census Bureau releases the poverty data in an annual report, the most recent of which was released in September 2013 as Income, Poverty, and Health Insurance Coverage in the United States: 2012.
The Census definition, or rate, determines poverty by comparing pretax cash income against a poverty threshold dollar amount that is adjusted for family size and composition. In 2012, according to the official measure, 46.5 million people, or 15 percent of the total U.S. population, lived in poverty.
This poverty rate is not statistically different from the 2011 rate, and remains 2.5 percentage points higher than in 2007, the year before the Great Recession. Between 2011 and 2012, however, the number of people in poverty did increase for people age 65 and older, people living in the South, and people living outside metropolitan statistical areas.
The poverty rate represents an average over the entire population and does not really tell us who is well-off and who is worse off. 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. By 2010, however, the poverty rate for both groups had risen to around 26 percent.
The Current Population Survey (CPS) Annual Social and Economic Supplement (ASEC), from which the official 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. Those who defined themselves as black only or as black and some other race had the highest poverty rates—27.2 percent. Among those of Hispanic origin, who can be of any race, the poverty rate was 25.6 percent. The poverty rate for Asians was 11.7 percent. Whites not of Hispanic origin had a poverty rate of 9.7 percent in 2012. See Figure 1 for long-term changes in the U.S. poverty rate by racial or ethnic group.
|Click to enlarge Figure 1|
Among children under age 18, 21.8 percent, or 16.1 million children, lived in poverty in 2012. (See the FAQ, How many children are poor?) The poverty rate for those over age 65, which in 1959 exceeded the overall poverty rate, fell below the overall rate beginning in 1982 and has stayed lower since then. In 2012, the poverty rate for this group was 9.1 percent, about 6 percentage points below the rate for the population as a whole.
In 2012, the poverty rate for families was 11.8 percent, comprising 9.5 million families. Of all family groups, poverty is highest among those headed by single women. In 2012, 30.9 percent of all female-headed families (4.8 million families) were poor, compared to 6.3 percent of married-couple families (3.7 million families).
|click to enlarge Figure 2|
As shown in Figure 2, poverty rates remained about the same across metropolitan areas in 2012 (14.6 percent poor in 2011 and 14.5 percent and 38.0 million in 2012). Suburban areas saw an increase, with poverty rates reaching their highest level (11.2 percent) since the mid-1960s. Rural poverty rates increased to 17.7 percent, which is higher than at any point since 1986.
|click to enlarge Figure 3|
As shown in Figure 3, the poverty rate varies considerably across regions. In the South, more than 19 million people were living in poverty in 2012, leading to a poverty rate of 16.5 percent. The Northeast experienced a slight increase in poverty from 2010. Despite the relative stability in these regions, the regional numbers mask significant growth within particular subregions, states, and cities.
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 assistance, medical care, social services, education and training, and housing are not included. Taxes paid, such as Social Security payroll taxes, and tax credits received, 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). Over the years, the Census Bureau has calculated alternative poverty rates using various experimental adjustments to the official poverty rate (see http://www.census.gov/hhes/povmeas/). It has, for example, expanded the definition of income to take into account some noncash income, including government benefits.
In March 2010, the federal government released information on a proposed Supplemental Poverty Measure (SPM) to offer a more complete picture of the depth and demographics of poverty, as well as the effects of public investments such as food assistance and tax credits on poverty rates. Analysts at the Census Bureau and the Bureau of Labor Statistics are developing the SPM, which will not replace the current measure, but rather will provide a different view of poverty and the effectiveness of public antipoverty policies. The SPM is a work in progress, to be informed by the research and evaluation of poverty scholars.
See the FAQ, "How is poverty measured in the United States?" for more about how poverty status is determined, including the SPM and other experimental measures.
Table 1 presents poverty rates by state for 2010 to 2012 and earlier years, based on three-year averages of CPS data (state poverty rates in a single year are not very reliable, owing to small sample sizes). Arizona, Arkansas, the District of Columbia, Georgia, Louisiana, Mississippi, and New Mexico had poverty rates of 18 percent or over. The poverty rate was lowest in New Hampshire at 7.4 percent.
Adjoining states may have radically different levels of poverty. For example, in the 2010 to 2012 figures, the poverty rates in the following adjoining states differed greatly: Arizona (18.3 percent) and Utah (10.7 percent), Virginia (10.9 percent) and North Carolina (16.7 percent), and Iowa (10.3 percent) and Missouri (15.2 percent). The 2012 poverty rate in New York was 16.4 percent, while in each of the five states surrounding it the rate was between 9.7 percent (Connecticut), and 12.9 percent (Pennsylvania).
See also, the Census Bureau’s American Community Survey, which has much larger sample sizes than the CPS, and is therefore considered a better source of state poverty rates.
See the Wisconsin Poverty section of this website for more about poverty in this state and a description of IRP’s Wisconsin Poverty Project, including the Wisconsin Poverty Reports, which present findings of the Wisconsin Poverty Measure devised by IRP researchers.