What are poverty thresholds and poverty guidelines? 2016

The poverty thresholds are the original version of the federal poverty measure, which was developed by Mollie Orshansky of the Social Security Administration in the 1960s.  For more about Orshansky’s role, see Gordon M. Fisher, Remembering Mollie Orshansky–The Developer of the Poverty Thresholds, Social Security Bulletin Vol. 68, No. 3 (2008). Updated each year by the Census Bureau, the thresholds are used to define and quantify poverty in America, and thereby provide a yardstick for progress or regress in antipoverty efforts, and in that sense the measure serves the nation well.

Values of the poverty thresholds for the years since 1980 for families of different sizes are available on the Census Bureau’s website. The most recent values of the poverty thresholds are provided in the table below.

The poverty guidelines are the other version of the federal poverty measure. They, too, are issued every year, generally in the winter, but by the U.S. Department of Health and Human Services (DHHS) in the Federal Register. The guidelines are a simplification of the poverty thresholds created for administrative use, such as determining financial eligibility for certain federal programs. They are adjusted for families of different sizes and by geographic location (with different guidelines for the 48 contiguous states and the District of Columbia; Alaska; and Hawaii).

When using the poverty guidelines to set eligibility criteria, some programs actually use a percentage multiple of the guidelines, such as 125 percent, 150 percent, or 185 percent. This is not the result of a single coherent plan; instead, it stems from decisions made at different times by different congressional committees or federal agencies. Some examples of federal programs that use the guidelines in determining eligibility include the following:

• Department of Health and Human Services: Community Services Block Grant, Head Start, Low-Income Home Energy Assistance
• Department of Agriculture: Supplemental Nutrition Assistance Program (SNAP, formerly Food Stamp Program), National School Lunch Program, Child and Adult Care Food Program
• Department of Energy: Weatherization Assistance for Low-Income Persons
• Department of Labor: Job Corps, National Farmworker Jobs Program, Workforce Investment Act Youth Activities

Major means-tested programs that do not use the poverty guidelines in determining eligibility include Temporary Assistance for Needy Families (TANF), Supplemental Security Income, the Earned Income Tax Credit, and the Social Services Block Grant. For a more detailed list of programs that do and do not use the guidelines, see “What programs use the poverty guidelines?” on the DHHS ASPE website.

Some state and local governments have chosen to use the federal poverty guidelines in some of their own programs and activities. Examples include state health insurance programs, financial guidelines for child support enforcement, and determination of legal indigence for court purposes. Some private companies such as utilities, telephone companies, and pharmaceutical companies have also adopted the guidelines in setting eligibility for their services to low-income persons.

Poverty guidelines for the years since 1982 and other historical information are available on the website of the DHHS Office of the Assistant Secretary for Planning and Evaluation. The 2018 values of the poverty guidelines are provided in the table below.

Both the poverty thresholds and the poverty guidelines are the same for all mainland states, regardless of regional differences in the cost of living. Both are updated annually for price changes using the Consumer Price Index for All Urban Consumers (CPI-U). The poverty guidelines are sometimes loosely referred to as the “federal poverty level” or the “poverty line,” but these terms are ambiguous and should be avoided in situations where precision is important. Key differences between the thresholds and the guidelines are outlined in the table below.

Academics, statisticians, and policy analysts have long asserted that existing methods for determining the poverty measure and estimating who is poor could be greatly improved. Efforts over the decades to devise a better measure culminated most recently in the release of a new, Supplemental Poverty Measure (SPM). The SPM builds on earlier efforts, including a variety of experimental poverty estimates using different data sources and measures that the Census Bureau has been releasing for many years in addition to the annual poverty report.

The SPM was developed by an Interagency Technical Working Group that included representatives from the Census Bureau, Bureau of Labor Statistics, Department of Health and Human Services, and other federal entities. The SPM will not replace the current official poverty measure used to create the annual poverty report, nor will it be used to determine eligibility for government programs. Instead, in the words of Census Bureau analyst Kathleen Short, “the SPM extends the information provided by the official poverty measure by including many of the government programs designed to assist low-income families and individuals that are not included in the current official poverty measure.” The most recent SPM findings are found in a Census Bureau report entitled The Supplemental Poverty Measure: 2016.

The most notable features of the SPM for this discussion are its use of a more comprehensive basis for setting the poverty threshold than the official measure and its expanded definitions of resources that includes noncash benefits (such as food assistance) and deducts expenses such as out-of-pocket medical expenses. The table below summarizes the differences between the official measure and the SPM in terms of measurement units, poverty threshold, threshold adjustments, threshold updates, and resource measure.

In the words of then Census Bureau Chief of the Social, Economic, and Housing Statistics Division David Johnson and Arts and Sciences Distinguished Professor of Economics and Public Affairs at the University of Wisconsin–Madison Timothy Smeeding (who served as Director of IRP from 2008–2014), “the SPM is designed to provide a more modern, comprehensive, and meaningful measure of poverty.”