Misplaced Pages

This is an old revision of this page, as edited by BrendelSignature (talk | contribs) at 23:47, 26 October 2006 (rv v). The present address (URL) is a permanent link to this revision, which may differ significantly from the current revision.

Poverty in the United States refers to the condition of people whose annual family income is less than a "poverty line" set by the U.S. government. An absolute poverty measure was developed in the mid 1960s as part of the "War on poverty." Based on this measure, the poverty line is set at approximately three times the annual cost of a nutritionally adequate diet. It varies by family size and is updated yearly to reflect changes in the consumer price index. Currently roughly thirteen percent of the US population fall below the federal poverty threshold. There is however some controversy regarding the federal poverty line, arguing that it either understates or overstates the problem of poverty (see section on "Controversy," below).

Measures of poverty

Measures of poverty can be either absolute or relative.

The official measure of poverty

There are two versions of the federal poverty measure: the poverty thresholds (which are the primary version) and the poverty guidelines. The Census Bureau issues the poverty thresholds, which are generally used for statistical purposes—for example, to estimate the number of people in poverty nationwide each year and classify them by type of residence, race, and other social, economic, and demographic characteristics. The Department of Health and Human Services issues the poverty guidelines for administrative purposes—for instance, to determine whether a person or family is eligible for assistance through various federal programs.

Since the 1960's, the United States Government has defined poverty in absolute terms. When the Johnson administration declared "war on poverty" in 1964, it chose an absolute measure. The "absolute poverty line" is the threshold below which families or individuals are considered to be lacking the resources to meet the basic needs for healthy living; having insufficient income to provide the food, shelter and clothing needed to preserve health.

The "Orshansky Poverty Thresholds" form the basis for the current measure of poverty in the U.S. Mollie Orshansky was an economist working for the Social Security Administration (SSA). Her work appeared at an opportune moment. Orshansky's article was published later in the same year that Johnson declared war on poverty. Since her measure was absolute (i.e., did not depend on other events), it made it possible to objectively answer whether we were "winning" this war. The newly formed United States Office of Economic Opportunity adopted the lower of the Orshansky poverty thresholds for statistical, planning and budgetary purposes in May 1965.

The Bureau of the Budget (now the Office of Management and Budget) adopted Orshansky's definition for statistical use in all Executive departments in 1965. The measure gave a range of income cutoffs, or thresholds, adjusted for factors such as family size, sex of the family head, number of children under 18 years old, and farm or non-farm residence. The economy food plan (the least costly of four nutritionally adequate food plans designed by the Department of Agriculture) was at the core of this definition of poverty.

The Department of Agriculture found that families of three or more persons spent about one third of their after-tax income on food. For these families poverty thresholds were set at three times the cost of the economy food plan. Different procedures were used for calculating poverty thresholds for two person households and persons living alone. Annual updates of the SSA poverty thresholds were based on price changes in the economy food plan.

Two changes were made to the poverty definition in 1969. Thresholds for non-farm families were tied to annual changes in the Consumer Price Index (CPI) rather than changes in the cost of the economy food plan. Farm thresholds were raised from 70 to 85 % of the non-farm levels.

In 1981, further changes were made to the poverty definition. Separate thresholds for "farm" and "female-householder" families were eliminated. The largest family size category became "nine persons or more."

Apart from these changes, the U.S. government's approach to measuring poverty has remained static for the past forty years.

Current poverty rate and guidelines

The official poverty rate in the U.S. has increased for four consecutive years, from a 26-year low of 11.3% in 2000 to 12.7% in 2004. This means that 37.0 million people were below the official poverty thresholds in 2004. This is 5.4 million more than in 2000. The poverty rate for children under 18 years old increased from 16.2% to 17.8% over that period. The current poverty rate is measured according to the 2006 HHS Poverty Guidelines which are illustrated in the table below.

SOURCE:  Federal Register, Vol. 71, No. 15, January 24, 2006, pp. 3848-3849.

Relative measures of poverty

Another way of looking at poverty is in relative terms. "Relative poverty" can be defined as having significantly less access to income and wealth than other members of society. In 1999, the income of a family at the poverty line was $17,020. This was 28.49% of the median income in the U.S. In 1959 a family at the poverty line had an income that was 42.64% of the median income. Thus a poor family in 1999 had relatively less income and therefore considerable less purchasing power than a poor family in 1959.

In the EU "relative poverty" is defined as an income below 60 percent of the national median equalised disposable income after social transfers for a comparable household. In Germany for example the official relative poverty line for a single adult person in 2003 was 938 euros per month (11256 euros/year, $12382 PPP. West Germany 974 euros/month, 11688 euros/year, $12857 PPP). For a family of four with two children below 14 years the poverty line was 1969.8 euros per month ($2167 PPP) or 23640 euros ($26004 PPP) per year. According to Eurostat the percentage of people in Germany living at risk of poverty (relative poverty) in 2004 was 16% (official national rate 13.5% in 2003). Additional definitions for poverty in Germany are "poverty" (50% median) and "strict poverty" (40% median, national rate 1.9% in 2003). Generally the percentage for "relative poverty" is much higher than the quota for "strict poverty". The U.S concept is best comparable to "strict poverty". By european standards the official (relative) poverty rate in the United States would be significantly higher than it is by the U.S. measure. A research paper from the OECD calculates the relative poverty rate for the United States at 16% for 50% median of disposable income and nearly 24% for 60% of median disposable income (OECD average : 11% for 50% median, 16% for 60% median). This would be the second highest poverty rate among the OECD countries, below Mexico but slightly above Turkey or Portugal.

A recent study published in the Washington Times showed how many of the appliances modern middle class and working class households take for granted are lacking in poverty stricken households. Among the households constituting the bottom ten percent, 36% were lacking microwave ovens, 53% were lacking clothes dryers and 79% were lacking a computer. Furthermore only 19% were in possession of a garbage disposal and only 23% owned a dishwasher. Color televisions, VCRs and stereos were among the more commonly found mundane appliances with 91% of households in the bottom ten percent owning a color televisions, 55% owning a VCR, and 42% owning a stereo.

Food security

Eighty-nine percent of American households were food secure throughout the entire year 2002, meaning that they had access, at all times, to enough food for an active, healthy life for all household members. The remaining households were food insecure at least some time during that year. The prevalence of food insecurity rose from 10.7 % in 2001 to 11.1 % in 2002, and the prevalence of food insecurity with hunger rose from 3.3 % to 3.5 %. This report, based on data from the December 2002 food security survey, provides statistics on the food security of U.S. households, as well as on how much they spent for food and the extent to which food-insecure households participated in Federal and community food assistance programs.

Causes of poverty

There are numerous perceived direct and indirect causes of poverty in the United States. They include:

• Unfavorable economic conditions
• Mental illness and disability
• Substance abuse
• Poor education
• Poor work ethic
• Out of wedlock birth
• Domestic abuse
• Natural or other disasters
• Crime
• Views of the upper class. A survey done by Michigan State University found that a majority of Americans making 70,000 or more believed that the two principal problems of poverty are lack of work ethic and a minimum wage that is too low.
• Institutional racism: The gross disparities among impoverished people in the United States along racial lines have led many to believe that historic and/or ongoing institutional racism is responsible for much of the poverty in the United States today.
• Limited job opportunities appear to exist for significant subgroups of some races and ethnic groups. This is reflected by the low-income nature of large sections of the economy, as divided along racial/ethnic lines: 21 % of all children in the United States live in poverty, but 46 % of African American children and 40 % of Latino children live in poverty.
• The structure of social class

Controversy

There has been significant disagreement about poverty in the United States; particularly over how poverty ought to be defined. Using radically different definitions, two major groups of advocates have claimed variously (a) that the United States has eliminated poverty over the last century; or (b) that it has such a severe crisis of poverty that it ought to devote significantly more resources to the problem.

Much of the debate about poverty focuses on statistical measures of poverty and the clash between advocates and opponents of welfare programs and government regulation of the free market. Since measures can be either absolute or relative, it is possible that advocates for the different sides of this debate are basing their arguments on different ways of measuring poverty. It is often claimed that poverty is understated, yet there are some who also believe it is overstated; thus the accuracy of the current poverty threshold guidelines is subject to debate and considerable concern.

Concerns regarding accuracy

In recent years, there have been a number of concerns raised about the official U.S. poverty measure. In 1995, the National Research Council's Committee on National Statistics convened a panel on measuring poverty. The findings of the panel were that "the official poverty measure in the United States is flawed and does not adequately inform policy-makers or the public about who is poor and who is not poor."

The panel was chaired by Robert Michael, former Dean of the Harris School of the University of Chicago. According to Michael, the official U.S. poverty measure "has not kept pace with far-reaching changes in society and the economy." The panel proposed a model based on disposable income:

According to the panel's recommended measure, income would include, in addition to money received, the value of non-cash benefits such as food stamps, school lunches and public housing that can be used to satisfy basic needs. The new measure also would subtract from gross income certain expenses that cannot be used for these basic needs, such as income taxes, child-support payments, medical costs, health-insurance premiums and work-related expenses, including child care.

Understating poverty

Many sociologists and government officials have argued that poverty in the United States is understated, meaning that there are more households living in actual poverty than there are households below the poverty threshold. A recent NPR report states that as much as 30% of Americans have trouble making ends meet and other advocates have made supporting claims that the rate of actual poverty in the US is far higher than that calculated by using the poverty threshold. The issue of understating poverty is especially pressing in states with both a high cost of living and a high poverty rate such as California where the median home price in May 2006 was determined to be $564,430. With half of all homes being priced above the half million dollar mark and prices in urban areas such as San Francisco, San Jose or Los Angeles being higher than the state average, it is almost impossible for not just the poor but also lower middle class worker to afford decent housing , not mentioning the possibility of home ownership. In the Monterey area, where the low-pay industry of agriculture is the largest sector in the economy and the majority of the population lacks a college education the median home price was determined to be $723,790, requiring an upper middle class income which only roughly 20% of all households in the county boast. Such fluctuations in local markets are however not considered in the Federal poverty threshold and thus leave many who live in poverty-like conditions out of the total number of households classified as poor.

Overstating poverty

Yet other advocates claim that poverty in the United States is overstated.

Some state that poor households today enjoy many items which were luxuries, fifty years ago, and every item was a luxury upon its introduction to the public. Furthermore, critics point out that while some of these items are not necessities they are much easier to produce today than fifty years ago, making them inexpensive. In the 1950s, a microwave cost more than two years of low-income rent; today one can be had for a fraction of one month's rent. Furthermore, present conditions are compared to an arbitrary time period (fifty years ago). If one chooses an earlier period -- say, a hundred years ago -- many more items would become luxuries or nonexistent (i.e. refrigerators, electric lights, gas ranges, etc.).

There is also criticism that poverty measures exclude income other than cash income, which includes many welfare benefits. For instance, if food stamps and public housing were successfully raising the standard of living for poverty stricken individuals, then the poverty line figures would not shift since they exclude transfer entitlements from food stamps and public housing as a form of income.

A 1993 study of low income single mothers titled Making Ends Meet, by Kathryn Edin, a sociologist at the University of Pennsylvania, showed that the mothers spent more than their reported incomes. According to Edin, they made up the difference through contributions from family members, absent boyfriends, off-the-book jobs, and church charity.

According to Edin: "No one avoided the unnecessary expenditures, such as the occasional trip to the Dairy Queen, or a pair of stylish new sneakers for the son who might otherwise sell drugs to get them, or the cable subscription for the kids home alone and you are afraid they will be out on the street if they are not watching TV."

Fighting poverty

There have been many governmental and nongovernmental efforts to make an impact on poverty and its effects. These range in scope from neighborhood efforts to campaigns with a national focus. They target specific groups affected by poverty such as children, autistics, immigrants, or the homeless. Efforts to alleviate poverty use a disparate set of methods, such as advocacy, education, social work, legislation, direct service or charity, and community organizing.

Politicians often make fighting poverty a central part of their political platforms.

See also

• Household income in the United States
• The Other America by Michael Harrington (ISBN 0-684-82678-X)
• Lowest-income counties in the United States
• Human Poverty Index
• Mississippi Teacher Corps
• Federal assistance in the United States

US related topics

Template:US topics

References

1. Sawhill, I.V. "Poverty in the United States" The Concise Encyclopedia of Economics. Liberty Fund, Inc. Ed. David R. Henderson. Library of Economics and Liberty. Retrieved: 2006-07-31.
2. U.S. Census Bureau. Poverty: Overview. Retrieved: 2006-07-31.
3. Fisher, G.M. (2003) The Development of the Orshansky Poverty Thresholds. Accessed: 2003-12-27
4. ^ Poverty Definition U.S. Census Bureau. Accessed: 2003-12-27.
5. "www.hhs.gov". The 2006 HHS Poverty Guidelines. Retrieved May 09. {{cite web}}: Check date values in: |accessdate= (help); Unknown parameter |accessyear= ignored (|access-date= suggested) (help)
6. Michael Foerster/Marco Mira d'Ercole, "Income Distribution and Poverty in OECD Countries in the Second Half of the 1990s", OECD Social, employment and migration working papers No.22, Paris 2005, page 22, figure 6.
7. "Appliances among the poor". Retrieved 2006-07-06.
8. Center for the Future of Children, The Future of Children. Vo. 7, No 2, 1997.
9. ^ Adams, J.Q. (2001). Dealing with Diversity. Chicago, IL: Kendall/Hunt Publishing Company. 0-7872-8145-X. {{cite book}}: Unknown parameter |coauthors= ignored (|author= suggested) (help)
10. ^ "California median home price". Retrieved 2006-07-06.
11. "Monterey County income distribution". Retrieved 2006-07-06.
12. Devising New Math to Define Poverty by Louis Uchitelle, New York Times. 1999-10-18. Accessed: 2006-06-16

External links

• U.S. Census Bureau Poverty Definition
• U.S. Census Bureau Poverty in the United States
• Harms, W. (1995) Poverty definition flawed, more accurate measure needed The University of Chicago Chronicle, 14:17.
• Why Poverty Doesn't Rate, American Enterprise Institute
• Social Solutions to Poverty: America's Struggle to Build a Just Society. Scott Myers-Lipton, (2006).

• Economy of the United States
• American society
• Poverty by country
• Wealth in the United States