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Poverty in the United States - Wikipedia, the free encyclopedia

Poverty in the United States

From Wikipedia, the free encyclopedia

Percent below each country's official poverty line, according to the CIA factbook.
Percent below each country's official poverty line, according to the CIA factbook.[1]

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.[2][3] Currently roughly 13% 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). The poverty rate in the United States is one of the highest among the post-industrialized developed world.[4] It is, however, important to note that America's poor most commonly have adequate food, clothing and shelter. It should be noted that poverty rates only provide a snap-shot of the percentage of persons who are currently poor. Poverty in the U.S. is cyclical in nature, with individuals rising above and falling below the poverty threshold from time to time; as a result, far more than 13% of the population fall below the poverty line at some point over a given period of years.

"While in any given year 12 to 15 percent of the population is poor, over a ten-year period 40 percent experience poverty in at least one year because most poor people cycle in and out of poverty; they don't stay poor for long periods. Poverty is something that happens to the working class, not some marginal 'other' on the fringes of society." - Michael Zweig, What's Class Got to do With It, American Society in the Twenty-first Century, 2004

Those under the age of 18 were the most likely to be impoverished. In 2001 the poverty rate for minors in the United States was the highest in the industrialized world, with 14.8% of all minors and 30% of African American minors living below the poverty threshold. Additionally, the standard of living for those in the bottom 10% was lower in the U.S. than in any other developed nation except the United Kingdom, which had the lowest standard of living for impoverished children.[5]

Contents

[edit] Measures of poverty

Measures of poverty can be either absolute or relative.

[edit] The official measure of poverty

Percent and number below the poverty threshold.
Percent and number below the poverty threshold.[6]
The homeless make poverty more visible in the United States.
The homeless make poverty more visible in the United States.

There are three 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.[7]

Since the 1960s, 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 the U.S. government was "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.[8]

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."[8]

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

[edit] 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[9] which are illustrated in the table below.

Persons in Family Unit 48 Contiguous States and D.C. Alaska Hawaii
1 $9,800 $12,250 $11,270
2 $13,200 $16,500 $15,180
3 $16,600 $20,000 $19,090
4 $20,000 $25,000 $23,000
5 $23,400 $29,250 $26,910
For each additional person, add $3,400 $4,250 $3,910

SOURCEFederal Register, Vol. 71, No. 15, January 24, 2006, pp. 3848-3849.

[edit] Relative measures of poverty

The poverty rate for selected age groups. Those under the age of 18 are most likely to fall below the poverty threshold.
The poverty rate for selected age groups. Those under the age of 18 are most likely to fall below the poverty threshold.[6]

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. Therefore, the relative poverty rate can directly be linked to income inequality. When the standard of living among those in more financially advantageous positions rises while that of those considered poor stagnates, the relative poverty rate will reflect such growing income inequality an increase. Conversely, the poverty rate can decrease, with low income people coming to have less wealth and income if wealthier people's wealth is reduced by a larger percentage than theirs. 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 relatively less purchasing power than wealthier members of society in 1959, and, therefore, "poverty" had increased. But, because this is a relative measure, this is not saying that a family in 1999 with the same amount of wealth and income as a family from 1959 had less purchasing power than the 1959 family.

In the EU, "relative poverty" is defined as an income below 60% of the national median equalized 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 (11,256 euros/year, $12,382 PPP. West Germany 974 euros/month, 11,688 euros/year, $12,857 PPP). For a family of four with two children below 14 years the poverty line was 1969.8 euros per month ($2,167 PPP) or 23,640 euros ($26,004 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[10] (OECD average: 11% for 50% median, 16% for 60% median).

[edit] The income distribution and relative poverty

Although the relative approach theoretically differs largely from the Orshansky definition, crucial variables of both poverty definitions are more similar than often thought. First, the so-called standardisation of income in both approaches is very similar. To make incomes comparable among households of different sizes, equivalence scales are used to standardise household income to the level of a single person household. In Europe, the modified OECD equivalence scale is used, which takes the combined value of 1 for the head of household, 0.5 for each additional household member older than 14 years and 0.3 for children. When compared to the US Census poverty lines, which is bases on a defined basket of goods, for the most prevalent household types both standardisation methods show to be very similar.

Secondly, if the height of the poverty treshold in Western-European countries is not always higher than the Orshansky treshold for a single person family. The actual Orchinsky poverty line for single person households in the US ($9645 in 2004) is very comparable to the relative poverty line in many Western-European countries (Belgium 2004: €9315), while price levels are also similar.The reason why relative poverty measurement causes high poverty levels in the US, as demonstrated by Förster[10], is caused by distributional effects rather than real differences in wellbeing among EU-countries and the USA. The median household income is much higher in the US than in Europe due to the wealth of the middle classes in the US, from which the poverty line is derived. Although the paradigm of relative poverty is most valuable, this comparison of poverty lines show that the higher prevalence of relative poverty levels in the US are not an indicator of a more severe poverty problem but an indicator of larger inequalities between rich middle classes and the low-income households. It is therefor not correct to state that the US income distribution is characterised by a large proportion of households in poverty; it is characterized by relatively large income inequality but also high levels of prosperity of the middle classes.

[edit] 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.

[edit] Causes of poverty

Homeless people living in cardboard boxes in Los Angeles, California where the median home price was estimated to be $564,430 in May 2006.
Homeless people living in cardboard boxes in Los Angeles, California where the median home price was estimated to be $564,430 in May 2006.

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

  • The conservative Heritage Foundation speculates that immigration increases job competition among low wage earners, both native and foreign born. Additionally many first generation immigrants, namely those without a high school diploma, also living in poverty themselves.[11]
  • Unfavorable economic conditions
  • Mental illness and disability
  • Lack of educational attainment and skill
  • Substance abuse
  • Birth of a child
  • Domestic abuse
  • Natural or other disasters
  • Crime
  • A survey done by Michigan State University found that a slight majority of American households with annual incomes of $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.[12]
  • 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.[13]
  • Region. Many rural areas, especially in the South and Appalachia have a high poverty rate due to limited job opportunities, historical issues, and sometimes resistance to change, among other things.

[edit] 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.

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.[14]

[edit] 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.

[edit] 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.[15] 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.[15] 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.[16] 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[citation needed], 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.[16][17] 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.

[edit] Overstating poverty

The federal poverty line also excludes income other than cash income, especially welfare benefits. Thus, 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 do not consider the income equivalents of such entitlements.[18]

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 TV subscription for the kids home alone and you are afraid they will be out on the street if they are not watching TV."[19]

[edit] 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.

[edit] See also

[edit] US related topics


[edit] References

  1. ^ CIA factbook. Retrieved on 2006-12-05.
  2. ^ 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.
  3. ^ U.S. Census Bureau. Poverty: Overview. Retrieved: 2006-07-31.
  4. ^ The Guardian, American poverty rate among the highest in the developed world. Retrieved on 2006-11-14.
  5. ^ Williams, Brian; Stacey C. Sawyer, Carl M. Wahlstrom (2005). Marriages, Families & Intimate Relationships. Boston, MA: Pearson. 0-205-36674-0. 
  6. ^ a b US Census Bureau, report on income, poverty and insurance for 2005. Retrieved on 2006-01-19.
  7. ^ Fisher, G.M. (2003) The Development of the Orshansky Poverty Thresholds. Accessed: 2003-12-27
  8. ^ a b Poverty Definition U.S. Census Bureau. Accessed: 2003-12-27.
  9. ^ www.hhs.gov. The 2006 HHS Poverty Guidelines. Retrieved on May 09, 2006.
  10. ^ a b 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.
  11. ^ Heritage Foundation's views of immigration and poverty. Retrieved on 2007-02-25.
  12. ^ MDU study of affluent views on poverty. Retrieved on 2007-02-25.
  13. ^ Center for the Future of Children, The Future of Children. Vol. 7, No 2, 1997.
  14. ^ Appliances among the poor. Retrieved on 2006-07-06.
  15. ^ a b Adams, J.Q.; Pearlie Strother-Adams (2001). Dealing with Diversity. Chicago, IL: Kendall/Hunt Publishing Company. 0-7872-8145-X. 
  16. ^ a b California median home price. Retrieved on 2006-07-06.
  17. ^ Monterey County income distribution. Retrieved on 2006-07-06.
  18. ^ Poor Poverty Yardsticks by Rea Hederman, Heritage Foundation, Washington Post. September 7, 2006. Accessed: 2007-02-18
  19. ^ Devising New Math to Define Poverty by Louis Uchitelle, New York Times. 1999-10-18. Accessed: 2006-06-16

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