When discussing the number of people living in poverty in America, the answer can vary depending on the source. According to the U.S. Census, roughly 37 million Americans are living in poverty. However, this figure doesn’t necessarily account for everyone who might be considered poor. The reason lies in how poverty is measured — and the various definitions of poverty can be surprisingly arbitrary.
This issue matters more than one might think, as the way we measure poverty plays a critical role in understanding the scope of the problem. It’s not just about seeing how deep poverty runs in American society; it’s also essential for evaluating anti-poverty programs effectively.
The Federal Poverty Line: An Outdated Measure
To understand how poverty is measured, we must first look at the federal poverty line. The official poverty rate, as calculated by the U.S. Census, relies on a formula that’s decades old. It was developed in 1963 by a Social Security Administration economist, who determined that the threshold should be three times the minimum food budget of a family. This calculation was based on data from the 1950s, where the average American family spent about one-third of their after-tax income on food.
As Dylan Matthews aptly put it in 2015: “The way we measure poverty is based on a 51-year-old analysis of 59-year-old data on food consumption, with no changes other than inflation adjustment. That’s bananas.” Unfortunately, the official measure hasn’t evolved significantly since then, and its limitations are substantial.
The official poverty measure also leaves out important factors. For instance, it doesn’t take into account major anti-poverty programs that contribute significantly to a person’s income. While it does include social benefits like unemployment and Social Security, it excludes vital assistance programs such as food stamps, Medicaid, and housing vouchers. Furthermore, the official measure calculates income before taxes, neglecting tax credits like the Earned Income Tax Credit (EITC), which plays a significant role in alleviating poverty.
The Supplemental Poverty Measure: A Step Toward Accuracy
Since 2011, the Census has adopted a new measure of poverty known as the Supplemental Poverty Measure (SPM). This new approach moves beyond the outdated method of calculating poverty based solely on food expenses. It now includes other necessary living expenses like housing, clothing, and utilities, while also counting noncash benefits like food stamps or housing vouchers.
Unlike the official poverty measure, the SPM also accounts for regional cost-of-living differences, which makes it a more nuanced and accurate reflection of poverty in America. Researchers at Columbia University have found that between 1967 and 2012, poverty, according to the SPM, declined by 40%. However, if certain social programs and tax credits were excluded, it would appear that poverty has remained stagnant during the same period.
Beyond Income: Other Factors That Contribute to Poverty
While the numbers are important, they don’t tell the whole story. The official poverty line is not a perfect reflection of reality. For example, if a family falls just above the poverty line, it doesn’t mean that they can easily cover the basic costs of living. In fact, the mere act of crossing the poverty line can lead to a loss of critical benefits like food stamps, making it harder to get by.
Another significant factor often left out of poverty measures is the burden of housing costs. Skyrocketing rents are taking a larger portion of many families' incomes. According to Harvard's Joint Center for Housing Studies, 22.4 million renter households, or about half of all renters, are considered "rent-burdened," meaning they spend more than 30% of their income on rent. Additionally, 12.1 million households are "severely rent-burdened," spending more than half of their income on housing. Rent burdens are not captured in the official Census measure, but addressing the high costs of housing would have a profound effect on alleviating poverty, especially for lower-income families.
The Bigger Picture: Government’s Role in Poverty Reduction
At the heart of the issue of poverty lies not just how we measure it, but how much the government is willing to do to improve the standard of living for all Americans. Regardless of the metric used, one thing remains clear: we have a long way to go before ensuring that everyone has access to a decent, dignified life.
Ultimately, the question is not just about finding the right measure but also about the collective will to tackle poverty through effective policy. The government’s investment in social programs, addressing high housing costs, and ensuring that everyone can access basic needs are key to reducing poverty in a meaningful way.
No matter how we measure poverty, we must ensure that the methods and programs used to alleviate it reflect the actual challenges faced by millions of Americans. Only then can we begin to address the root causes of poverty and move toward a more equitable society.