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Measuring Income and Poverty in the United States |
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National Center for Children in Poverty: This fact sheet discusses how the U.S. government measures poverty, why the current measure is inadequate, and what alternative ways exist to measure economic hardship. Most measures of poverty, in the U.S. and elsewhere, focus narrowly on income rather than including other aspects of economic status, such as assets or debt. Absolute measures of poverty---like the official U.S. measure---set an income threshold below which an individual or family is considered to be poor, regardless of general living standards. Relative measures typically set the poverty level at a percent of median income and therefore vary with the economic fortunes of the population as a whole. The U.S. measures poverty by a standard developed more than 40 years ago, when data indicated that families spent about one-third of their income on food. Food now comprises far less than a third of an average family's expenses, while the costs of housing, child care, health care, and transportation have grown disproportionately. Thus, the poverty level does not reflect the true cost of supporting a family. In addition, the current poverty measure is a national standard that does not adjust for the substantial variation in the cost of living from state to state and between urban and rural areas. More accurate estimates of typical family expenses, and adjustments for local costs, would produce a substantially higher poverty threshold.
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