Measuring Poverty
The threshold for determining who is considered poor in the United States is set by the federal government. The threshold varies according to family size, and it is adjusted each year using the Consumer Price Index to keep up with inflation. Different guidelines are used for Alaska and Hawaii because of the higher cost of living in those states. The poverty thresholds for various family sizes in 2009 are as follows:
2009 Poverty Guidelines
|
Persons in Family
or Household |
48 Contiguous
States and D.C. |
| 1 |
$10,830 |
|
2 |
14,570 |
|
3 |
18,310 |
|
4 |
22,050 |
|
5 |
25,790 |
|
6 |
29,530 |
|
7 |
33,270 |
|
8 |
$37,010 |
|
SOURCE: Dept.of Health and Human Services |
The formula for creating this poverty standard was developed in the 1960s, and it was based on the fact that food costs were one-third of a typical family’s budget. So federal officials estimated the price of food goods that would be needed for one year, and they multiplied that number by three to get the poverty threshold.
|
Federal Poverty Guideline = 3 X Annual Cost of Food |
Since the 1960s, the relative costs of basic necessities have changed dramatically. Food now makes up only one-sixth of a typical family’s overall budget.
The costs of housing and health care have risen significantly, while the relative cost of food has decreased. Yet the poverty standard is still calculated by using three as the multiplier. For this and other more complex reasons, the current poverty standard significantly underestimates the number of people who are poor.
How much does it really take to make ends meet?
Since researchers agree that the federal poverty level significantly understates how much it takes to support a family, they have developed alternative measures that realistically quantify basic living costs in specific localities. The National Center for Children in Poverty, for example, has developed Basic Needs Budgets for 70 localities across 13 states. Referring to their findings, they sum up the results in this way:
"Across the country, families on average need an income of about twice the official poverty level, or roughly $40,000 for a family of four, to meet basic needs. In a high-cost city like New York, the figure is over $50,000, whereas in rural areas, the figure is in the low $30,000s."
Basic Needs Budgets for a Family of Four in Selected Urban, Suburban and Rural Areas
|
|
URBAN
New York |
URBAN
Houston |
SUBURBAN
Aurora, IL |
RURAL
Alamosa County
Colorado |
|
Rent and Utilities |
$13,596 |
$8,916 |
$10,812 |
$6,228 |
|
Food |
$7,295 |
$7,295 |
$7,295 |
$7,295 |
|
Child Care |
$16,896 |
$8,060 |
$9,924 |
$5,481 |
|
Health Insurance |
$1,812 |
$2,568 |
$2,212 |
$2,768 |
|
Transportation |
$1,680 |
$3,570 |
$4,618 |
$5,257 |
|
Other necessities |
$5,641 |
$4,377 |
$4,889 |
$3,651 |
|
Payroll and
income taxes |
$8,221 |
$716 |
$3,330 |
$775 |
|
TOTAL |
$55,140 |
$35,502 |
$43,079 |
$31,455 |
Twin Cities Data
In Minnesota, extensive research has been done on the cost of basic necessities for various family types. An organization named the Jobs Now Coalition has published data on basic needs budgets for Minnesota and also for the seven-county metro area. Here is a sampling of their key findings:
Monthly Basic Needs Budgets by Family Size
|
|
|
|
|
|
| Expenses |
1 adult |
1 adult
1 child |
1 adult
2 children |
2 parents
(both working)
2 children |
| Food |
$252 |
$328 |
$482 |
$669 |
| Housing |
$699 |
$848 |
$848 |
$1110 |
| Health Care |
$144 |
$272 |
$400 |
$478 |
| Transportation |
$479 |
$479 |
$479 |
$733 |
| Child Care |
$0 |
$682 |
$1071 |
$1071 |
| Clothing/Other |
$169 |
$228 |
$263 |
$272 |
| Net Taxes |
$426 |
$501 |
$526 |
$639 |
| Monthly Total |
$2,169 |
$3,338 |
$4,069 |
$4,972 |
| Annual Income |
$26,028 |
$40,056 |
$48,828 |
$59,664 |
| Hourly Wages |
$12.05 |
$19.26 |
$23.48 |
2 at $14.34 each |
For a more in-depth discussion of measuring poverty, see the following links:
Institute for Research on Poverty, Madison, Wis.
How does the Federal Government Measure Poverty? — National Center for Children in Poverty
New Yorker article on the definition and meaning of poverty
