Advertiser Disclosure

Poverty in the United States

Poverty is still a big problem in the United States, especially for minorities and people living in rural areas. Improving education and health are keys to individuals and families rising above the poverty level.

Poverty is the human condition of being unable to obtain or provide a standard level of food, water and/or shelter for you or your family.

It exists in every country in varying degrees, and is unlikely to disappear anytime soon. The United States is considered the richest country in the world, and yet 34 million of its residents live in poverty.

Poverty is measured in two ways – absolute poverty and relative poverty.

Absolute poverty looks at the goods and services someone (or a family) cannot obtain.

Relative poverty looks at the context of the need, how one social group compares to others.

The official method of calculating America’s poverty levels was developed in the 1960s and has not been refined substantially since then, although critics maintain that the government overstates the U.S. poverty level because it counts people as impoverished who in generations past would be considered as not living in poverty.

The highest poverty rate on record was 22 percent (1950s). The lowest was 10.5% (2019).

How is Poverty Defined in America?

According to the U.S. Census Bureau’s 2019 Current Population Report, 34 million Americans are considered impoverished – 10.5% of the country’s population. (The census supplemental poverty rate, which adjust for how government programs keep people out of poverty, was at 11.7% in 2019.) The poverty rate for American children was 14.4%, the lowest since 1973, and the rate for people 65 and older was 8.9%.

Among the most impoverished are:

  • Those living in female-headed households with no husband present (24.3%).
  • Young adults without a high school diploma (23.7%).
  • Those living in a family whose head is unemployed (26.4%).
  • Minorities (18.8% for blacks).

These numbers actually represent relatively good news. There were 4.2 million fewer people in poverty in 2019 than the year before, and the poverty rate is the lowest since the statistic was first kept in 1959. The 2019 mark was the fifth consecutive annual decline in poverty. Poverty rates declined for all race and Hispanic origin groups.

However, the Census Bureau numbers were compiled before the COVID pandemic sent the economy into a tailspin. Columbia University’s Center on Poverty & Social Policy estimated how the supplemental poverty rate changed on a monthly basis. Assessing the pre-covid rate at 15% (compared to the Census Bureau’s 10.5%), the center said the poverty rate peaked at 17.3% in August 2020, falling to 16% two months later, but concluded it would have been much worse without extraordinary government intervention.

Measuring the extent of poverty does nothing to ameliorate the lives of the poor, but compiling and understanding poverty statistics is essential to solving, or at least addressing, the problem.

Governments, policy makers and society at large depend upon precise and timely information about poverty to create and deliver the most effective solutions. The goal is to chip away, bit by bit, family by family, and community by community, at the scourge of poverty.

Where Is Poverty Most Common in the U.S.?

The face of poverty for most Americans is pictures of families in rundown housing in large cities where the industry has moved away.

The true face of poverty, however, is found in rural areas of the South and Southwest regions of the U.S. where living conditions are even more run down and industry never really started up.

Nine of the 10 states with the highest poverty rates (two year average, 2018-19) in the U.S. are in the South. That includes Mississippi (19.4% of population below the poverty line); Louisiana (18.4%), Arkansas (15.0%), West Virginia (14.9%), Kentucky (14.6%), Alabama (14.4%), South Carolina (13.9%), Georgia (13.5%) and North Carolina (12.9%) lead the way.

The other is New Mexico (16.0%).

These areas have a long history of poverty and there are many factors contributing to it, but the most obvious are that they were agricultural economies first and foremost with light emphasis on education and innovation.

Absolute Poverty

Absolute poverty is a measure of the minimal requirements necessary to afford the minimal standards of life-sustaining essentials — food, clothing, shelter, clean water, sanitation, education and access to health care. The standards are consistent over time and are the same in different countries. For example, one absolute measurement is the percentage of a population that consumes enough food daily to sustain the human body. This standard – 2,000 – 2,500 calories per day – is applied worldwide and across all cultures.

The World Bank defines poverty in absolute terms:
  • Those living on less than $1.90 per day live in extreme poverty.
  • Those living on less than $3.20 per day in lower middle income countries and less than $5.50 in upper middle income countries live in moderate poverty.

For instance, in 2017, 6.5 million people in Europe and Central Asia lived in extreme poverty, compared with almost 431 million in Sub-Saharan Africa.

The World Bank expects the COVID pandemic to push between 88 million and 115 million people worldwide into extreme poverty in 2020 and up to 150 million in 2021, reversing improvements that had been taking place. Global poverty had dropped about 1% per year between 1990 and 2015, the World Bank reports.

Relative Poverty

Relative poverty is a measurement of income inequality within a social context. It does not measure hardship or material deprivation, but rather the disparities of wealth among income groups.

For example, in the United States, a household that has a refrigerator, televisions, air conditioning can be considered impoverished if its income falls below a certain threshold. In other countries, those households might be thought of as wealthy.

Measuring U.S. Poverty

The federal government’s measurement of U.S. poverty was developed in the early 1960s by Mollie Orshansky, an economist and statistician at the Social Security Administration. Orshansky based her original poverty thresholds on the Department of Agriculture’s economy food plan, which detailed what it considered the least expensive, yet still nutritionally adequate, diet for American families that were experiencing a temporary shortage of funds.

She then deduced from Department of Agriculture surveys that average families of three or more people spend about one-third of their money on food. By multiplying that amount by a factor of three, to include all other family expenses, and applying various weighted data, Orshansky established a detailed matrix of 124 poverty thresholds for families of different sizes and compositions. (Today, there are 48 thresholds.) Poor families were those whose yearly income was below the threshold for their category.

Over the years, many attempts have been made to improve, update or even replace Orshansky’s methodology. In 1992, a National Academy of Science (NAS) panel suggested revisions to the system based on alternative definitions of both income and needs, suggesting that the traditional approach no longer provided an accurate picture of poverty. Legislation based on those findings has been introduced in Congress from time to time but has never been enacted.

The Census Bureau uses several alternative methods to calculate the poverty indices, including the American Community Survey (ACS). In 2010, the Census Bureau introduced the Supplemental Poverty Measure (SPM) to reflect long-term changes in government policies that altered disposable income available to families and therefore their poverty status. However, the official rate is still based on data from the Bureau’s Current Population Survey Annual Social and Economic Supplement (CPS ASEC).

Overstating Poverty

Critics of the current method of calculating poverty thresholds point out that the CPS ASEC measures only monetary income (e.g., earnings, Social Security income, veterans payments, workers’ compensation, pensions), but does not include other sources of in-kind or non-cash gifts from public or private sources, including:

  • Benefits from anti-poverty programs such as food stamps, federal housing subsidies, school lunches and Medicaid.
  • Tax advantages such as the Earned Income and Child Tax Credits.

Adding these sources of income would change the poverty numbers considerably.

They also contend that many families reported as living in poverty are not poor in the ordinary sense or as understood by most Americans. Impoverished families often have household appliances and adequate food, and live in adequate shelter — a higher standard of living than even middle class families maintained several decades ago.

Therefore, current government methodology of measuring poverty, which calculates income inequality and not actual material deprivation, could be overstating the extent of poverty in the United States.

Historical Changes in Poverty Levels

In the late 1950s, the poverty rate was approximately 22%, with just shy of 40 million Americans living in poverty. The rate declined steadily, reaching a low of 11.1% in 1973 and rising to a high of nearly 15% three times – in 1983, 1993 and 2011 – before hitting the all-time low of 10.5% in 2019. However, the 46.7 million Americans in poverty in 2014 is the most ever recorded.

Since the late 1960s, the poverty rate for people 65 or older has fallen dramatically. This drop could be ascribed to the enactment of the Medicare Program in 1965, which dramatically lowered out-of-pocket health care costs for this age group.

What are the Causes and Effects of Poverty in America?

Impoverished families tend to have less education, more health problems and less access to nutritionally adequate food. They also are more likely to live in high-crime areas.

Poverty and Education

The more advanced one’s education, the greater the chance of achieving a secure economic future. High school graduation rates for African-American and Hispanic students are almost 20 percentage points lower than for other ethnic groups, while their poverty rates greatly exceed the average.

Without the knowledge and skills required for well-remunerated work in the modern workplace, each succeeding generation of undereducated adults merely replaces the one before it without achieving any upward mobility or escape from poverty.

Poverty and Health

Health is also strongly related to income. Poor people have higher mortality rates, a higher prevalence of acute or chronic diseases and more emotional and behavioral issues.

  • The life expectancy of the richest 1% in the U.S. was 14.6 years longer than the poorest 1% for men and 10.1 years for women, according to a 2016 report by the Journal of the American Medical Association.
  • The mortality rate for African-American infants (10.8 per 1,000 live births) was more than double that of white infants (4.6) in 2018, according to the Centers for Disease Control and Prevention.
  • Those in impoverished neighborhoods have a higher risk for mental illness, chronic disease,higher mortality, and lower life expectancy, according to the Office of Disease Prevention and Health Promotion.
  • Poor children are more than twice as likely to have unhealthy levels of lead in their blood than other children, according to the CDC.

Poverty and Food

Food poverty is defined as the inability to obtain healthy and affordable food. Poorer families tend to have low intakes of fruit and vegetables and high intakes of junk food. They also tend to suffer more from cancer, diabetes, obesity and heart disease.

While food insecurity and poverty are not the same, they are related. Food insecurity means that that the availability of nutritionally adequate food or the ability to acquire it is limited or uncertain. In 2019, 10.5% of U.S. households were food insecure, according to the U.S. Department of Agriculture (USDA). Blacks and Hispanics were more than twice as likely to face food insecurity than whites.

Poverty and Crime

The relationship between poverty and crime is complex, and many factors are associated with poverty and crime, including unemployment, population density, high school dropout rate and incidence of drug use.

While difficult to quantify, some studies have indicated that as a particular population’s poverty rate increases, crime, particularly violent crime, tends to increase, as well.

Government Programs that Lift or Help Keep People Out of Poverty

Government benefits keep millions of Americans out of poverty, mostly women, children and the elderly. Social Security alone keeps approximately 27.3 million people above the poverty line, including 17.9 million senior citizens 65 or older. Refundable tax credits, such as the Earned Income Tax Credit and the Child Tax Credit, kept 7.9 million people out of poverty, and food stamps have the same result for 3 million people.

If non-cash government aid programs were counted in the Census Bureau thresholds, food stamps would lift another 3.9 million Americans out of poverty. In addition, the combined Earned Income Tax Credit and Child Tax Credit kept 9.2 million families from falling into poverty in 2010.

Other government programs include:
  • Community Services Block Grant
  • Head Start
  • Low-Income Home Energy Assistance
  • Medicaid
  • Medicare prescription drug coverage
  • Family planning services
  • Supplemental Nutrition Assistance Program (SNAP) (formerly known as food stamps)
  • Special Supplemental Nutrition Program for Women, Infants, and Children (WIC)
  • National School Lunch and Breakfast Programs
  • Legal services
  • Jobs Corps

Some state and local governments provide programs for the poor, as do some private companies and charities.

How U.S. Poverty Levels Compare to Countries around the World

According to the Organization for Economic Cooperation and Development (OECD), the United States has the third highest poverty rate among the world’s developed countries. The United Nations Children’s Fund (UNICEF) ranks the United States second behind Mexico on a scale of what economists call “relative child poverty” when measured against 35 of the world’s richest nations.

These rankings are not absolute measures. Relative child poverty refers to a child living in a household where the income is less than half of the national median; the relative standards in the United States are high.

About The Author

Bill Fay

Bill “No Pay” Fay has lived a meager financial existence his entire life. He started writing/bragging about it in 2012, helping birth Debt.org into existence as the site’s original “Frugal Man.” Prior to that, he spent more than 30 years covering the high finance world of college and professional sports for major publications, including the Associated Press, New York Times and Sports Illustrated. His interest in sports has waned some, but he is as passionate as ever about not reaching for his wallet. Bill can be reached at [email protected].

Sources:

  1. Semega, J.; Kollar, M.; Shrider, E.; and Creamer, J. (2020, September 15) Poverty in the United States: 2019. Retrieved from https://www.census.gov/library/publications/2020/demo/p60-270.html
  2. Boghani, P. (2020, December 8) How COVID Has Impacted Poverty in America. Retrieved from https://www.pbs.org/wgbh/frontline/article/covid-poverty-america/
  3. N.A. (2020, October 7) COVID-19 to Add as Many as 150 Million Extreme Poor by 2021. Retrieved from https://www.worldbank.org/en/news/press-release/2020/10/07/covid-19-to-add-as-many-as-150-million-extreme-poor-by-2021
  4. Chetty, R.; Stepner, M.; and Abraham, S. (2020, April 16) The Association Between Income and Life Expectancy in the United States, 2001-2014. Retrieved from https://jamanetwork.com/journals/jama/article-abstract/2513561
  5. N.A. (ND) Poverty. Retrieved from https://www.healthypeople.gov/2020/topics-objectives/topic/social-determinants-health/interventions-resources/poverty
  6. N.A. (ND) Healthy People Objectives. Retrieved from https://www.cdc.gov/nceh/lead/data/healthy-people-objectives.htm
  7. Coleman-Jensen, A.; Rabbitt, M.; Gregory, C.; and Singh, A. (2020, September) Household Food Security in the United States in 2019. Retrieved from https://www.ers.usda.gov/publications/pub-details/?pubid=99281
  8. Wolfe, J. and Blair, H. (2019, September 11) Government programs kept tens of millions out of poverty in 2018. Retrieved from https://www.epi.org/blog/government-programs-keep-tens-of-millions-out-of-poverty/
  9. N.A. (2021, February) Poverty rates in OECD countries as of 2019. Retrieved from https://www.statista.com/statistics/233910/poverty-rates-in-oecd-countries/