page_title: Poverty in the United States
section_title: Understating poverty
hierarchical_section_title: Poverty in the United States / Measuring poverty / Criticism / Understating poverty
caption_attribution_description: English: Boston 2013
context_page_description: Poverty in the United States of America refers to people who lack sufficient income or material possessions for their needs. Although the United States is a relatively wealthy country by international standards, poverty has consistently been present throughout the United States, along with efforts to alleviate it, from New Deal-era legislation during the Great Depression to the national War on Poverty in the 1960s to poverty alleviation efforts during the 2008 Great Recession.
  The U.S. federal government uses two measures to measure poverty: the poverty thresholds set by the U.S. Census Bureau, used for statistical purposes, and the poverty guidelines issued by the Department of Health and Human Services, which are used for administrative purposes. Poverty thresholds, which recognize poverty as a lack of those goods and services are commonly taken for granted by members of mainstream society, consist of income levels. On the other hand, poverty guidelines are simpler guidelines that are used to determine eligibility for federal programs such as Head Start and food stamps.
  According to a 2018 assessment by the U.S.
context_section_description: 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. A recent NPR report states that as many 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. A study taken in 2012 estimated that roughly 38% of Americans live "paycheck to paycheck."
  
  In 1969, the Bureau of Labor Statistics put forward suggested budgets for adequate family living. 60% of working-class Americans lived below the "intermediate" budget, which allowed for the following:
  It assumes, for example, that the family will own:
  ... A toaster that will last for 33 years.
  ... A vacuum cleaner that will last 14 years.
  The budget assumes that a family will buy a two-year-old car and keep it for four years...
  
  Finally, the budget allows nothing whatever for savings.
  Given that the "intermediate" budget was fairly modest, observers questioned whether poverty levels were really capturing the full extent of prosperity, challenging the long-established view that most Americans had attained an affluent standard of living in the two decades following the end of the Second World War.
  There have also been criticism of the methodology used to develop the U.S. poverty thresholds in the first place. As noted above, the poverty thresholds used by the US government were originally developed during the Johnson administration's War on Poverty initiative in the early 1960s. The thresholds were based on the cost of a food basket at the time, multiplied by three, under the assumption that the average family spent one third of its income on food.
  However, the current poverty line only takes into account food purchases that were common more than 50 years ago. Additionally, it assumes that Americans spend one third of their income on food; in fact, Americans typically spent less than one tenth of their after-tax income on food in 2000. For many families, the costs of housing, health insurance and medical care, transportation, and access to basic telecommunications take a much larger bite out of the family's income today than a half century ago, yet none of these costs are considered in determining the official poverty thresholds.
  
  According to John Schwarz, a political scientist at the University of Arizona:
  The official poverty line today is essentially what it takes in today's dollars, adjusted for inflation, to purchase the same poverty-line level of living that was appropriate to a half century ago, in 1955 .... Updated thereafter only for inflation, the poverty line lost all connection over time with current consumption patterns of the average family. Quite a few families then didn't have their own private telephone, or a car, or even a mixer in their kitchen... The official poverty line has thus been allowed to fall substantially below a socially decent minimum, even though its intention was to measure such a minimum.
  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 2006 was $564,430. 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 $723,790, requiring an upper middle class income only earned by roughly 20% of all households in the county. Such fluctuations in local markets are, however, not considered in the federal poverty threshold and may leave many who live in poverty-like conditions out of the total number of households classified as poor.
  The Supplemental Poverty Measure, introduced in 2011, aims at providing a more accurate picture of the true extent of poverty in the United States by taking account of non-cash benefits and geographic variations. According to this new measure, 16% of Americans live
caption: Homeless man in Boston
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