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Renea Lombardi PHE 410 Poverty: How the U.S. measures UP The gap between rich and poor is now approaching levels not seen since the late 1920s In 2007, 37.3 million people were living in poverty. Source: U.S. Census Bureau, Housing and Household Economic Statistics Division

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Renea Lombardi

PHE 410

Poverty: How the U.S. measures UP

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There are two slightly different versions of the federal poverty measure:  The poverty thresholds and The poverty guidelines.

  • The poverty thresholds are the original version of the federal poverty measure and they are updated each year by the Census Bureau. The thresholds are used mainly for statistical purposes — for instance, preparing estimates of the number of Americans in poverty each year. 

  • The poverty guidelines, often informally referred to as the "Federal Poverty Level“ (FPL), are issued by the Department of Health and Human Services.  The guidelines are a simplification of the poverty thresholds for use for administrative purposes — for instance, determining financial eligibility for certain federal programs.

    Source: United States Department of Health & Human Services

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  • Measure of Need: Poverty Threshold poverty measure:  The poverty thresholds and

  • Family A has five members: two children, their mother, father, and a great-aunt

  • Their threshold was $25,364 dollars in 2007.

    • Suppose the members' incomes in 2007 were:

  • Mother: $10,000

  • Father: 7,000

  • Great-aunt: 10,000

  • First child: 0

  • Second child: 0

  • Total family income: $27,000

  • Compare total family income with their family's threshold:

  • Income / Threshold = $27,000 / $25,364

  • Since their income was greater than their threshold, Family A is not "in poverty" according to the official definition.

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What programs use the poverty guidelines? poverty measure:  The poverty thresholds and

  • Department of Health and Human Services:

    • Head Start

    • Low-Income Home Energy Assistance Program (LIHEAP)

    • State Children’s Health Insurance Program

    • Medicare – Prescription Drug Coverage

    • Community Health Centers

    • Family Planning Services

    • Job Opportunities for Low-Income Individuals

    • Assets for Independence Demonstration Program

  • Department of Agriculture:

    • Food Stamp Program

    • Special Supplemental Nutrition Program for Women, Infants, and Children (WIC)

    • National School Lunch Program

    • School Breakfast Program

  • Department of Labor:

    • Job Corps

  • Department of the Treasury:

    • Low-Income Taxpayer Clinics

      Source: Institute for Research on Poverty (IRP)

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Proposals/Solutions? poverty measure:  The poverty thresholds and

  • Although the thresholds in some sense reflect families needs, they are intended for use as a statistical yardstick, not as a complete description of what people and families need to live.

  • Poverty thresholds were originally derived in 1963-1964, using:

    • U.S. Department of Agriculture food budgets designed for families under economic stress

    • Data about what portion of their income families spent on food

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Controversy? poverty measure:  The poverty thresholds and

  • Failing to include income that many low-income people receive in the form of public assistance, some critics maintain that the extent of poverty is over-stated.