Poverty remains a persistent issue in the United States, with millions of Americans unable to make ends meet each year. According to data from the Census Bureau, nearly 38 million Americans lived in poverty in 2021.
How does the federal government define poverty?
The federal government defines poverty based on family size and income. If a family’s total income is less than the poverty threshold set by the federal government, then that family is considered impoverished. The official poverty measure is adjusted annually to account for inflation.
Let’s use 2021 poverty data from the Department of Health and Human Services (HHS) as an example. Using the official poverty measure, a family of four would be considered in poverty if their annual household income was $26,500 or less before taxes. (For 2020-2021, the median household income for a family of such size was $90,657.)
Since the measure is set at the federal level, it does not take into account the varying costs of living in different parts of the country, which can lead to errors in counting.
What are the different ways of measuring poverty?
Poverty can be measured in two ways: poverty guidelines and poverty thresholds.
The HHS uses poverty guidelines to determine a person’s financial eligibility for federal benefits and programs specific to low-income Americans. These include SNAP (Supplemental Nutrition Assistance Program, also known as food stamps), Medicaid, and income-based plans for paying off federal student loans.
Meanwhile, the Census Bureau sets poverty thresholds for the official poverty measure and the Supplemental Poverty Measure (SPM) to calculate the number of Americans living in poverty each year. This number is then used to evaluate trends and current economic conditions within communities and to make comparisons across demographic groups.
Put simply, poverty guidelines are administrative, whereas poverty thresholds are statistical.
What is the US poverty rate?
The national poverty rate was 11.6% in 2021.
Poverty rates are highest among American Indian or Alaska Native, Black, and Hispanic American populations. In 2021, 24.3% of American Indian or Alaska Native people, 19.5% of Black people, and 17.1% of Hispanic people were classified as living in poverty, followed by 9.3% of Asian Americans and 8.1% of non-Hispanic white Americans.
There are also differences in poverty rates based on education level. Census Bureau data from 2021 showed that 27.2% of people without a high school diploma and 13.2% of people with a high school diploma but no college education were living in poverty. On the other hand, 9.2% of Americans with some college education and only 4.1% of people with a bachelor’s degree or higher were classified as at or below the poverty level.
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