The 2015 federal poverty guidelines were just released. The guidelines are used as a tool to not only define poverty, but also determine one’s eligibility for many federal programs, such as SNAP (food stamps).
The poverty guidelines are updated on an annual basis. In 2014, a family of 4 was considered living below the poverty line if they earned less than $23,850 annually. In 2015, that figure rose by $400 — a family of 4 must earn below $24,250 annually to be considered living in poverty.
However, what happens if your family of 4 earns $25,000? According to the guidelines, your family would be considered as living above the poverty line. This also means that your family may not qualify for many federal programs.
While it is important to have a universal definition of poverty, the federal poverty guidelines are often criticized for the following:
- Undercounting the number of people struggling financially.
- Being based on a measure developed in the 1960’s that assumes families spend 1/3 of their income on food.
- Still utilizing a formula based on a time when most families did not use daycare (one wage earner and one stay-at-home parent).
- It does not include any federal assistance programs as income.
- It is universal across state lines, even though the cost of living varies by state.
The United States Census Bureau developed an alternative measure of poverty in order to address concerns with the official poverty guidelines. While this Supplemental Poverty Measure (SPM) is not used for federal program eligibility, it does paint a more accurate picture of poverty. It includes cost factors such as work expenses, medical costs, and child care, which are not included in the poverty guidelines measure. It also adds federal government in-kind benefits, such as SNAP (food stamps) to an individual’s income.
Based on the most recent SPM, the 2013 poverty rate is higher than what is typically measured by the poverty guidelines by .9%. That translates to 2,923,000 additional Americans experiencing poverty than what is counted with the federal poverty guidelines.
Lastly, the Economic Policy Institute shows that in order to adequately meet your basic needs, you need to earn a wage that is much higher than the poverty rate. For Oregon, that means your family of 4 needs to earn between $56,770-$69,818 annually, depending on where you live in the state. That’s more than double the poverty rate.
Please note that while many people make it on way less than this, and adequately, it means people may be overextending themselves on some items in their budget, or maybe they were able to find some resources (e.g. — free daycare with their mom), in order to make it work more efficiently. This budget takes into account basic living expenses in a region, and also includes budget recommendations like not spending over 30% of your income on rent. To get a better sense of what this looks like, over half of Oregon renters (53%) spend more than 30% of their income on rent.
While this is not a poverty measure, it is important to note that financial struggles exist at levels beyond the poverty level.
- U.S. Department of Health and Human Services (2015). “2015 Poverty Guidelines.”
- Oregon Center for Public Policy (2000). “How We Measure Poverty” by Jessie Willis.
- The United States Census Bureau (2014). “Supplemental Poverty Measure: 2013.” by Kathleen Short
- Economic Policy Institute (2013). “Family Budget Calculator.”