What Is Poverty?

February 10, 2014

2015 Poverty Guidelines

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.

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Testimonials

  • The training taught me to “manage what I have better and be more aware of the stress level it causes to not be able to meet ‘your’ needs.” (Poverty Awareness Training participant)