The federal poverty level is the minimum income required to avoid poverty in the US, calculated annually using a scheme from the 1960s and adjusted for inflation. Poverty levels are used to determine eligibility for state and federal programs, but some criticize the methodology for not accounting for differing living standards. Poverty lines and poverty guidelines are two slightly different metrics used by the government. Critics argue that the official poverty level figures are unrealistic and do not account for regional differences in living standards.
The federal poverty level is the minimum annual income required to avoid living in poverty in the United States. Any income level below this level is considered insufficient to meet the basic necessities of life. The level of poverty is determined on the basis of a scheme devised in the 1960s and updated annually to take inflation into account. The term refers to two slightly different metrics set by the government, one of which is used to determine eligibility for state and federal programs. The methodology used to calculate poverty levels is sometimes criticized for not taking into account differing living standards.
Poverty levels are calculated annually for both individuals and households using slightly different methods. Any person or family that earns less than the federal poverty level in any given year is considered by the government to be living in poverty. For example, a family of four who earned less than $22,050 US dollars (USD) in 2009 would be considered to be living in poverty. This means that it is difficult or impossible for the family to meet the basic needs of life, such as food, water and shelter.
The federal poverty level is based on work and research done in the early 1960s by Mollie Orshansky of the Social Security Administration. Orshansky, aware that families of 3 or more often spent a third of their income on food, devised a scheme that took the cost of an affordable meal plan from the Department of Agriculture and multiplied it by three. For families of two or less a multiplier of 3.7 was used. Since 1969, Orshansky’s original numbers have been adjusted annually for inflation using the consumer price index.
The terms “federal poverty level” and “poverty line” can actually mean two slightly different things: poverty lines and poverty guidelines. Poverty lines are calculated by the US Census Bureau and are used for statistical purposes. The Department of Health and Human Services (HHS) creates poverty guidelines using a simplified version of the Census Bureau’s thresholds. Poverty guidelines are used to determine eligibility for many federal and state programs, such as Head Start, the Department of Agriculture’s Food Assistance Program, and some community health services. Some programs, such as those created under the Patient Protection and Affordable Care Act of 2010, use income levels as high as 400 percent of poverty guidelines to determine eligibility for benefits.
Some have criticized the official federal poverty level figures as an unrealistic measure of poverty in America. Critics point to the assumption that low-income families still spend a third of their income on food, as they did in the 1960s when the methodology was established. Official guidelines are the same across the contiguous 48 states, regardless of regional differences in living standards. Separate measures are used in Alaska and Hawaii. Several alternative methods have been proposed and even tested by government agencies, but so far none of them have been adopted as an official measure of poverty.
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