How we measure poverty matters — and we can do better

How many people are living in poverty in America? It depends on whom you ask. If it’s the US Census, the answer would be somewhere around 37 million people. But that number doesn’t necessarily capture everyone who might be considered poor, because measuring poverty largely depends on how we define it. And some definitions, including the one used to determine the federal poverty line, can be surprisingly arbitrary.

That’s a problem, because understanding how we measure poverty is critically important — not just because it gives us a sense of how deep the problem is in American society, but also because it allows us to better evaluate anti-poverty programs.

If we look at the federal poverty line, for example, it looks like poverty has mostly been stagnant, slowly ebbing and flowing without much meaningful change. In 1970, for example, 12.6 percent of Americans lived below the poverty line and in 2023, 11.1 percent of Americans did. But by other measures, poverty has dramatically dropped over the past six decades.

So how do we measure poverty, and should we look for another way?

The poverty line, explained

The official poverty rate, as measured by the US Census, is seriously outdated. It was developed in 1963 by an economist at the Social Security Administration, and it determined that the threshold should be three times the minimum food budget of a given family. That calculation was based on data from the 1950s, which found that the average American family spent about a third of their income after taxes on food.

To put a finer point on this, here’s how my colleague Dylan Matthews described this methodology in 2015: “The way we measure poverty is based on a 51-year-old analysis of 59-year-old data on food consumption, with no changes other than inflation adjustment. That’s bananas.” It’s only gotten older since then, and its flaws don’t stop there.

The official poverty measure also leaves out critical components of a person’s income, including some major anti-poverty programs. While it does count certain social benefits outside someone’s regular wages that contribute to their income — things like unemployment or Social Security benefits — major assistance programs like food stamps, Medicaid, or housing vouchers are excluded. Additionally, because it calculates incomes pre-tax, it leaves out tax credits like the Earned Income Tax Credit. As a result, the official poverty rate misses how major social programs are helping lift people out of poverty.

Since 2011, however, the Census has taken steps to address these issues by applying another measure of poverty — the Supplemental Poverty Measure. This calculation ditches the decades-old practice of only using food spending to determine the costs of a family’s basic needs, adding other expenses like shelter, clothing, and utilities to the equation. It also counts noncash benefits like food stamps or housing vouchers toward someone’s income, and unlike the official poverty measure, which largely ignores geography, it accounts for regional cost-of-living differences.

According to researchers at Columbia University, who calculated what the Supplemental Poverty Measure would have been in the years before the Census started using it, poverty declined by 40 percent between 1967 and 2012. But when they removed some aspects of a person’s income, including certain tax credits and social programs, then it looks like poverty has stayed pretty much the same over the same time period.

All of this sounds very technical. But where the government chooses to place the poverty line can make a material difference in someone’s life: If someone technically falls above the poverty line, that doesn’t mean that they suddenly no longer struggle to make ends meet. And though a person’s income might not change, if the poverty threshold changes, someone may then have a more difficult time covering basic costs because they might lose access to some welfare benefits like food stamps.

So while various poverty measures can help give us a sense of how big of a problem it is, it’s also important to look at other factors that set people back and design programs to address those issues.

Sky-high housing costs, for example, eat up many families’ incomes. According to Harvard’s Joint Center for Housing Studies, for example, 22.4 million renter households, representing about half of renter households, are rent-burdened — meaning they spend more than 30 percent of their incomes on rent. And some 12.1 million households were “severely” rent burdened, meaning they spent more than half of their incomes on rent.

Rent burdens don’t show up in some poverty measures, including the official Census metric; but addressing these exorbitant housing costs would significantly help families across the board, especially those with lower incomes, and likely help alleviate poverty overall.

Ultimately, the problem of poverty doesn’t come down to how we measure it, but to how much government is willing to do to ensure that everyone can have a decent and dignified life. And no matter how we choose to measure poverty, one thing is for certain: We are nowhere close to guaranteeing that standard of living in America.

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