Although the terms poverty and low income may seem the same, there are many differences between them. People are considered to be living in poverty when they have income levels under official guidelines. People with incomes from the poverty line to 200% above that amount fall in the low income category. People who fall within these guidelines often live similar lives, facing challenges when meeting basic needs and saving for the future.
By understanding poverty measures, statistics, supplemental poverty measures, and how poverty guidelines are used, the confusion between the terms can be reduced. It is also important to understand how world poverty is different than poverty in the United States.
The Census Bureau makes annual overall measures about the United States’ population to determine poverty thresholds, which includes the number of people living within these measures. The guidelines that the Department of Health and Human Services (HHS) uses are a simplified version of the Census Bureau’s thresholds. These guidelines are used to determine eligibility for federal entitlement programs (i.e. social security, food stamps). There is a single set of poverty guidelines for the 48 contiguous states, while Alaska and Hawaii have separate guidelines. The HHS updates their guidelines on a yearly basis. The official HHS guidelines for 2015 state that a family of four with an income of $24,250 lives at the poverty line. A family of four is considered low income when their annual income is $44,100. Both of these measures are for the 48 contiguous states.
In 2014, the official poverty rate for the United States was 14.8%. This rate means that there are 46.7 million people in more than 13 million families living at or below the poverty line. This figure has been rising steadily for more than a decade. There are a number of factors that contribute to the rising rate, including increasing healthcare and child care costs, low wages, and low education levels. Family upsets are also causing an increase in the rate, largely due to divorce and single parenting.
Supplemental poverty measures
The federal government uses income and family size to determine the poverty line. The government uses the assumption that the average family spends approximately one third of their income on food. This measure calculates the amount of money an average family spends on food per person and multiplies that number by three. This calculation determines how much money a family of three needs to survive. The government updates their figures annually to reflect inflation.
The poverty guidelines were first set by the Census Bureau in the 1960s. Since that time, there have been a number of increasing costs that contribute greatly to a family’s ability to thrive. These costs include child care, housing, healthcare, and transportation.
The Census Bureau implemented a supplemental measure to capture a more accurate picture of poverty in the United States. In 2014, the official measure was $24,008. With the supplemental measure in place, the figure was adjusted to $25,844 for homeowners with a mortgage and $21,380 for homeowners without a mortgage. The amount was adjusted to $25,460 for renters.
How poverty guidelines are used
There are several federal programs that use official low income and poverty guidelines to determine eligibility for specific benefits. These programs include food stamps, Head Start, energy assistance, school lunch assistance, children’s health insurance, Medicaid, migrant health facilities, and job training programs. Many state and local governments use the federal guidelines as well to determine legal defense aid and child support. There are also a number of private companies, such as utility companies, that use the guidelines to determine eligibility for specific services.
It is important to keep in mind that the terms low income and poverty are relative. Typically, low income and poverty levels in the United States are exclusive to the United States. These standards are significantly different than the standards used in much of the world. Typically, people within the low income and poverty levels in the United States live in secure homes and have the ability to meet their basic needs. In comparison, roughly half of the sub-Saharan African population lives on a daily income that is about equal to $1.25 in United States currency. Using these figures shows how diverse the terms low income and poverty can be.
Hope Housing Foundation (HOPE) is Texas based non-profit organization dedicated to creating and promoting high quality yet affordable housing for those with low to moderate incomes. We maintain a high commitment to the community that we serve. We are closely involved in a number of local initiatives including educational scholarships, resident services, and community development programs. To learn more about our services or to become a partner, call us today at 1(214) 842-8075. You can also Contact Us by email for more information.