U.S. Federal Poverty Threshold: an Imprecise Measure

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U.S. Federal Poverty Threshold: An Imprecise Measure

The advancement of civilization has brought about enormous change in the way humans live, and the leading nations have found astute ways to adapt to these changes. The United States of America, established as the undisputable leader of the modern world, has served as the innovator of many important guidelines that aid in structuring the governance of society. One of the major problems every nation faces in its moral, political, and legal discussions is the fate of its most impoverished citizens. As a most fundamental starting point, nations must find a measurable indicator of poverty. The United States government initially established a measure of official poverty in 1965 in conjunction with the U.S. Census Bureau. Defined as a minimum amount of income that American households need to subsist, it was first based on the finding that the median family in the mid-1950s spent about one-third of its income on food. That figure was then tripled to account for expenditures on all other goods and services. This constituted the threshold to measure poverty and determine the number of poor people. Anyone below the threshold was to legally be considered poor. Since its inception, the poverty threshold has been adjusted each year only for inflation. The importance of an accurate poverty measure is critical in the efforts of a civilized society to rid itself of poverty, to recognize its own deficiencies, to better allocate resources, to reduce the growing gaps between income levels, and to better aid those who live in dire conditions. In addition, Federal poverty guidelines determine eligibility for many private and government programs for low income families. The current federal poverty measure needs to change, since it might severely underestimate the number of poor citizens and deny local aid to millions of low-income workers who currently do not qualify. The components reflected in the United States poverty measure are flawed, outdated, and pose a threat to the proper development of our nation as a world leader.

As Fuchs (1967) observed, “Today’s comfort or convenience is yesterday’s luxury and tomorrow’s necessity. In a dynamic society it could hardly be otherwise.” Clearly, the fundamental error inherent in the poverty measure is the fact that methodology applicable in 1965 is invariably applied in 2009 despite the calamitous changes societies have experienced. At its inception, supporters of the existing methodology argued that the cost of food as the basis of the threshold was an ideal selection. After all, basic commodities seem to remain the most stable of economic indicators through time. In addition, the official definition of poverty is defined as the necessary income necessary for American families to subsist. By incorporating the most basic of subsistence elements- food- as the basis of the poverty measure, economists at the time believed that it could stand the test of time. As opposed to 1965, however, food no longer constitutes a major component of a family’s expenditures. According to the U.S.Bureau of Labor Statistics, in its Consumer Expenditures in 2000 (Washington, DC, 2001), reported that food constituted 13.6 percent of total expenditure, while housing accounted for about 32.4 of family spending. Food expenses, now constituting one-seventh of expenditures, are relatively low in comparison to the disproportionate growth of the costs of housing, child care, health care, and transportation. Thus, the existing poverty level fails to accurately take into account the true costs of supporting a family.

Many societal factors have further changed that make the 1965 initial measure obsolete. Today, both parents in a family are more likely to participate in household support than at the date of its inception. In addition, as evidenced by recent trends, single mothers are more often heads of households than decades ago. As a result, child-care costs, which were...
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