Poverty in the United States and Different Poverty Measure

Topics: Poverty in the United States, Poverty threshold, Poverty Pages: 7 (1507 words) Published: March 24, 2014
 POVERTY

There is no universally acceptable definition of poverty, although there are several connotations and definitions in vogue. Poverty implies a condition of life characterised by deprivation some sort or the other, and perceived as undesirable by the person concerned or others. It is a multidimensional concept and phenomenon. Generally, there is a consensus among scholars about poverty being conceived and defined as absolute or relative. Absolute poverty implies a person’s lack of access to objectively determined, reasonably adequate quantities of goods and services, to satisfy his/her material and non-material basic needs. Relative poverty, on the other hand, means that a person’s access to the basic needs of life is relatively lower, as compared to some reference group of people. Between two households or two persons, one may be considered as poor, while the other in comparison may not be so, even though both may be in a position to fulfill their basic needs.

Following the Office of Management and Budget's (OMB) Statistical Policy Directive 14, the Census Bureau uses a set of money income thresholds that vary by family size and composition to determine who is in poverty.  If a family’s total income is less than the family’s threshold, then that family and every individual in it is considered in poverty.  The official poverty thresholds do not vary geographically, but they are updated for inflation using Consumer Price Index (CPI-U).  The official poverty definition uses money income before taxes and does not include capital gains or noncash benefits (such as public housing, Medicaid, and food stamps).

Income
used to compute
poverty status:

Money income
Includes earnings, unemployment compensation, workers’ compensation, Social Security, Supplemental Security Income, public assistance, veterans’ payments, survivor benefits, pension or retirement income, interest, dividends, rents, royalties, income from estates, trusts, educational assistance, alimony, child support, assistance from outside the household, and other miscellaneous sources. Noncash benefits (such as food stamps and housing subsidies) do not count. Before taxes.

Excludes capital gains or losses.
If a person lives with a family, add up the incomeof all family members. (Non-relatives, such as housemates, do not count.)

Measure of need
(poverty thresholds):
Poverty thresholds are the dollar amounts used to determine poverty status Each person or family is assigned one out of 48 possible poverty thresholds Thresholds vary according to:
Size of the family
Ages of the members
The same thresholds are used throughout the United States(do not vary geographically) Updated annually for inflation using the Consumer Price Index for All Urban Consumers (CPI-U). Although the thresholds in some sense reflect families needs, they are intended for use as a statistical yardstick, not as a complete description of what people and families need to live many government aid programs use a different poverty measure, the Department of Health and Human Services (HHS) poverty guidelines, or multiples thereof Poverty thresholds were originally derived in 1963-1964, using: U.S. Department of Agriculture food budgets designed for families under economic stress Data about what portion of their income families spent on food

Computation:
If total family income is less than the threshold appropriate for that family, the family is in poverty
all family members have the same poverty status
for individuals who do not live with family members,their own income is compared with the appropriate threshold If total family income equals or is greater than the threshold,the family (or unrelated individual) is not in poverty

Example:
Family A has five members: two children, their mother, father, and great-aunt. Their threshold was $26,338 dollars in 2008. (See poverty thresholds for 2008) Suppose the members' incomes in 2008 were:

Mother:...
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