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 income
of all family members. (Non-relatives, such as
housemates, do not count.)
(poverty thresholds): Poverty thresholds are the dollar amounts used to determine
poverty status
Each person or family is assigned one out of 48 possible
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 $22,509 dollars in 2003. (See poverty thresholds for 2003)
Suppose the members' incomes in 2003 were:
| Mother: | $10,000 |
| Father: | 5,000 |
| Great-aunt: | 10,000 |
| First child: | 0 |
| Second child: | 0 |
| Total family income: | $25,000 |
Compare total family income with their family's threshold.
Income / Threshold = $25,000 / $22,509 = 1.11
Since their income was greater than their threshold, Family A is
not "in poverty" according to the official definition.
The income divided by the threshold is called the Ratio of
Income to Poverty.
Family A's ratio of income to poverty was 1.11.
The difference in dollars between family income and the
family's poverty threshold is called the Income Deficit (for
families in poverty) or Income Surplus (for families above poverty)
-- Family A’s income surplus was $2,491 (or $25,000 - $22,509).
status cannot
be determined: Unrelated individuals under age 15 (such as foster children)
income questions are asked of people age 15 and older
if someone is under age 15 and not living with a family
member, we do not know their income
since we cannot determine their poverty status, they are
excluded from the “poverty universe” (table totals)
People in:
institutional group quarters (such as prisons or nursing
homes)
college dormitories
military barracks
living situations without conventional housing (and
who are not in shelters)
official poverty measure: The official measure of poverty was established by the
Office of Management and Budget (OMB) in
Statistical Policy Directive 14.
To be used by federal agencies in their statistical work.
Government aid programs do not have to use the official
poverty measure as eligibility criteria.
Many government aid programs use a different poverty
measure, the Department of Health and Human
Services (HHS) poverty guidelines, or variants thereof
Each aid program may define eligibility differently
Official poverty data come from the Current Population Survey
(CPS) Annual Social and Economic Supplement (ASEC),
formerly called the Annual Demographic Supplement or simply
the "March Supplement."
History: “The Development of the Orshansky Thresholds
and Their Subsequent History as the Official U.S. Poverty
Measure,” by Gordon M. Fisher
Last Revised: August 26, 2004
