The federal poverty level is a measure that is often cited yet seldom is it fully understood.  Currently, the federal poverty level is considered to be at about a $15,000 yearly income per two-person families and, of which, the extreme poverty threshold  is set to households that are living on less than $2 per day.  This definition is fairly controversial, and has been subject to change over the years based on a number of factors.  However, it is a key concept to understand, and not just for domestic policy but foreign affairs as well.

The federal poverty level, or threshold, has been in effect in its current state since the Kennedy Administration.  According to a paper by economist, Gordon M. Fisher, the level was initiated in order to understand the risks of living in poverty  and the affects of poverty on different groups of people.  During the Johnson Administration, the level was used as a target; particularly, during the administration’s War on Poverty.

The level was developed based on the cost of food for families at the time and what kind of nutritional diet a family would be able to have at different levels.  Under the first calculation of this threshold, done by an economist working for the Social Security Administration, the threshold was determined at $1,988 yearly income per two-person households.

Since its creation, while a number of revisions have occurred since the first set of calculations, the formula to determine the level has been an important factor in U.S. policy decisions.  When looking at global poverty, the extreme poverty measure is particularly important for the threshold has been used to set goals for anti-poverty measures.

The Millennium Project is one such measure that uses the federal poverty level calculations to influence foreign policy.  The project has a number of goals to keep the global economy move forward, but listed first on these goals is the effort to “eradicate extreme hunger and poverty.”  These goals were set in 1990 with initial targets set to hit these goals.

The initial target for the extreme poverty goal was to halve extreme poverty by 2015.  Reminiscent of Johnson’s War on Poverty, this goal looked to drive the force for a greater world society.  The goal actually was estimated to have been reached by 2008, an achievement that was praised as a major success for the Millennium Project.

Despite the fact that poverty levels are used by programs like the War on Poverty and the Millennium Project, the poverty threshold has a number of critics.  Popular criticisms are that the threshold is too low, as it still uses calculations from the 1960s, and are applied indiscriminately to very different regions.  Alternative poverty measures have been proposed by state governments and by groups such as the National Academy of Sciences.  Unfortunately, none have yet been adopted.

Federal poverty levels are important to understand considering they are most often used in discussions surrounding poverty.  The measures influence policy decisions and are used to track the path of the U.S. economy.  The indications are that extreme poverty is going down across the world, but what this says about actual poverty and what it says about the way it is measured could be debated in some corners.

– Eric Gustafsson

Sources: The New Yorker, Huffington Post, UN Millennium Project, Social Security Administration, Center for American Progress