To better understand and tackle poverty, it is essential to understand the way that citizens measure and evaluate poverty at home. The Federal Poverty Line is not one single measure but rather two separate calculations used for different purposes. The first Federal Poverty Line, the poverty threshold, is mainly used for statistical purposed by the United States Census Bureau. Next come the Federal Poverty Guidelines; these are used primarily to determine eligibility for federal programs.

Mollie Orshanksy of the Social Security Administration developed the poverty threshold in the 1960’s to gauge the effectiveness of poverty reduction programs. The measure takes into account pre-tax income such as earnings, dividends, pensions, child support, interest, Social Security and royalties. However, it ignores both non-cash benefits such as food stamps and capital gains and losses.

The threshold varies across families of different ages and sizes and annually adjusts for increases in inflation. For 2011, the most recent survey available, the Census Bureau’s definition of poverty was a household income of $23,283 for a family of four (two adults, two children.) A single person under the age of 65 lives in poverty if he or she makes less than $11,946 per year. For a person over the age of 65, the number drops to $11,011 a year. As of 2011, 46.2 million people in the U.S. lived under the poverty threshold, the largest figure ever recorded.

The U.S. Department of Health and Human Services issues the other poverty measure, the Federal Poverty Guidelines each year. In 2014, the poverty line, as established by the guidelines, was $23,850 for a family of four. $4,060 can be added or subtracted from this base number to account for larger and smaller families.

The Federal Poverty Guideline aims to simplify the poverty threshold for administrative use, such as identifying eligibility for federal programs. For instance, those making 400 percent or less of the poverty are eligible for tax credits to help pay the cost of insurance under the Affordable Care Act. That amounts to individuals making less than $46,680 and families of four making less than $95,400. Other programs that make use of the poverty guidelines include Food Stamps, the Low-Income Energy Assistance Program and the National School Lunch Program.

The Federal Poverty Line, divided into both the poverty threshold and the poverty guidelines, help fight poverty by taking the crucial first step of identification. The information provided by the Census Bureau and the poverty threshold helps identify the people and areas most in need throughout the U.S. Additionally, the poverty guidelines help the federal government distribute aid to the appropriate people. The guidelines protect people close to the poverty line from falling deeper in need while also helping those already in poverty get the necessary assistance.

– Martin Levy

Sources: US Economy, US Dept. Health and Human Services, University of Wisconsin
Photo: Living NonViolence