Drawing the Poverty Line

The federal poverty level is based on relative poverty. Poverty in the United States is measured by the number of people who fall below a certain level of income—called the poverty line—that defines the income needed for a basic standard of living.

In the United States, the official definition of the poverty line traces back to a single person: Mollie Orshansky. In 1963, Orshansky, who was working for the Social Security Administration, published an article called “Children of the Poor” in a highly useful, but dry publication called the Social Security Bulletin. Orshansky’s idea was to define a poverty line based on the cost of a healthy diet.

Her previous job had been at the U.S. Department of Agriculture, where she had worked in an agency called the Bureau of Home Economics and Human Nutrition. One task of this bureau had been to calculate how much it would cost to feed a nutritionally adequate diet to a family. Orshansky found that the average family spent one-third of its income on food. She then proposed that the poverty line be the amount needed to buy a nutritionally adequate diet, given the size of the family, multiplied by three.

The current U.S. poverty line is essentially the same as the Orshansky poverty line, although the government adjusts the dollar amounts to represent the same buying power over time. The U.S. poverty line in 2015 ranged from $11,790 for a single individual to $25,240 for a household of four people.

Figure 1 shows the number in poverty and the U.S. poverty rate over time; that is, the percentage of the population below the poverty line in any given year. While the number in poverty has grown over time, the poverty rate declined through the 1960s, rose in the early 1980s and early 1990s, but seems to have been slightly lower since the mid-1990s. However, in no year in the last four decades has the poverty rate been less than 13.5% of the U.S. population—that is, at best about one American in nine is below the poverty line.

The federal poverty line in the U.S. is an example of relative poverty (not extreme poverty). The cost of living is not taken into consideration, so the federal poverty level is standard across the United States and fails to account for the fact that some cities are vastly more expensive than others. The Economic Policy Institute (EPI) created this family budget calculator (click on it to see how your city measures up to the federal poverty line). According to the EPI, in 615 U.S. cities,  it takes a total income at least twice the federal poverty line for any type of family with three children or fewer to afford basic expenses.^[1]

Figure 1. Changes in the number in poverty and the poverty rate.

Causes of poverty

Poverty as a personal failing

When it comes to poverty in the United States, there are two main lines of thought. The most common line of thought within the U.S. is that a person is poor because of personal traits–things like personality characteristics, motivation, and education. This viewpoint puts the blame on an individual’s personal failure not to climb out of poverty and is centered around the belief that anyone can succeed if they try hard enough. This thought pattern stems from the idea of meritocracy, or the belief that individuals are selected and moved ahead based primarily on their achievements and intellectual abilities.

Daniel Patrick Moynihan, Secretary of Labor and sociologist, completed a report titled “The Negro Family: The Case for National Action” (known as the Moynihan Report) in 1965. The intent was to show that civil rights legislation alone would not produce racial equality, and to advocate for additional policies to address structural discrimination. Unfortunately, the report was interpreted as focusing on the internal dynamics of Black families, as it seemed to identity racially disproportionate rates of divorce, “illegitimate” children, welfare dependence, and unemployment as primary factors. This reading allowed many conservatives to argue that racial self-help was both adequate and necessary, with some some commentators straying into judgement instead of analysis so as to focus on “loose morality among African Americans” as a way to blame Black families themselves for inequality ^[2].

Poverty as a structural failing

Another explanation for poverty is that it results from structural inequality. For example, the job market fails to provide a proper number of jobs which pay enough to keep families out of poverty. Even if unemployment is low, the labor market may be saturated with low paying, part-time work that lacks benefits such as health insurance coverage or employee retirement contributions (thus limiting the number of full-time, good paying jobs). Low minimum wages and the increasing prevalence of part-time jobs that offer no benefits have contributed to the labor market’s inability to produce enough jobs sufficient for keeping a family out of poverty. This is an example of an economic structural failure. It exists independently of any one individual’s actions or priorities, and as such it is an apt object of analysis for sociologists.

Poverty is not equally distributed among racial and ethnic groups in the United States. Although whites make up the largest total number of people in poverty, Blacks, Latinos, and Native Americans are disproportionately likely to be poor by comparison.

The 1965 Moynihan Report began with the following rationale for why Blacks were not experiencing equality as a group: “There are two reasons. First, the racist virus in the American bloodstream still afflicts us: Negroes will encounter serious personal prejudice for at least another generation. Second, three centuries of sometimes unimaginable mistreatment have taken their toll on the Negro people” (as reprinted in Geary 2015).

Sociologist William Julius Wilson has written extensively about the institutional barriers Black Americans face, and has examined structural causes of poverty. His books The Declining Significance of Race (1972), The Truly Disadvantaged (1987) and When Work Disappears (1996) examine what he calls the “underclass.” In one case study, Wilson documents the economic and social changes in the North Lawndale area of West Chicago over several years. He notes that North Lawndale lost 75 percent of its businesses from 1960-1970, resulting in unprecedented levels of unemployment. While 70 percent of Black men nationwide worked full-time, year-round in the 1970s, by the 1980s, only half did (1996). Although Wilson’s books have won numerous awards and have been widely read, he has been heavily criticized for prioritizing the role of social class over that of race and institutional racism.

A recent survey by the U.S. Federal Reserve found that 47 percent of Americans would have a difficult time raising $400 cash in an emergency^[5] This supports recent census data, which shows that half the population qualifies as poor or low income. Poverty rates are persistently higher in rural and inner city parts of the country as compared to suburban areas. Children, the disabled, the elderly, and minority populations are particularly vulnerable to poverty.

Most people tend to think about poverty as “cyclical” or generational poverty, but in a recent study conducted by the Center for Poverty Research at the University of California, Davis, the average “spell of poverty” lasted 2.8 years, and although most people become poor due to less money being earned by a head of household, 25 percent entered into poverty as the result of a breadwinner’s death or through divorce^[6]. The effects of poverty on children are many, including an increased likelihood of reduced life chances.

Further Research: Stratified Monopoly

Figure 2. In Monopoly the game, unlike in real life, all players start on equal footing.

Many sociologists and economists have used the classic board game Monopoly to illustrate poverty, social mobility, and the principles of a market economy. The game, nearly a century old, was originally designed to show the benefits of a limited tax system as well as those of a monopoly, or owning all of a particular type of property, utility, or transportation system.

However, if we consider Monopoly as an example we can see that several aspects of the game do not in fact translate to everyday life.

1. Each player begins at “GO” with the same amount of money and an opportunity to buy property as soon as one lands on it.
2. Each player “earns” the same amount of money when they pass “GO.”
3. Each player has the same likelihood of rolling the die, going to jail, and bailing themselves out.

When we consider players who are unsuccessful at Monopoly, we often say they have had “bad luck.”

You can play your own game of stratified Monopoly following the rules found here.

• What does Stratified Monopoly show us about wealth and poverty in the U.S.?
• Which version of Monopoly is closer to reality in the U.S.?