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Other articles in Part 1 Oregon's unseen poor Remarriage and training help single mom escape poverty Homelessness in Oregon, life on the streets Workshop simulates what it's like to be poor 1999 federal poverty guidelines Related links Measuring Poverty: A New Approach from the National Research Council US Census Bureau poverty Web page History of poverty guidelines, from US Dept of Health and Human Services

Official government poverty line shows signs of old age story by Tom Gentle Poverty is generally defined in terms of the income needed to meet basic needs for food, housing, clothing and transportation. But the notion of how much income is necessary differs significantly from one place to another. For example, if you live in a Third World country and earn less than $1 a day, you're poor, according to the definition of poverty used by the World Bank. In the United States, you're poor if your yearly income falls below the amount defined by the federal government as the official poverty line. (See chart of 1999 Federal Poverty Guidelines on this page.) The income required to satisfy basic needs is related to a society's concept of a minimum standard of living. During times of great technological innovation, commonly accepted standards of living change rapidly, according to Gordon Fisher, program analyst with the U.S. Department of Health and Human Services. Technology, he said, introduces new consumption items. At first only the rich may buy these items, but eventually "things originally viewed as luxuries-for instance, indoor plumbing, telephones, and automobiles-come to be seen as conveniences and then as necessities," Fisher said. So what does it mean when the number of poor households with one car, a washing machine and dryer, a microwave oven and color television set is on the rise? Some would say it shows the poor don't really have it so bad. Others would argue that these things are now necessary for a minimum standard of living. Although poverty standards in the United States trace back to the 19th century, the current official U.S. poverty line was adopted in 1969. It is heavily influenced by the standard of living that prevailed in the 1950s. The official poverty line originated in the Social Security Administration where Mollie Orshansky, an economist, developed poverty thresholds, or income cutoffs, for different sizes of families. She based these thresholds on an economy food plan developed by the U.S. Department of Agriculture for low-income families. Using 1963 as the base year, Orshansky calculated that a family of two adults and two children spent about $1,033 for food. To estimate how much money this family spent for housing, clothing, transportation and other basic needs, she turned to the most recent study available, a 1955 USDA survey that found typical families spent one-third of their after tax income on food. So she multiplied the cost of the USDA economy food plan ($1,033) by three to arrive at $3,100 as the minimum yearly income a family of four needed to get by. This became the poverty guideline for a family of four. Any family whose annual income before taxes fell below $3,100 was poor. The guidelines are updated each year to take inflation into account. So the 1999 guideline of $16,700 for a family of four is intended to represent the same purchasing power as the 1963 guideline of $3,100. Although Orshansky's poverty guidelines were not intended to be an official government measurement of poverty, they were given official status throughout the federal government in 1969. At that time, Social Security administrators and others estimated that the guidelines would be useful for five to ten years at most before they would need to be revised to reflect changing prices, standards of living and family spending. However, although a few changes have been made, they remain largely intact. As a result, the guidelines have been the target of serious criticisms: *The guidelines have never been updated to account for changing household consumption patterns. Families no longer spend one-third of their income on food and two-thirds on other basic needs. "Food now accounts for more like one-sixth of the family budget. Housing, transportation and utilities are much larger components of family spending," said Laura Connolly, an OSU economist. *The guidelines fail to take into account the extra costs of two-earner families, such as clothing, transportation and, perhaps biggest of all, childcare. "The cost of child care was not figured in to the official guidelines because the typical family in the 1950s had one wage earner and a stay-at-home mother," Connolly said. *The guidelines do not recognize geographic differences, even though the cost of food, clothing and housing varies from state to state and within states. "In a high cost state such as California, the official poverty thresholds are probably too low. In a lower cost state, they are too high," Connolly said. Oregon is both a high cost and low cost state. We generally have higher living costs west of the Cascades and lower costs east of the mountains. In addition, the poverty measure does not take into account differences between urban areas, such as Portland and much of the Willamette Valley, where housing costs tend to be higher, and rural areas, where transportation costs are higher. "There are always trade-offs that are not reflected in the guidelines," Connolly said. In practice, the poverty guidelines are not used in a uniform manner. Some major public assistance programs, such as Temporary Assistance to Needy Families, do not use them at all. "The poverty guidelines look simple on paper, but in the real world they can be very complicated," said Terry Weygant, program manager at Community Services Consortium in Corvallis. One of the programs Weygant manages determines eligibility at 125 percent of the federal poverty level, but allows deductions for such things as medical expenses and childcare. A related program is open to people who earn 150 percent of the poverty guideline, but does not allow any deductions. Thus, families who are eligible for one program may not qualify for the other one even though it might help ease their financial difficulties. All of which raises the question, if the official poverty measure is as bad as critics say, why hasn't it been changed? The answer: an attempt at revision is underway. In 1992, Congress asked the National Research Council to look at alternatives to the current poverty guidelines. The Council completed its study in 1995 and recommended a number of changes, including: *Change the way income is measured by adding non-cash benefits such as food stamps and by subtracting taxes, work expenses (including child care), child support, and out-of-pocket medical expenses. *Replace the current poverty threshold with one based on current spending patterns for food, clothing and shelter. *Allow for geographic variation and update it every year. The U.S. Census Bureau has developed 12 alternative measures of poverty based on the 1995 National Research Council report. These experimental measures attempt to reflect what today's poor must really spend on food, clothing and housing. Although some social scientists estimate that a new poverty formula would raise the poverty income level for a family of four from the current $16,700 to between $21,000 and $28,000, it will not be clear how the guidelines will be affected until actual changes are put in place. Those changes will not take place soon. The White House said consideration of a new poverty formula needs "at least a couple of years more work," according to the New York Times.   Article 5 of 6 in Part 1   back to top

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