Poverty Talk: Basic Terms You Need to Know Now

Updated on October 18, 2019 and originally posted July 10, 2018 by the Annie E. Casey Foundation

What's considered poor in America for a family of four in 2018?

Experts talk about pover­ty in var­i­ous ways. This post explains some of the most com­mon terms used to describe pover­ty in the Unit­ed States today.

Two Main Mea­sures of Poverty

There are two fed­er­al mea­sure of pover­ty in the Unit­ed States: the offi­cial pover­ty mea­sure and the sup­ple­men­tal pover­ty measure.

In 2018, 13% of Amer­i­cans — 42 mil­lion peo­ple — lived in pover­ty accord­ing to the offi­cial def­i­n­i­tion of pover­ty. This mea­sure esti­mates an 18% child pover­ty rate, trans­lat­ing to 13 mil­lion kids liv­ing in pover­ty in 2018.

That same year, 13% of Amer­i­cans — about 42.5 mil­lion peo­ple — lived in pover­ty accord­ing to sup­ple­men­tal pover­ty mea­sure. This cal­cu­la­tion esti­mates a 15% child pover­ty rate, trans­lat­ing to about 10.7 mil­lion kids liv­ing in pover­ty in 2018.

The Offi­cial Pover­ty Measure

The U.S. Depart­ment of Health and Human ser­vices uses the offi­cial pover­ty mea­sure to deter­mine eli­gi­bil­i­ty for gov­ern­ment programs.

Income thresh­olds for this mea­sure are cal­cu­lat­ed by tripling the infla­tion-adjust­ed cost of the min­i­mum food bud­get in 1963 and amend­ing for fam­i­ly size and com­po­si­tion. A fam­i­ly or an indi­vid­ual is con­sid­ered poor if their house­hold earn­ings fall below their pre­scribed annu­al income threshold.

In 2018, some of these thresh­olds were:

  • $29,967 for a fam­i­ly of five with three children.
  • $25,465 for a fam­i­ly of four with two children.
  • $20,231 for a fam­i­ly of three with two children.

The Sup­ple­men­tal Pover­ty Measure

Devel­oped in 2010, the sup­ple­men­tal pover­ty mea­sure offers a more sta­tis­ti­cal­ly com­plex esti­mate of pover­ty and speaks to how gov­ern­ment safe­ty net pro­grams are impact­ing pover­ty rates.

Unlike the offi­cial pover­ty mea­sure, which defines a family’s income as their pre-tax cash earn­ings, the sup­ple­men­tal pover­ty mea­sure con­sid­ers a broad­er set of resources. It counts in-kind ben­e­fits, such as food and hous­ing assis­tance, as well as safe­ty net ben­e­fits, such as the Earn Income Tax Cred­it. It also sub­tracts nec­es­sary expen­di­tures, such as child care, and med­ical expenses.

Income thresh­olds for this mea­sure extend beyond food costs and con­sid­er the costs of basic goods and neces­si­ties, such as cloth­ing and shel­ter. Thresh­olds vary by loca­tion and hous­ing arrange­ments and can expand the fam­i­ly unit to include non-relat­ed mem­bers who share house­hold resources.

In 2018, some of these thresh­olds were:

  • $28,342 for a fam­i­ly of four with two chil­dren and a home mort­gage payment.
  • $28,166 for a fam­i­ly of four with two chil­dren and a rent payment.
  • $24,173 for a fam­i­ly of four with two chil­dren and no home mort­gage payment.

Com­par­ing the Two Fed­er­al Pover­ty Measures

  Offi­cial Sup­ple­men­tal
Used to deter­mine eli­gi­bil­i­ty for gov­ern­ment assis­tance programs Yes No
Esti­mat­ed annu­al­ly based on a sam­pling of U.S. households Yes Yes
Varies geo­graph­i­cal­ly No Yes
Adjust­ed over time to reflect chang­ing pat­terns of consumption No Yes
Accounts for non-relat­ed cohab­i­ta­tors and their fam­i­lies as well as fos­ter children No Yes
Con­sid­ers dif­fer­ent hous­ing arrange­ments, such as hav­ing a mort­gage pay­ment ver­sus rent­ing a home No Yes
Con­sid­ers mon­ey income from all sources, includ­ing gov­ern­ment pro­grams and tax credits No Yes

Degrees and Types of Poverty

Extreme Pover­ty

Fam­i­lies live in extreme pover­ty when their house­hold earn­ings amount to less than half of their assigned pover­ty thresh­old. Also writ­ten as below 50% pover­ty,” this des­ig­na­tion applied to 17.3 mil­lion Amer­i­cans in 2018.

In 2018, some thresh­olds for extreme pover­ty were:

  • $14,983 for a fam­i­ly of five with three children.
  • $12,732 for a fam­i­ly of four with two children.
  • $10,115 for a fam­i­ly of three with two children.

Near­ly half — 45.3% — of America’s poor lived in extreme pover­ty in 2018, accord­ing to U.S. Cen­sus Bureau data. Chil­dren are more like­ly to expe­ri­ence extreme pover­ty than adults; 5.7% of Amer­i­cans, includ­ing 8% of all chil­dren, lived in extreme pover­ty in 2018.

Low Income

To meet their most basic needs, fam­i­lies need to earn about twice as much as the fed­er­al pover­ty thresh­old, accord­ing to research. Fam­i­lies with annu­al earn­ings below this lev­el — $50,930 for a fam­i­ly of four with two chil­dren in 2018 — are con­sid­ered low income.

Also writ­ten as below 200% pover­ty,” this des­ig­na­tion applied to 39% of all chil­dren — near­ly 28.5 mil­lion kids total — in 2018.

Con­cen­trat­ed Poverty

Areas of con­cen­trat­ed pover­ty — also called high-pover­ty areas — are cen­sus tracts where pover­ty rates for the local pop­u­la­tion hits 30% or higher.

Com­pared to more afflu­ent areas, high-pover­ty neigh­bor­hoods are more like­ly to have high rates of crime, vio­lence, health issues and unemployment.

The most recent data on record indi­cate that 8.5 mil­lion chil­dren — 12% of kids nation­wide — lived in areas of con­cen­trat­ed pover­ty from 2013 to 2017, accord­ing to the KIDS COUNT Data Center.

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