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What is poverty?

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Stacy Vogel
August 24, 2008

Most studies use federal standards to define poverty, but critics argue that the standards are woefully outdated.


The federal government set the poverty line in the 1960s based on income and family size. Researchers estimated that families spent about one-third of their incomes on food, so they calculated how much families spent on food and multiplied those numbers by three to find the minimum amounts that families needed to get by.


The numbers are adjusted annually for inflation, but the formula has never changed. In 2008, the poverty threshold for a family of four is $21,200. For one person, it’s $10,400.


But many groups say the formula no longer works because costs such as housing, child care, health care and transportation have grown more than the cost of food. The average family now spends about one-seventh of its income on food, according to the National Center for Children in Poverty at Columbia University.


A family actually needs an income of about twice the federal poverty level to meet its basic needs, the center states.


But Dr. Robert Haveman said the government could be overestimating the number of people in poverty.


If the government included non-cash benefits, such as food and rent assistance, and made some allowance for non-cash assets, such as property and cars, some people below the poverty line now would find themselves above it, the UW-Madison professor of economics and public affairs said.


But just as important as setting the poverty line is deciding whether poverty is relative or absolute, Haveman said.


Some might say the poor are better off now than they were decades ago. Many receive government assistance to meet their basic needs and own items such as televisions and cell phones that would have been considered luxuries in the past.


“The people who make that criticism, they’re really saying the people at the bottom today have more things than they did 20 years ago,” Haveman said. “What they’re ignoring is people in the middle and especially people at the top have a lot more things than they did 20 years ago.”


Many nations measure poverty relative to their median incomes, Haveman said. For example, people in Europe are judged to be in poverty when they fall below 60 percent of the median income.


“It’s based on a judgment, and the judgment is in a rich society there are people who are poor (who) may be meeting basic needs, but they’re doing without things that a lot of people have,” Haveman said.


From that view, those under the poverty line in the United States today are much worse off than those in poverty in the 1960s. Back then, the poverty line was nearly 50 percent of the median income, according to the National Center on Children in Poverty. Today, it’s about 29 percent.


But to really measure poverty, you have to look beyond a person’s financial income, Haveman said. He argues that a more “full-bodied poverty measure” would look at someone’s access to:


-- Quality education.


-- Health care.


-- Adequate housing in safe neighborhoods.


-- Information on available public benefits.


-- Social contacts.


Such a measure would require authorities to determine poverty on a case-by-case basis.


“It’s a totally legitimate way of proceeding to understand who’s destitute, but it’s difficult to do,” he said.


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Here are the 2008 poverty guidelines from the U.S. Department of Health and Human Services:


Family size Poverty threshold


1 $10,400


2 $14,000


3 $17,600


4 $21,200


5 $24,800


6 $28,400


For each additional person, add $3,600.



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