What Is Poverty?

Posted by Sheila Redick on March 13, 2006

The measurement of poverty was established more than 40 years ago and hasn't changed much since.  Poverty is based on the cost of a nutritionally adequate diet, which was assumed, on average, to be one-third of a family's expenses.  To come up with a poverty threshold, the cost of the nutrionally adequate diet was multiplied by three.

Each year, the official threshold is adjusted for inflation.  But the underlying assumptions remain the same.  However, according to Anna Bernasek writing in The New York Times, families now spend "close to 12 percent of income on food, not one-third.   And while some of the remaining 88 percent may go to nonessentials, items such as housing, transportation and health care are significant, and expensive, factors."

If recommended adjustments were made in the calculations, the poverty rate in 2003 would have been two percentage points above the official rate of 12.5 percent, adding 5 million people to the 37 million now considered "poor" in the U.S.