Commentary: The Story Behind the Poverty Rubric

By Sony Salzman
BU News Service

Most Americans are familiar with the concept of poverty threshold; more than 46 million of them wish they weren’t so intimately familiar. This threshold is used as a measuring stick that guides social policy, and often politicians and media take for granted that its true value is understood. The current roll-out of the Affordable Care Act addresses America’s very low poverty line by expanding Medicaid qualifications to those who earn 133 percent above the threshold. But if 100 percent of government-defined “poverty” is too low to cover needy Americans, it begs the question: how is poverty calculated in America, and why is the limit so low?

The answer can be traced back to an office in the Social Security Administration in 1965, where statistician Mollie Orshansky needed a definition for poverty to analyze welfare programs. She knew that in that year, the average family spent one third of income on food. The Department of Agriculture had already estimated how much a family would need to spend on food during times of extreme hardship, based on the 1955 census data. Orshansky inferred that three times that subsistence amount would approximate a poor family’s total income.

That same year – 1965 – President Johnson announced a “War on Poverty,” which adopted Orshansky’s model. Adjusting for inflation, poverty threshold was set to equal three times an average 1950s family’s food budget at times of economic duress.

This is still how the U.S. measures poverty.

“All other rich democracies measure poverty as one half of the median income,” said Allan Sager, professor of health policy at Boston University. “Federal poverty levels today are extremely deflated.”

Using current poverty calculations, only families and individuals earning 30 percent less than average income are eligible for government assistance. Currently, poverty line for a single person is $11,484, and a family of four is $23,021 per year.

There have been past efforts to change the poverty threshold, one from Congress and one from the National Academy of Sciences. The most recent attempt to re-define poverty came from the US Census Bureau, but Congress stopped funding it in 2011. Traditionally, it has been difficult for congress to propose changes because redefining thresholds might increase America’s “poverty problem.”

This is one of the reasons the Obama Administration, when deciding how to expand Medicaid coverage, chose to work within the current system, raising qualifications to 133 percent of the threshold. This adds about 15 million people to Medicaid, but does not change the basic way poverty is calculated.  According to Sager, the Orshansky model is here to stay.

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