People living in families with incomes below the official poverty guidelines are considered to be living in poverty. Those in families with incomes from the poverty line to 200 percent above the poverty line are considered to be living on low incomes. "Low-income" is often a preferred term to avoid describing people as somehow deficient by calling them poor. However, practically speaking, people who meet the technical measure of poverty and those who earn a little more income live similar lives. They struggle with meeting their basic needs, can be food-insecure, and have trouble saving for and coping with financial crises.
About Poverty Measures
Each year the Census Bureau uses poverty thresholds that are used for making overall calculations about the United States' population. This would include how many people are living in poverty. The Department of Health and Human Services uses a simplified version of the poverty thresholds, called poverty guidelines, which are used to determine whether families are eligible for federal entitlement programs, like food stamps, cash assistance and social security. A family in poverty may qualify for more assistance than people who earn low incomes. A set of poverty guidelines applies to the 48 contiguous states. Hawaii and Alaska each have separate schedules. The guidelines are also updated annually. The official poverty guidelines for 2010 state that an annual income of $22,050 for a family of four lives at the poverty line. An annual income of $44,100 for that family of four would be considered low-income.
The official poverty rate in the United States in 2009 was 14.3 percent, according to the Census Bureau. That represents 43.6 million people in more than 13 million families at or below the poverty line. That number has been growing in statistically significant increases since 2004. In addition, according to the Working Poor Families Project, there were an additional 9.9 million families who worked but earned income between the poverty line and 200 percent of the poverty line. Factors that contribute to the increase of income-insecurity include low wages, lower levels of education, rising costs of health care and child care, and family disruptions such as through divorce and single parenting.
Supplemental Poverty Measure
According to the Urban Institute, the federal government began using poverty measures in the 1960s. It set the poverty line based on income and family size, with an overarching principle that families spent about one-third of their incomes on food. The poverty measures calculated how much a typical family spent on food for each person and multiplied that number by three to arrive at what a family of three would need just to get by. The numbers are updated each year to reflect changes in inflation, but the original principal of judging poverty by the ability to cover food costs has not changed much over the years. Recognizing that the growing costs of housing, child care, health care, and transportation are big factors in families' ability to make ends meet, the Census Bureau began using a supplemental poverty measure in 2010 to more accurately capture what poverty looks like in the United States. The Census Bureau expected to start publishing new data reflecting this extra measure in September 2011.
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How Guidelines are Used
Poverty or low-income status based on the official federal guidelines is used by several federal programs to determine whether you are eligible to receive certain benefits. For example, Head Start, energy assistance, food stamps, school lunch assistance, Medicaid, children's health insurance, job-training programs, and migrant health facilities all have income-eligibility requirements. States and local governments often use the federal guidelines in determining child support and legal defense aid. In addition, some companies, like utility companies, use these guidelines for determining who can receive certain services.
"Poverty" and "low-income" are relative terms for Americans. A person's poverty is in some cases measured against other people's wealth and income in the United States, but the standards used to describe poverty in the United States are drastically different from what the rest of the world uses. People who live in poverty in the United States may still have more security and access to basic needs than those who are indigent and live elsewhere. According to The World Bank, about half the population of sub-Saharan Africa and 40 percent of the people in Asia live on an income that would be equivalent to $1.25 per day in U.S. currency. The Gini coefficient of inequality is a common measure of determining differences in income and wealth among various countries or regions.