Poverty and economic inequality are persistent issues in the United States. Despite being one of the wealthiest countries in the world, the United States has one of the highest poverty rates among developed nations. In 2021, around 11.6% of Americans, or 37.9 million people, lived below the official poverty line. However, defining and measuring poverty is complicated, and the “official” poverty rate obscures the true extent of economic deprivation in the U.S. This article will examine who is considered poor in America, looking at the official poverty measure, supplemental poverty measures, and the lived experience of poverty across different groups.
The Official Poverty Measure
The official poverty rate in the U.S. is determined by comparing a family’s pre-tax cash income to poverty thresholds set by the federal government. These thresholds vary by family size and composition. In 2021, the poverty line for a family of four with two children was an annual income of $26,496. Families with incomes below this line are considered poor.
This measure was developed in the 1960s and is widely criticized as outdated and insufficient. Some key limitations include:
- The poverty thresholds do not account for geographic differences in cost of living.
- Pre-tax cash income excludes the value of non-cash benefits like food stamps and housing subsidies.
- Costs like medical expenses and work expenses are not accounted for.
- The poverty line is the same for the contiguous 48 states and does not reflect regional variation in costs.
Due to these flaws, many experts argue that the official poverty measure undercounts the number of people struggling to make ends meet.
Supplemental Poverty Measures
In response to criticisms of the official poverty measure, the U.S. Census Bureau has developed supplemental poverty measures that account for additional factors:
- Geographic adjustments for differences in housing costs
- Non-discretionary expenses like medical costs and taxes
- Value of non-cash benefits
In 2021, the supplemental poverty rate was 12.4%, over one percentage point higher than the official rate. This suggests that accounting for cost of living and expenses leads to a poverty rate over 30 million.
Poverty Across Demographics
Certain groups face disproportionately high poverty rates in the United States:
| Group | Poverty Rate |
|---|---|
| Children under 18 | 16.1% |
| Adults ages 18-64 | 11.4% |
| Adults over 65 | 8.9% |
| Female-headed households | 26.4% |
| Black Americans | 19.5% |
| Hispanic Americans | 17.0% |
Poverty rates are highest among children, particularly those in female-headed households. Racial minorities also face substantially higher poverty risks than white Americans.
The Working Poor
Many Americans live in poverty despite being employed. Around 4.9% of full-time workers lived in poverty in 2021. Among part-time workers, the poverty rate was 16.6%. Low-wage jobs often do not pay enough to lift workers out of poverty.
The growth of the gig economy and contract work also contributes to the working poor. Many gig workers lack stability, benefits, and income security associated with traditional full-time employment.
Deep Poverty
Those in deep poverty live significantly below the poverty line. In 2021, around 3.3% of Americans had incomes below 50% of the poverty line. This amounted to an annual income of around $13,000 for a family of four.
Those in deep poverty often must choose between necessities like food, shelter, medical care, and heat. They are also more likely to face food insecurity, housing instability, lack of medical care, and other manifestations of poverty.
Intergenerational Poverty
Poverty can persist across generations. Children raised in poor households are more likely to experience poverty as adults due to limited access to education, employment opportunities, and social capital required to achieve upward mobility.
Breaking the cycle of intergenerational poverty requires expanding access to quality education, healthcare, childcare, housing, and economic opportunity for poor children.
The Costs of Poverty
Poverty imposes significant economic and social costs on individuals, communities, and the nation as a whole. The direct costs include lost productivity and earnings, higher healthcare spending, increased crime, and greater spending on social welfare programs and charity.
There are also indirect costs like reduced educational outcomes, poorer health, and lower lifetime earnings among children raised in poverty. Overall, childhood poverty costs the U.S. an estimated $1.03 trillion per year due to lost productivity and increased social spending.
Spatial Poverty
Poverty in America is highly concentrated spatially, particularly within inner cities, remote rural regions, Indian reservations, and the Southern United States. Mechanization in agriculture, the decline of manufacturing, suburbanization, and racial segregation contribute to the geographic unevenness of American poverty.
Place-based anti-poverty initiatives like Promise Neighborhoods and Opportunity Zones seek to revitalize distressed communities through comprehensive investment in housing, education, health, and economic development.
Subjective Poverty
Beyond official income measures, subjective feelings of deprivation are important for understanding poverty. Many Americans just above the poverty line still struggle to meet basic needs and feel poor subjectively.
According to 2021 Federal Reserve survey data, 25% of U.S. adults would have difficulty covering an emergency $400 expense. This suggests far more households face financial precarity than captured by official poverty statistics.
Conclusion
Poverty in America affects a broader segment of the population than conveyed by official statistics. Children, single mothers, minorities, the working poor, and those facing chronic disadvantage disproportionately experience poverty. Localized poverty concentrates disadvantage in particular neighborhoods.
Expanding the social safety net, investing in children, and promoting equitable economic development can help address the multifaceted challenges of American poverty.