NCPA - National Center for Policy Analysis

Problems In Defining The "Poor"

August 5, 1999

When President Lyndon Johnson launched his war on poverty in the 1960s, the first order of business was coming up with a definition of who was poor. Experts say the poverty level set by the Census Bureau is out of whack. "The Census numbers seriously overstate the poverty problem," in the opinion of W. Michael Cox of the Dallas Federal Reserve Bank.

"The Census leaves out a lot of things that look like income and that act like income," says Gary Burtless of the Brookings Institution.

  • Census counts only cash income, including government cash aid -- leaving out food stamps and housing subsidies.
  • But it also doesn't subtract taxes from income.
  • The calculations of the poverty level assume families spend one-third of income on food -- as was the case in the 1960s -- but food prices have actually dropped compared with other goods, to the point where the average family now devotes just 14 percent of its household budget to food.
  • Since the average family is typically larger than the average poverty family, it is cheaper than government figures indicate for the average low-income family to feed itself.

The Census Bureau sets the poverty line for an adult living alone at $8,480 annually. For two adults, the poverty line is $10,915. For two adults with two children, the amount is $13,133.

That means that about 11.6 percent of American families are poor, by Census standards.

Source: Charles Oliver, "Even Amid Signs of U.S. Plenty, Debate Over Poverty is Hot Topic," Investor's Business Daily, August 5, 1999.


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