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Measuring Poverty

The current federal poverty level is $23,550 a year for a family of four and $19,530 for a family of three. But this measure is based on a methodology developed in the 1960s and now widely recognized as outdated. One major criticism is that the official poverty level is too low. Current research suggests that, on average, families need an income of about twice the federal poverty level just to afford basic expenses. Moreover, although the cost of living varies significantly within and across states, the federal poverty level is the same across the continental U.S.

There are also flaws in the methodology used to determine how many families are considered poor by this standard. Official poverty rates are calculated by comparing pre-tax cash income to the poverty level. This means that important work supports, such as the federal Earned Income Tax Credit and SNAP/food stamps, are not included – nor are families’ tax liabilities.

Improved measures are critical to better identify struggling families, evaluate the impact of existing public policies and programs, and craft new policies that more effectively meet families’ needs. Efforts to develop a modern poverty measure that reflects current spending patterns, geographic differences in the cost of living, and government tax and benefit policies are underway. NCCP and other organizations have also done important work documenting how much it takes for families to truly afford basic day-to-day expenses.

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