10.3 The Poverty Line and Food Costs
Elizabeth B. Pearce
How is poverty defined? While there are multiple measures, a common and shared one is the poverty threshold, also known as the poverty line. While poverty will affect all of the families related to all of the topics in this text, we will discuss it here because it was originally tied to the cost of food, specifically an “economy food plan.” In 1963, the poverty line was designated at three times the economy food plan, and it was assumed “that the housewife will be a careful shopper, a skillful cook, and a good manager who will prepare all the family’s meals at home” (Fremstad, 2019).
When U.S. officials became concerned about poverty during the 1960s, they quickly realized they needed to find out how much poverty we had. To do so, a measure of official poverty, or a poverty line, was needed. A government economist, Mollie Orshanky, first calculated this line in 1963 by multiplying the cost of a very minimal diet by three, as a 1955 government study had determined that the typical American family spent one-third of its income on food. Thus a family whose cash income is lower than three times the cost of a very minimal diet is considered officially poor.
This way of calculating the official poverty line has not changed since 1963, although the amount is adjusted by inflation. It is thus out of date for many reasons. For example, many expenses, such as heat and electricity, childcare, transportation, and health care, now occupy a greater percentage of the typical family’s budget than was true in 1963. In addition, this official measure ignores a family’s non-cash income from benefits such as food stamps and tax credits. As a national measure, the poverty line also fails to take into account regional differences in the cost of living. All these problems make the official measurement of poverty highly suspect. As one poverty expert observes, “The official measure no longer corresponds to reality. It doesn’t get either side of the equation right—how much the poor have or how much they need. No one really trusts the data” (DeParle et al., 2011).
This is a good time to ask yourself, if you looked at food as a percentage of your budget, would it be the equivalent of 33%? That’s how the poverty line is still calculated.
The poverty line is adjusted annually for inflation and takes into account the number of people in a family: the larger the family size, the higher the poverty line. In 2010, the poverty line for a nonfarm family of four (two adults, two children) was $22,213. A four-person family earning even one more dollar than $22,213 in 2010 was not officially poor, even though its “extra” income hardly lifted it out of dire economic straits. Poverty experts have calculated a no-frills budget that enables a family to meet its basic needs in food, clothing, shelter, and so forth; this budget is about twice the poverty line. Families with incomes between the poverty line and twice the poverty line