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Measuring Poverty: Who is Poor in America
Michael Harrington’s influential 1962 book The Other America
depicted the poor as inhabiting an “invisible land,” a world described in
the 1964 Economic Report of the President as “scarcely recognizable, and
rarely recognized, by the majority of their fellow Americans.” One early
achievement of Johnson’s War on Poverty was to cast light on the problem
of poverty by developing an official poverty measure that has been released
by the government in each year since August 1969.4 While reasonable at the
time, this measure has turned out to be ill-suited to capturing the progress
subsequently made in the War. As a result, modern poverty measures tell a
different story of who is poor, and especially how this has changed over time.
Measuring Poverty
Measuring poverty is not a simple task; even defining it is controversial.
Just starting with a commonsense definition of the poor—“those whose
basic needs exceed their means to satisfy them”—requires difficult conceptual
choices regarding what constitutes basic needs and what resources
should be counted in figuring a family’s means. There are no generally
accepted standards of minimum needs for most necessary consumption
items such as housing, clothing, and transportation. Moreover, our ideas
about minimum needs may change over time. For example, even some
middle-income households did not have hot and cold running water indoors
in 1963. Today, over 99 percent of all households have complete indoor
plumbing.
The Official Poverty Measure
Mollie Orshansky, an economist in the Social Security Administration,
developed the official poverty thresholds between 1963 and 1964 (Fisher
1992). At the time, the U.S. Department of Agriculture had a set of food
plans derived using data from the 1955 Household Food Consumption
Survey, the lowest cost of which was deemed adequate for “temporary or
emergency use when funds are low.” Because families in this survey spent
about one-third of their incomes, on average, on food, Orshansky set the
poverty threshold at three times the dollar cost of this “economy food plan,”
with adjustments for family size, composition, and whether the family lived
on a farm.
These income thresholds that were first used as the poverty thresholds
for the 1963 calendar year have served as the basis for the official poverty
4 A similar poverty measure was adopted internally by the Office of Economic Opportunity in
1965.
The War On Poverty 50 Years Later: A Progress Report | 223