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What is the Federal Poverty Level?

By Robert Grimmick
Updated: May 17, 2024

The federal poverty level is the minimum annual income required to avoid living in poverty in the U.S. Any level of income below this level is considered insufficient to meet the basic necessities of life. The poverty level is determined based on a scheme devised in the 1960s and updated annually for inflation. The term refers to two slightly different metrics set by the government, one of which is used to determine eligibility for both state and federal programs. The methodology used to calculate poverty levels is sometimes criticized because it does not take into account different standards of living.

Poverty levels are calculated annually for both individuals and households using slightly different methods. Any person or household that earns less than the federal poverty level in a given year is considered by the government to be living in poverty. For example, a family of four that earned less than $22,050 US Dollars (USD) in 2009 would be considered to be living in poverty. This means it is difficult or impossible for the family to afford the basic needs of life, such as food, water, and shelter.

The federal poverty level is based upon work and research carried out in the early 1960s by Mollie Orshansky of the Social Security Administration. Orshansky, aware that families of 3 or more often spent a third of their income on food, devised a scheme that took the cost of a cheap meal plan from the Department of Agriculture and multiplied it by three. For families of two or fewer, a multiplier of 3.7 was used. Since 1969, Orshansky's original numbers have been adjusted for inflation annually using the Consumer Price Index.

The terms "federal poverty level" and "poverty line" can actually mean two slightly different things — poverty thresholds and the poverty guidelines. Poverty thresholds are calculated by the U.S. Census Bureau, and are used for statistical purposes. The Department of Health and Human Services (HHS) creates the poverty guidelines using a simplified version of the Census Bureau's thresholds. Poverty guidelines are used to determine eligibility for many federal and state programs, such as Head Start, the Department of Agriculture's food assistance program, and some community healthcare services. Some programs, such as those created under the Patient Protection and Affordable Care Act of 2010, use income levels up to 400% of the poverty guidelines to determine eligibility for benefits.

Some have criticized the official federal poverty level figures as being an unrealistic measure of poverty in America. Critics point to the assumption that low-income families still spend a third of their income on food, as they did in the 1960s when the methodology was established. The official guidelines are also the same across the 48 contiguous states, with no accounting for regional differences in the standard of living. Separate measures are used in Alaska and Hawaii. Several alternative methods have been proposed and even tested by government agencies, but so far none of these have been adopted as the official measure of poverty.

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Discussion Comments
By anon311802 — On Jan 04, 2013

I live in a neighborhood where most families are living on some kind of assistance. I watch some families sell their medications to just to survive. At the same time, I see other families/individuals sell their food stamps to buy drugs and alcohol or, rarely, to pay their bills. I have watched one organization (like HEAP and PIPP) try to help families in trouble with utilities only to have it taken away from their food stamp benefits.

It's a crazy mixed up system and needs to be totally revamped to be more efficient for both the recipient and entity providing the benefits. In Ohio, if you receive SSI, you have to pay a spend-down for Medicaid according to how much money you get (that is, if you are not old enough to receive medicare). That spend-down would be any money you receive over $579 for an individual. You are expected to live on that amount of money plus $200 food stamps. If you are on the PIPP program, they reduce your food stamp benefits.

If you think about it, it is no wonder there is so much crime and mental issues in neighborhoods such as mine.

By cougars — On Dec 02, 2010

That would be an interesting way to change how the federal poverty level and the food stamp system works. I would support something like that. I also think it would be easy to sell the public on something like this. The biggest opposition would probably be the processed food industry. The Congressional Budget office should commit to a study to see how much a change like that could save.

By GlassAxe — On Nov 29, 2010

@ Georgesplane- Your bit about the cost of food got me thinking about the money we spend on programs, and how the nation could reduce part of its budget without cutting benefits. The biggest domestic burden on our country is health care, and the biggest burden on health care is obesity related diseases. It is the poorest segments of the population that put the biggest strain on the health care system, but it is not their fault. When you are only given enough food stamps to buy unhealthy foods, then you will eventually become unhealthy.

I wonder what the reduction in health care costs would be if the government did not allow food stamp recipients to buy chips, candy, and soda with their benefits. Instead, the government would increase benefits, by say 10%, to make up for the loss in purchasing power. I would call this fair. The government would not be telling people what they could eat, but it would mandate what they buy with government aid. Instead of subsidizing the snack food companies, the food stamp program would do what it was meant to do...subsidize people's health.

By Georgesplane — On Nov 26, 2010

I believe that the federal poverty level should be adjusted for each individual state to determine benefits. It should be more of a set of guidelines, indexes that measure cost of living traits unique to each state. This would be a more effective and efficient means of metering aid, saving taxpayers, and helping individuals who live in areas with a higher cost of living. The fact is certain types of aid stretch further in different areas. As an example, the cost of food is not consistent across the nation, unless you are buying processed food. A person who falls under the federal income poverty level in Arizona would be able to afford more food with his or her food stamps than someone with a similar income in New Hampshire.

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