Derivation of the Current Poverty Measure

When the Social Security Administration (SSA) created the poverty definition in 1964, it focused on family food consumption. The U.S. Department of Agriculture (USDA) used its data about the nutritional needs of children and adults to construct food plans for families. Within each food plan, dollar amounts varied according to the total number of people in the family and the family's composition, such as the number of children within each family. The cheapest of these plans, the Economy Food Plan, was designed to address the dietary needs of families on an austere budget.

Since the USDA's 1955 Food Consumption Survey showed that families of three or more people across all income levels spent roughly one-third of their income on food, the SSA multiplied the cost of the Economy Food Plan by three to obtain dollar figures for the poverty thresholds. Since the Economy Food Plan budgets varied by family size and composition, so too did the poverty thresholds. For 2-person families, the thresholds were adjusted by slightly higher factors because those households had higher fixed costs. Thresholds for unrelated individuals were calculated as a fixed proportion of the corresponding thresholds for 2-person families. The poverty thresholds are revised annually to allow for changes in the cost of living as reflected in the Consumer Price Index (CPI-U). The poverty thresholds are the same for all parts of the country — they are not adjusted for regional, state or local variations in the cost of living.

For a detailed discussion of the poverty definition, see U.S. Census Bureau, Current Population Reports, Poverty in the United States: 1999 (PDF).

Individuals for whom poverty status is determined

Poverty status is determined for all people except institutionalized people, people in military group quarters, people in college dormitories, and unrelated individuals under 15 years old. These groups also were excluded from the numerator and denominator when calculating poverty rates. They are considered neither "poor" nor "nonpoor."

Selected Poverty Thresholds

Year	One Person:	One Person 65 Years and Over:
1969	$1,840	$1,757
1979	$3,689	$3,479
1989	$6,310	$5,947
1999	$8,501	$7,990
2003	$9,393	$8,825

 

Year	Two persons:	Two persons (one related child under 18 years):
1969	$2,383	$2,458
1979	$4,725	$4,878
1989	$8,076	$8,343
1999	$10,869	$11,483
2003	$12,015	$12,682

 

Year	Four persons:	Four persons (two related children under 18 years):
1969	$3,721	N/A
1979	$7,412	$7,356
1989	$12,674	$12,575
1999	$17,029	$16,895
2003	$18,810	$18,660

 

Next: Population Below Poverty, 1969-2003.