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Friday, October 15, 2010

Poverty in the United States: 2009

Thomas Gabe
Specialist in Social Policy

In 2009, 43.6 million people were counted as poor in the United States—an increase of 3.7 million persons from 2010, and the largest number of persons counted as poor in the measure’s 50-year recorded history. The poverty rate, or percent of the population considered poor under the official definition, was reported at 14.3% in 2009, amounting to one of every seven persons in the U.S. being counted as poor. The 2009 poverty rate was up from 13.2% in 2008, and above its most recent pre-recession low of 12.3% in 2006. The increase in poverty over the past three years reflects the effects of the economic recession that began in December 2007. In spite of signs that the economy may be recovering, some analysts expect poverty to remain above pre-recessionary levels for as long as a decade. The incidence of poverty varies widely across the population according to age, education, labor force attachment, family living arrangements, and area of residence, among other factors. Under the official poverty definition, an average family of four was considered poor in 2009 if its pre-tax cash income for the year was below $21,954.

The measure of poverty currently in use was developed nearly 50 years ago, and was adopted as the “official” U.S. statistical measure of poverty in 1969. Except for minor technical changes, and adjustments for price changes in the economy, the “poverty line” (i.e., the income thresholds by which families or individuals with incomes that fall below are deemed to be poor) is the same as that developed nearly a half century ago, reflecting a notion of economic need based on living standards that prevailed in the mid-1950s.

Moreover, poverty as it is currently measured only counts families’ and individuals’ pre-tax money income against the poverty line in determining whether or not they are poor. In-kind benefits, such as benefits under the Supplemental Nutrition Assistance Program (SNAP, formerly named the Food Stamp program) and housing assistance are not accounted for under the “official” poverty definition, nor are the effects of taxes or tax credits, such as the Earned Income Tax Credit (EITC) or Child Tax Credit (CTC). In this sense, the “official” measure fails to capture the effects of a variety of programs and policies specifically designed to address income poverty.

A congressionally commissioned study conducted by a National Academy of Sciences (NAS) panel of experts recommended, some 15 years ago, that a new U.S. poverty measure be developed, offering a number of specific recommendations. Bills introduced in the 111
th Congress (H.R. 2909 and S. 1625) would instruct the Census Bureau to develop a new “modern” poverty measure, following NAS recommendations. More recently, under the Obama Administration, an initiative is underway for the Census Bureau to develop a Supplemental Poverty Measure (SPM) that would reflect many of the NAS panel’s recommendations and be informed by research conducted on those recommendations over the past 15 years. This initiative aligns with many of the provisions in H.R. 2909 and S. 1625. Statistics based on the SPM, which has yet to be developed, are to accompany the Census Bureau’s fall 2011 scheduled release of 2010 income and poverty statistics under the “official” measure. The new poverty measure is to be considered an “experimental” measure, to supplement the “official” poverty measure. The “official” statistical poverty measure would continue to be used by programs that use it as the basis for allocating funds under formula and matching grant programs. The Department of Health and Human Services (HHS) would continue to issue poverty income guidelines derived from “official” Census Bureau poverty thresholds. HHS poverty guidelines are used in determining individual and family income eligibility under a number of federal and state programs. This CRS report will be updated on an annual basis, following release of U.S. Census Bureau annual income and poverty estimates. .

Date of Report: October 4, 2010
Number of Pages: 22
Order Number: RL33069
Price: $29.95

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