That’s the assumption that has formed the basis for the official poverty measure ever since 1964 when Social Security analyst Mollie Orshansky developed it. She started with the U.S. Department of Agriculture’s 1955 “thrifty food plan,” which was designed for “temporary or emergency use when funds are low.” Estimating that households of three or more spent about 1/3 of their after-tax income on food, Orshansky tripled the thrifty food plan’s cost; people with incomes below that threshold were classified as poor.
Poverty experts have been pushing for years for a more realistic measure. This past November, the Census Bureau released a supplemental poverty measure. That formula takes into account the cost of food, clothing, and shelter as well as how family budgets are affected by tax policies, noncash benefits, child care assistance, medical costs, and geographical region. The new measure will not affect benefit eligibility; that will still be based on the current poverty formula.
When the supplemental formula is applied, the number of people in poverty increases from 46.6 million (a 15.1% poverty rate) to 49.1 million (16.0%). Poverty rates fall among children but rise among seniors, primarily due to high out-of-pocket medical costs. At the same time, the new measure shows 44 million people with incomes between 100 and 150% of poverty – an increase of 50% over the existing measure. Poverty advocates point out that cuts in public assistance programs may push these families back into poverty.
