How Is the U.S. Poverty Level Determined?


Quick Answer

The U.S. Census Bureau uses a number of income benchmarks in tandem with family size and composition to determine the poverty level, according to its website. The Census Bureau uses data provided by the Office of Management and Budget's Statistical Policy Directive 14 to set these levels.

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How Is the U.S. Poverty Level Determined?
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Full Answer

Income considered for meeting poverty level requirements includes wages, earnings, unemployment benefits, workers' compensation, Social Security benefits and retirement income. The income is computed before taxes, and it does not include noncash benefits such as housing subsidies or food stamps, explains the U.S. Census Bureau. If an individual is part of a family, the income of all family members is included when deciding whether the family meets poverty level standards for such things as government aid.

The same levels are used throughout the United States and do not vary by state or region, reports the U.S. Census Bureau. The levels change every year partly to adjust for inflation at rates determined by the Consumer Price Index for All Urban Consumers. Government aid programs use the poverty level numbers to determine aid. Not all government aid programs, however, use this yardstick. Poverty threshold levels were first established in 1963 to 1964 using information from the U.S. Department of Agriculture on food budgets of families going through financial hardship.

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