Each year the Census Bureau publishes the official poverty rate using data from the Annual Social and Economic Supplement to the Current Population Survey. The poverty rate measures the percentage of people living in families with incomes below the poverty threshold (poverty line). The poverty line is different for families of different sizes and types. In 2005 the official poverty threshold for a family of four was $19,971.
The official poverty measure was developed in the 1960s. Since then, the poverty thresholds have been adjusted for inflation but the way poverty is measured has remained largely unchanged.
Most poverty researchers agree that the official measure has become outdated and may distort our understanding of poverty trends and the effectiveness of anti-poverty programs. For example, there is broad consensus that the definition of income used to determine a family’s poverty status should be expanded to include the value of near-cash benefits such as food stamps; that it should be adjusted for taxes, including the impact of the earned income tax credit; and that child care and other work-related expenses should be subtracted. Researchers also agree that the current poverty thresholds are based on outdated patterns of consumption; that they do not adjust adequately for differences in family size and composition; and that they incorrectly assume that the spending needs of the elderly are lower than those of non-elderly adults.
After extensive review and analysis, a 1995 National Academy of Sciences (NAS) panel of experts produced a number of recommendations for updating the official poverty measure. Since then, researchers both within and outside the Census Bureau have developed experimental measures that implement various combinations of the NAS recommendations. In addition to point-in-time differences in the overall poverty rate, the distribution of poverty among different population subgroups and the magnitude of changes over time also change under the various experimental measures.
For more information about measuring poverty, see this analysis.