Every year, a single set of numbers helps decide who counts as poor in America and who gets help. Those numbers come from a formula designed when Lyndon Johnson was president and a gallon of gas cost about thirty cents. So what is the poverty line, and does it still tell us what we think it does?
Quick answer: The poverty line is a federal income cutoff, set by household size, used to count who is living in poverty. It was created in the 1960s by multiplying the cost of a basic food budget by three. Critics from different political directions say the formula no longer matches how families live, though they disagree about how to fix it.
What the poverty line actually is
The poverty line is a dollar figure. If a household’s cash income before taxes falls below the figure for a household of its size, every person in that household is officially counted as poor. If income lands above it, they are not.
That sounds simple, but “the poverty line” is really shorthand for two related things. One is a statistical measure used to count poverty. The other is a simplified version used to decide who qualifies for programs. We will untangle them below.
The figures are updated every year for inflation, and they rise with family size because more people need more money. The exact numbers change, so check the Census Bureau and the Department of Health and Human Services (HHS) for current figures.
Where the number came from
In the early 1960s, the country was rediscovering poverty. Books and news coverage had shown that prosperity was not reaching everyone, and the government wanted a way to measure the problem. Before a war on poverty could be waged, someone had to define the enemy.
Mollie Orshansky, an economist at the Social Security Administration, built the measure. She started with the cheapest nutritionally adequate food plans the Department of Agriculture had designed. Surveys at the time suggested families spent roughly a third of their after-tax income on food, so she multiplied the food cost by three.
That logic was reasonable for its day. Food was a big, well-documented expense, and a family that could not afford even a bare-bones food plan was clearly in trouble. The measure was adopted for use across the federal government in the mid-1960s, and the basic method has barely changed since. The main update has been adjusting the dollar amounts for inflation each year.
A formula built around the grocery bill of the 1960s is still counting poverty in an economy where rent and child care loom larger.
Two versions: the threshold and the guidelines
Here is where people often get tangled. The government publishes two sets of numbers, and they serve different purposes.
| Version | Who publishes it | What it is used for |
|---|---|---|
| Poverty threshold | U.S. Census Bureau | Statistics: counting how many people are poor |
| Poverty guidelines (often called the federal poverty level) | HHS | Administration: deciding eligibility for many programs |
The thresholds are more detailed, varying by the number of adults and children in a household. The guidelines are a simplified version, easier for a caseworker to use. For a closer look at how they differ, see our explainer on the poverty threshold and the Census versus HHS guidelines.
Why the federal poverty level shows up everywhere
Many programs set eligibility as a percentage of the federal poverty level, such as 100 percent, 138 percent or 200 percent. Which programs use it, and at what percentage, varies by program and sometimes by state. Our guide to the federal poverty level and how it is set walks through the mechanics, and our article on how Medicaid eligibility is figured shows one example. Always check current official sources for exact amounts and rules.
How family size changes the line
The line goes up with each additional person, but not in a perfectly proportional way, since some costs are shared. If you want to see how this plays out, we cover it in the poverty line for a family of four and how size changes it.
What the official measure counts, and what it leaves out
To decide whether a household is below the line, the official measure looks at pre-tax cash income. That means wages, Social Security checks, pensions, unemployment benefits and similar money. Here is how that plays out in practice:
- Pick the right line. Find the threshold for the household’s size and makeup.
- Add up cash income. Count money received before taxes.
- Compare. If income is below the line, the household is counted as poor.
What does not get counted is just as important. The official measure does not include food assistance such as SNAP, housing subsidies, or tax credits like the Earned Income Tax Credit. It also does not subtract taxes paid, work expenses, child care or out-of-pocket medical costs. And it uses one national set of numbers, even though living costs in rural Mississippi and coastal California are very different.
Why critics say it is outdated
Almost everyone who studies poverty agrees the formula is dated. They disagree, sometimes sharply, about what that means. Here are the main criticisms, laid out as fairly as we can.
The budget no longer looks like the 1960s
Food once took about a third of a typical family’s budget. Today, for most households, it takes a considerably smaller share, while housing, health care, child care and transportation take more. A formula that triples a food budget may miss what a modern family truly needs. Our articles on why housing is so expensive and why rent is so high show why that gap matters.
It ignores geography
One national number cannot reflect the fact that the same income stretches much further in some places than others. A family just above the line in an expensive metro area may be struggling more than a family just below it in a low-cost town.
It misses the safety net
Because benefits like food assistance and tax credits are not counted as income, the official measure can show little change in poverty even when government programs have made a real difference in families’ lives. Some critics argue this makes the measure a poor tool for judging whether anti-poverty programs work.
Ask whether the line is too low, too high or just miscounting, and you will hear three different, serious answers.
Critics disagree about the fix
This is where the debate gets interesting, because the criticisms point in different directions.
The view that the line is too low
Some researchers and advocates argue that the line understates real hardship. They point out that families well above the official line often cannot afford rent, child care and health costs, and that many surveys of what people say they need to get by produce numbers well above the poverty line. On this view, a more realistic measure would count more people as struggling. We explore a related idea in our planned piece on what hourly wage counts as a poverty wage, and we have also examined the history of the minimum wage and its role in this debate.
The view that the official count overstates poverty
Others make the opposite argument. Because the official measure leaves out benefits like food assistance, housing aid and refundable tax credits, they say it overstates how many people are truly deprived of basic needs. Some analysts who favor this view also point to measures of actual household consumption, arguing that spending data show families in better shape than income data suggest.
The view that the point is measuring what works
A third group cares less about the level and more about the purpose. If the goal is to judge whether policies reduce hardship, they argue, a measure must count the benefits those policies deliver. Otherwise we cannot tell whether a program helped.
Notice that these are different questions. One is a factual question: how many families lack what they need? Another is a values question: how much should society guarantee, and who is responsible for providing it? Evidence can inform both, but it cannot settle the second one for us.
A second yardstick: the Supplemental Poverty Measure
Because of these concerns, the Census Bureau has published a Supplemental Poverty Measure for years alongside the official one. It adjusts for regional housing costs, counts many government benefits and tax credits as resources, and subtracts certain necessary expenses like taxes and work costs.
The two measures can tell different stories. Depending on the year and the group, the supplemental measure can show higher or lower poverty rates than the official one. For example, it tends to show lower rates among children when benefits are generous, and it can show higher rates among older Americans because it accounts for medical costs. We plan to compare them in depth in a piece on the official versus supplemental poverty measures.
The official measure remains the one built into many laws and programs, which is partly why it persists. Changing it would shift who qualifies for help, and that carries real budget consequences. Those incentives are part of why a widely criticized formula has lasted so long, even as it affects how families build wealth across generations.
Why this matters beyond the statistics
The poverty line is not just a number for researchers. It shapes who gets health coverage, food help and other support, and it shapes how the public understands hardship. When a family earns a dollar too much, they may lose assistance they still need. When a measure counts the wrong things, policy debates can talk past one another.
It also connects to larger questions about how wealth and opportunity are distributed. Our guide to how policy shaped wealth in America and our explainer on the racial wealth gap show that income is only one slice of economic security. Savings, home ownership and family resources matter too, which we will explore in a future article on income versus wealth. You can browse more in our Money, Housing and Opportunity section.
How to read poverty statistics wisely
When you see a poverty number in the news, a few questions help. Which measure is being used, official or supplemental? Does it count benefits? What year and place does it cover? And who is making the argument, and what do they want the number to show?
That last question is not cynical. Everyone, on every side, has a reason to prefer certain measures. Our media literacy guide offers tools for noticing how a statistic can be framed, and our guide to talking about politics with family can help when numbers become the center of a heated conversation.
Think about it: If you could design the measure from scratch, what would you want it to count: income, spending, benefits, local prices? What would you want it to be used for, and who should decide?
Key takeaways
- The poverty line is a federal income cutoff, varying by household size, that determines who is officially counted as poor.
- It was created in the early 1960s by multiplying a basic food budget by three, and the method has barely changed.
- The Census Bureau’s threshold counts poverty, while HHS guidelines (the federal poverty level) are used for program eligibility.
- The official measure counts pre-tax cash income and leaves out benefits like food assistance, taxes and regional price differences.
- Critics disagree on whether the line is too low, overstates poverty, or simply fails to show what policies accomplish.
- The Supplemental Poverty Measure offers a second view, and reading both gives a fuller picture.
Frequently asked questions
What is the poverty line in simple terms?
It is a dollar amount, set by household size, used to decide whether a family counts as poor. If a household’s pre-tax cash income falls below the line for its size, everyone in it is counted as living in poverty. The exact figures change each year, so check the Census Bureau and HHS for current numbers.
Who created the poverty line and when?
Social Security Administration economist Mollie Orshansky developed it in the early 1960s, and it was adopted as the federal government’s working measure in the mid-1960s during the War on Poverty. It was built from food costs, since food was the best-documented household expense of the era.
Is the poverty line the same as the federal poverty level?
They are closely related but not identical. The poverty threshold is the Census Bureau’s statistical measure used to count how many people are poor. The poverty guideline, often called the federal poverty level, is a simplified version published by HHS and used to decide eligibility for many programs.
Why do critics say the poverty line is outdated?
The formula is still based on a 1960s idea that food is about a third of a family’s budget. Today housing, child care, health care and transportation take far larger shares, and the official count ignores many benefits and taxes. Critics disagree about whether the line is too low, too high or simply miscounted.
Is there another way to measure poverty?
Yes. The Census Bureau also publishes a Supplemental Poverty Measure that adjusts for housing costs, regional prices, taxes and many government benefits. It often produces different poverty rates for different groups, which is why researchers look at both measures together.