January 17, 2019

Perspectives on American Poverty

“Taking Agriculture Department data on minimum food requirements, Orshansky calculated the annual cost of a subsistence food budget for families of different sizes and types. Household budget studies from the 1950s showed that families spent one-third of their income on food. So, Orshanksy multiplied the cost of a minimum food budget for each family type by three to arrive at their poverty threshold. Thresholds rise annually based on inflation over the past year.

Being poor means having insufficient income during the year to purchase bare necessities. The poverty rate is the percentage of the population in this situation.

The Orshansky poverty measure has been subject to substantial criticism. Clearly, poverty thresholds are not very high. A single individual making $1,060 a month would not be considered poor. Yet, in most areas in the U.S., it’s hard to rent a place for less than $500 a month.

Even if that’s possible, this leaves only $20 a day for transportation, clothing, phone, food and other expenses. Orshansky’s minimal food budget assumed that people shop wisely, never eat out and never give their children treats. She actually preferred a more generous food budget to get multiplied by three; but she was overruled by senior government officials.”

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