The idea of the poverty line dates back to 1963, when Mollie Orshansky, a statistician for the Social Security Administration, developed a method to measure how many families were unable to afford basic necessities. She based her calculations on the cost of feeding a family of four with a rudimentary food plan plus other necessary living expenses.
Today, the U.S. Census Bureau still uses these calculations to determine what income is considered poverty level. Here’s a look at what it means to live in poverty in 2023. And here are the best and worst states to be poor.
The Poverty Threshold in 2023
According to the most recent report from the U.S. Census Bureau, the poverty threshold for a family of four is $29,960. For an individual, the poverty threshold is $14,891.
The U.S. Department of Health and Human Services uses the Census Bureau threshold to determine who is eligible for certain government assistance programs, like SNAP (food stamps). Under their guidelines, a family of four is considered impoverished if they earn $30,000 or less per year.
That number is slightly higher in Alaska and Hawaii, which tend to have higher living expenses. For U.S. Department of Health purposes, the poverty threshold for Alaska is $37,500 for a family of four and for Hawaii it’s $34,500.
To put those numbers in perspective, the median household income in 2023 is $98,487 — over three times the poverty threshold.
How Many Americans Live in Poverty?
According to 2021 U.S. Census Bureau data — the latest available — 11.6% of Americans live at or below the poverty line. That amounts to approximately 38 million people. The percentage of children under the age of 6 living in poverty is 16.1%.
Poor Americans Spend Larger Percentages of Their Income on Basic Necessities
Americans living in poverty tend to feel the effects of inflation more than the average American. As a result, they are spending greater portions of their income to cover basic expenses like housing and food.
According to Bureau of Labor Statistics data, while the average American household spends 33.8% of its income on housing, American households earning less than $30,000 spend 41.2%. When it comes to food, the average American household spends 12.4% of its income, while households earning less than $15,000 spend 16.7% and those earning between $15,000 and $30,000 spend 14.1%.
Poor households also spend more on healthcare expenses. The average American household devotes 8.1% of its income to healthcare, compared to 8.6% for those earning less than $15,000 and 10.9% for those earning between $15,000 and $30,000.
On the other hand, impoverished Americans spend less proportionately on “nice to have” expenses. The average American household spends 5.3% of its income on entertainment, while those earning under $15,000 spend 4.8% and those earning between $15,000 and $30,00 spend 4.6%.
Additionally, the average American household puts 11.8% of its income toward personal expenses and insurance, while those earning less than $15,000 earmark just 1.2%, and those earning between $15,000 and $30,000 dedicate 2.8%.
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