What does living at the poverty line look like?

Inflation affects families at different income levels unevenly as the poorest Americans pay a larger share of their incomes on food and housing.

Updated September 18, 2023 by the USAFacts team

In 1963, a statistician for the Social Security Administration named Mollie Orshansky developed what we commonly refer to as the poverty line — a federal marker that indicates who is poor in America.

Before then, the government lacked a method to measure how many families struggled to afford basic necessities. Orshansky drew from her experience as a former Department of Agriculture (USDA) economist. She based her calculations on one of the most critical expenses for a family: its food bill. By tallying the cost to feed a family of four, based on a no-frills food plan developed by the USDA, she calculated the corresponding income needed to cover these meals plus living expenses.

Orshansky applied this model to create 124 poverty thresholds, accounting for age, gender, family size, and other designations.

What does the poverty line look like today?

To this day, the Census Bureau issues its poverty thresholds based on Orshansky’s work. These figures take into account household size and income, as well as other factors, such as age. These poverty thresholds are used for statistical purposes to calculate the number of Americans living in poverty. They are also the starting points from which federal “poverty guidelines” are calculated.

According to the most recent report issued in January 2023, the poverty threshold for a family of four is $29,960. For an individual, the poverty threshold is $14,891.

The US Department of Health and Human Services (HHS) issues its poverty guidelines based on the Census Bureau’s poverty thresholds. They’re used to determine the financial eligibility for certain government programs, including Head Start, the Supplemental Nutrition Assistance Program (known as SNAP or sometimes referred to as food stamps), the National School Lunch Program, and the Low-Income Home Energy Assistance Program.

According to HHS’s measurement, a family of four in 2023 would be considered impoverished if their income is $30,000 or lower. Alaska and Hawaii use a slightly different measure due to a higher cost of living in those states. The poverty guideline is $37,500 in Alaska and $34,500 in Hawaii.

Comparatively, the 2023 median household income for a family of four is $98,487.

How many people are living near the poverty line?

The Census Bureau estimated that in 2021, 11.6% of Americans — roughly 38 million people — lived at or below the poverty level. That year, the poverty threshold was $27,740 for a family of four and $13,788 for an individual.

The share of people living in poverty in the US has generally been decreasing since its most recent peak in 2010 — on the heels of the Great Recession — when the poverty rate was 15.1%.

The percentage of children in poverty has also been decreasing over the last decade. In 2010, 1 in 4 children (25.3%) lived in poverty in America. In 2021, the rate of childhood poverty was 16.1%.

What does spending look like at the poverty line?

Since 2020, the cost of managing daily life in the US has risen, especially when it comes to paying for essentials such as food and fuel — and Americans have taken notice. A survey conducted by the US Census Bureau in June and July 2023 showed that over one-third of Americans find it somewhat or very difficult to pay for their usual household expenses.

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For many of the poorest Americans, essential expenses can be a heavy burden. Bureau of Labor Statistics (BLS) data shows that lower-income households tend to experience higher inflation rates than those with higher incomes. This is partly because poorer households must spend a larger portion of their incomes on housing, food, and healthcare.

People who live near the poverty line spend a larger share of their income on housing. Compared to the national average of 33.8%, families and individuals earning under $30,000 paid 41.2% of their income on housing, according to a BLS Consumer Expenditure Survey. This includes the cost of rent or a mortgage, utilities, repairs, and other miscellaneous items such as furniture and cleaning supplies.

Similarly, lower-income Americans paid a higher share of their income on food. The average family or individual spent 12.4% of their income on food in 2021. For households with incomes less than $15,000, that share was 16.7%, and for those whose incomes were between $15,000 and $29,000, the share was 14.1%.

There were also disparities in healthcare. The average spent on items such as insurance, medical services, and drugs was 8.1% of a household’s income. For those with incomes less than $15,000, that share was 8.6%, and for those who earned between $15,000 and $29,000, it rose to 10.9%.

Low-income families are also more likely to be cost-burdened by childcare expenses. According to Census Bureau data, family childcare costs increased by 25% between 2015 and 2020.

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