Poverty in the United States

Based on Wikipedia: Poverty in the United States

Here's a number that should stop you cold: in 2023, thirty-seven million Americans were living in poverty. That's roughly the entire population of Canada, or every single person in California—except instead of enjoying beach weather and tech jobs, they're struggling to meet their most basic needs.

And here's what makes it strange. The majority of these adults aren't unemployed dropouts. They have jobs. They finished high school. They did what they were supposed to do.

Yet the poverty rate in America hasn't meaningfully budged in half a century. Sociologist Matthew Desmond pointed this out in his 2023 book: eleven percent of Americans lived in poverty in 2019, compared to twelve percent in 1970. After fifty years of economic growth, technological revolution, and staggering wealth creation, the needle barely moved.

The Paradox of Plenty

The United States is, by international standards, spectacularly wealthy. The economy has grown enormously since the 1960s. American billionaires could fund small nations. Yet compared to other developed countries, America has a stubbornly high poverty rate.

Why? The answer lies partly in what economists call the "social safety net"—the collection of government programs designed to catch people when they fall. America's net has notably larger holes than those of its peer nations.

Consider the numbers: nearly twenty-three percent of American workers toil in low-wage jobs. In Britain, that figure is seventeen percent. In Japan, eleven percent. In Italy, just five percent. The Organisation for Economic Co-operation and Development (OECD) compiled these statistics, and they paint a picture of an economy where working hard doesn't necessarily mean staying out of poverty.

Social scientist Mark Robert Rank observed in 2023 that the past four decades have seen a systematic retrenchment of social support programs. Eligibility requirements have tightened. Benefit amounts have shrunk. Meanwhile, the United States still lacks universal child care, guaranteed medical insurance, and other social benefits that citizens of Germany, France, or Sweden take for granted.

How Do You Measure Poverty?

Before we can fight poverty, we need to define it. This turns out to be surprisingly complicated.

The American government uses two main yardsticks. The Census Bureau publishes "poverty thresholds" for statistical purposes—these tell us how many people are poor and help researchers study patterns over time. The Department of Health and Human Services issues "poverty guidelines" for administrative purposes—these determine who qualifies for food assistance, Medicaid, and other federal programs.

Both measures trace back to a woman named Mollie Orshansky.

Orshansky was an economist at the Social Security Administration in the early 1960s. She had previously worked at the Department of Agriculture, where she learned something interesting: according to a 1955 survey, families typically spent about one-third of their income on food. So she devised a simple formula. Calculate the minimum cost of a basic food budget, multiply by three, and you get the poverty line.

Her timing was impeccable. President Lyndon Johnson declared his "War on Poverty" just six months after she published her method. Suddenly, policymakers had a number—a way to measure whether they were winning or losing.

The newly created Office of Economic Opportunity embraced Orshansky's thresholds enthusiastically. As research director Joseph Kershaw put it with charming simplicity: "Mollie Orshansky says that when you have more people in the family, you need more money. Isn't that sensible?"

A Frozen Formula

Here's where it gets troubling. That formula from 1963? We're still using it, adjusted only for inflation.

But American spending patterns have changed dramatically. In the 1960s, food consumed a third of family budgets. By the 1980s, that had dropped to a fifth. By the 1990s, a sixth. Today, housing, healthcare, and childcare gobble up far more of most budgets than groceries do.

If someone recalculated the poverty threshold using the same logic Orshansky used—but with modern spending data—the multiplier would be about 7.8 instead of 3. That would more than double the poverty line, instantly redefining tens of millions more Americans as poor.

The government hasn't done this recalculation. The official poverty measure remains frozen in the economic assumptions of the Kennedy administration.

Two Ways of Counting

Recognizing these limitations, the Census Bureau introduced a second measure in 2011: the Supplemental Poverty Measure, or SPM.

The two measures differ in important ways. The Official Poverty Measure only counts cash income. If you receive food stamps—now called the Supplemental Nutrition Assistance Program, or SNAP—those benefits don't count. If you get Medicaid health coverage, that doesn't count either. If you live in public housing, the value of that subsidy is invisible to the formula.

The Supplemental Poverty Measure tries to be more realistic. It includes non-cash government assistance. It also accounts for what economists call "necessary expenses"—the money you have to spend on things like work-related transportation and childcare before you can feed your family. And crucially, it adjusts for geographic differences. Living in Manhattan costs more than living in rural Mississippi; the SPM acknowledges this.

The results diverge significantly. For 2021, the Official Poverty Measure put the poverty rate at 11.6 percent. The Supplemental Poverty Measure, with its more comprehensive accounting, showed 7.8 percent.

That gap tells us something important: government programs actually work. When you count what the government gives people, fewer people appear poor. This isn't statistical sleight of hand—it's evidence that food assistance, housing subsidies, and healthcare programs genuinely lift people above the poverty line.

The Numbers Behind the Numbers

What does the poverty line actually mean in dollars and cents?

In 2021, the Official Poverty Measure set the threshold at $13,800 for a single person. For a family of four, the line was $27,700. Earn more than that, and statistically speaking, you're not poor. Earn less, and you are.

These thresholds might seem reasonable until you try to live on them. Thirteen thousand eight hundred dollars a year works out to about $1,150 per month. In most American cities, that won't even cover rent, let alone food, transportation, healthcare, and clothing.

By international standards, though, American poverty isn't extreme poverty. The World Bank defines extreme poverty as living on less than $2.15 per day—about $785 per year. In 2020, only 0.25 percent of Americans fell below that line. By the standards of the global poor, even America's poor are relatively well-off.

But this comparison offers cold comfort. Being better off than someone in a developing nation doesn't make it easier to pay American rent or American medical bills.

A History of Struggle

Americans have been wrestling with poverty since the nation's founding, but systematic efforts to understand and address it are relatively recent.

The modern conversation began, arguably, with a radical economist named Henry George. His 1873 book "Progress and Poverty" asked a question that still haunts us: why does poverty persist alongside economic progress? Why do cities full of wealth also contain slums full of misery?

George's book sparked the Progressive movement. Social reformers began systematically documenting what poverty actually looked like. In 1890, Jacob Riis published "How the Other Half Lives," a searing photographic exposé of New York's tenements. Riis brought readers into the cramped, dark, disease-ridden apartments where immigrant families lived stacked atop one another.

Five years later, researchers at Hull House—the pioneering settlement house founded by Jane Addams in Chicago—published their own study. Florence Kelley and her colleagues produced "Hull House Maps and Papers," which included color-coded maps showing income levels and nationalities block by block. They were borrowing techniques from Charles Booth's groundbreaking poverty maps of London, applying them to American slums.

The Old Poverty

Before the Great Depression, poverty in America had a particular geography. It concentrated in certain places and certain populations.

Historian James T. Patterson calls this "the old poverty." Its face was the Southern sharecropper—the farmer who didn't own land but worked someone else's fields in exchange for a share of the crop. These sharecroppers and tenant farmers made up about a quarter of the South's population. More than a third of them were African Americans, locked into a system that kept them perpetually in debt to landowners.

This was poverty rooted in place and history, tied to the legacy of slavery and the extractive economics of cotton cultivation. It was rural, agricultural, and seemed almost permanent—a feature of the Southern landscape as fixed as the red clay soil.

The Depression and the New Deal

The Great Depression created something different: the "new poverty."

Suddenly, poverty wasn't confined to sharecroppers and immigrants. Middle-class families who had done everything right—worked hard, saved money, bought homes—found themselves destitute. Banks failed. Factories closed. There was no unemployment insurance, so losing your job meant losing everything.

The visual symbol of this new poverty was the Hooverville—the makeshift shantytowns named mockingly after President Herbert Hoover, who many blamed for the economic collapse. These encampments of tents and tarpaper shacks sprouted in cities across America, filled with families who had nowhere else to go.

President Franklin Roosevelt's New Deal represented the first comprehensive federal attempt to address poverty. The Federal Emergency Relief Administration created jobs specifically to help the poor. Why jobs instead of just handing out cash? Roosevelt's advisors believed that work was psychologically essential—that people needed the dignity of employment, not just money.

Other programs followed: the Civilian Conservation Corps put young men to work building parks and fighting forest fires. The Public Works Administration funded massive infrastructure projects. And perhaps most enduringly, the Social Security Act of 1935 created a system of old-age pensions that would eventually become the single most powerful anti-poverty program in American history.

The War on Poverty

By the early 1960s, poverty had largely faded from public consciousness. The economy was booming. Suburbs were expanding. Television showed Americans images of themselves as prosperous consumers living the good life.

Then came Michael Harrington.

Harrington was a socialist writer and activist who spent years living among the poor. His 1962 book "The Other America" delivered a shock to the national conscience. He described a world that most middle-class Americans never saw—the forgotten poor hidden in urban ghettos, decaying small towns, and hollowed-out Appalachian mining communities. Harrington estimated that between forty and fifty million Americans lived in poverty, invisible to their more fortunate countrymen.

The book influenced President John F. Kennedy and, after his assassination, President Lyndon Johnson. In his 1964 State of the Union address, Johnson declared "unconditional war on poverty in America."

This wasn't just rhetoric. Johnson created the Office of Economic Opportunity to coordinate a massive expansion of federal programs. Head Start provided early childhood education. Job Corps trained young people for employment. The Community Action Program funded local organizations to fight poverty at the grassroots level. Medicare and Medicaid—created in 1965—ensured that the elderly and the poor would have access to medical care.

The War on Poverty also brought statistical precision to the fight. Before 1969, the United States had no official way to measure poverty. The government adopted Mollie Orshansky's thresholds as the official standard, giving policymakers a number to track.

The Cycles Continue

Poverty rates did fall through the late 1960s and early 1970s. Then they rose again. Then fell. Then rose.

The Great Recession of 2008 pushed poverty levels back toward 1960s territory—the very levels that had prompted the War on Poverty in the first place. By 2010, census data showed that half the American population qualified as either poor or low-income. One in five millennials lived below the poverty line.

Some scholars argue that poverty today looks fundamentally different from poverty in the past. Contributors to "The Routledge Handbook of Poverty in the United States" suggest that globalization and what they call "neoliberal structural adjustment policies" have created new forms of extreme deprivation. Entire communities, they argue, have become "surplus populations"—economically marginal people whose labor the modern economy doesn't need.

The Pandemic Shock

The coronavirus pandemic provided a dramatic natural experiment in poverty policy.

First came the shock. Between May and October 2020, roughly eight million Americans fell into poverty as businesses closed and jobs evaporated. This happened despite unprecedented federal intervention. The CARES Act pumped trillions into the economy through stimulus checks, enhanced unemployment benefits, and business loans.

But the CARES Act was temporary. When its funding ran out, poverty surged.

Then came an even more dramatic demonstration of what aggressive policy could achieve. In 2021, the expanded Child Tax Credit essentially cut monthly checks to families with children. The Supplemental Poverty Measure for that year showed just 7.8 percent of Americans in poverty—one of the lowest rates ever recorded.

When those enhanced benefits expired at the end of 2021, the poverty rate jumped by 4.6 percentage points in a single year—from 7.8 percent to 12.4 percent. According to the Center on Budget and Policy Priorities, about 15.3 million Americans fell back into poverty.

The policy experiment was brutally clear: when the government sends money to poor families, poverty falls. When it stops, poverty rises.

International Criticism

Other countries have noticed America's poverty problem.

In 2013, the United Nations Children's Fund—better known as UNICEF—ranked the United States as having the second-highest child poverty rate among developed nations. Only Romania did worse.

In 2016, the International Monetary Fund—traditionally more concerned with fiscal discipline than social welfare—warned the United States that its poverty rate needed urgent attention. The IMF recommended raising the minimum wage and offering paid maternity leave to encourage more women to enter the workforce.

The most stinging criticism came in 2017, when Philip Alston, the United Nations special rapporteur on extreme poverty and human rights, toured the United States for two weeks. His findings were scathing. He described "private wealth and public squalor," declaring that the state of Alabama had "the worst poverty in the developed world." His formal report, issued in May 2018, stated that forty million Americans lived in poverty and more than five million lived in conditions comparable to the developing world.

The 2024 Numbers

There is some recent good news, at least in the official statistics. The poverty rate fell to 10.6 percent in 2024, down from 11.1 percent the previous year. That translates to about 35.9 million people living below the poverty threshold.

Whether this represents a genuine turning point or just another fluctuation in the endless cycle remains to be seen.

Why Does Poverty Persist?

The causes of American poverty are multiple and interlocking. Income inequality has widened dramatically since the 1970s. Inflation erodes the purchasing power of low wages. Unemployment, even during good economic times, never disappears entirely. Debt traps—payday loans, high-interest credit cards, medical bills—drag families down. Educational gaps limit opportunities.

But the deeper question is why America tolerates a poverty rate that peer nations have largely eliminated. The answer probably lies in politics, history, and culture—in American beliefs about individual responsibility, in suspicion of government programs, in racial divisions that have shaped policy debates since before the Civil War.

The technical tools to reduce poverty exist. The pandemic proved that direct cash transfers work. Countries like Denmark and the Netherlands have poverty rates around five percent—less than half of America's. Their citizens aren't smarter or harder-working than Americans. Their governments simply chose different policies.

Whether Americans will make similar choices is a question that remains unanswered, fifty years after Mollie Orshansky first drew her poverty line.