sign in sign up
<<
Home , Poverty threshold

/

* Notes and Brief Reports

The 1984Federal Table l.-Federal poverty guidelinesfor 1984 Income Guidelines* Annual income . Contiguous ‘The Omnibus Budget Reconciliation Act of 1981(sec- States Size of and District of tions 652 and 673(2)) transferred the responsibility of family unit 1 Columbia Alaska Hawaii annually revising the Federal poverty income guidelines I ...... 54,980 S6.240 $5.730 from the Community ServicesAdministration (CSA) to 2 ...... 6,720 8.410 7,730 the Secretary of and Human Services (HHS).’ 3 ...... 8,460 10.580 9,730 10,200 12.750 11,730 This note provides background information about the : ...... I I.940 14,920 13,730 1984revision of the guidelines. 6 ...... 13,680 17.090 15.730 ’ I 7 ...... 15,420 19,260 17.730 . 8 ...... 17,160 21.430 19.730

Poverty Thresholds and 1 For family units with more than 8 members, add the following amount for each additional family member: contiguous States and the District of Colum- Poverty Guidelines bia, 51,740; Alaska, $2,170; and Hawaii, 52.000. The Federal poverty income guidelines, Shown in table 1, are a simplified version of the Federal Govern- poverty guidelines. In 1969, OMB issued a directive re- ment’s official statistical poverty thresholdsP The quiring all Federal departments and agenciesto use the principal differences between the thresholds and the Census Bureau poverty thresholds (and the Census Bu- guidelines have to do with the issuing agency and the reau’s other poverty statistics) for statistical purposes. purpose. The poverty thresholds are issued by the Cen- The legislative language describing the poverty guide- sus Bureau and are used for statistical purposes (for ex- lines refers to the poverty thresholds (the starting point ample, to determine the number of persons in poverty for calculating the poverty guidelines) as “the official and to present data classifying them by type of resi- poverty line (as defined by the Office of Management dence, race, and other social, economic, and and Budget)” rather than as the CensusBureau poverty demographic characteristics). The poverty guidelines thresholds. are issued by the Department of Health and Human Becauseof data collection and publication schedules, Services and are used for administrative purposes (for the statistical poverty thresholds for a given calendar example, to determine whether a person or family is fi- year are generally not available until the second half of nancially eligible for assistance or services under a the following calendar year? To avoid’using 2-year-old particular Federal program). As described below, the poverty thresholds in programs that have poverty status poverty guidelines are derived from the statistical pover- as an eligibility criterion, a procedure currently de- ty thresholds that the Bureau of the Census publishes scribed in sections 673(2) and 652(b) of the Omnibus / under directives issued by the Office of Management Budget Reconciliation Act of 1981 has been used since and Budget (OMB). 1973 to calculate poverty income guidelines for ad- OMB is often referred to’ in connedtion with the ministrative use in such programs. This procedure is de- scribed in section 652(b) in the following language: .

l By Gordon M. Fisher, Office of the Secretary, Department of The revision required . . . shall be accomplished by Health and Human Services. The 1984 poverty guidelines were pub- multiplying the official poverty line (as defined by the lished in the Federal Register, February27, 1984, pages 7151-7152. t The first administrative poverty guidelines were established by the 3 Each year, the Census Bureau’s report on the poverty population Office of Economic Opportunity (OEO) in December 1965. (OEO be- contains a table showing weighted average poverty thresholds for each came the Community Services Administration in 1975.) Re- family size, as well as a more detailed matrix of poverty thresholds for vised poverty guidelines were issued by OEO each year from 1967 different subtypes of families of each size. The starting point for cal- through 1972, before the requirement to revise them annually was en- culating the poverty guidelines is these weighted average poverty acted in September 1972, as section 625 of the Economic Opportunity thresholds, the precise values of which depend not only on Consumer Act of 1964. In 1978. it was renumbered as section 624. Price Index figures but also on the mix of the different subtypes of 2 Information on the poverty thresholds can be obtained from the families within each family size. Information on that mix is not availa- Bureau of the Census, Current Population Reports (Series P-60. No. ble until the Current Population Survey data have been processed. 68 and subsequent applicable reports). whichaccounts for the delay in publication.

24 Social Security Bulletin, July 1984/Vol. 47, No. 7 .-. Office of Management and Budget) by the percentage l Department of Education. Follow Through, Up change in the Consumer Price Index during the an- ward Bound, Talent Search, Special Services for nual or other interval immediately preceding the time ,Students, and Educational Oppor- at which the revision is made. tunity Centers. Table 2 gives the computations for the 1984 revision. l Department of Energy. Weatherization Assistance The methodology is further explained on page 27 of this for Low-Income Persons. note. ,a ‘0 Department of Labor. Job Corps, Migrant and Seasonal Farmworkers, and Train- Program Applicability ing-Indians and Native Americans, Special National Programs and Activities for the Disad- The Federal poverty income guidelines, or’ adapta- vantaged, other employment and training pro- tions of them, are used as an eligibility criterion by a grams under the Job Training Partnership Act, and number of Federal programs, including the following: I Senior Community ServiceEmployment Program. l l Department of Health and Human Services. Com- ACTION. Foster Grandparent Program and Sen- munity ServicesBlock Grant, Low-Income Home ior Companion Program. Energy Assistance, Head Start, and Hill-Burton l Legal Services Corporation. Legal Servicesfor the UncompensatedServices Program. Poor. l Department of Agriculture. Stamps; Special l Office of Personnel Management. Federal Employ- Supplemental Food Program for Women, Infants, ment for Disadvantaged Youth-Part-Time (Stay- and Children (WIG); National School Lunch Pro- in-School Program); and Federal Employment for gram, School Breakfast Program, and Child Care DisadvantagedYouth-Summer (Summer Aids). Food Program (for free and reduced-price meals); and Special Milk Program for Children (for free Some programs use the poverty guidelines as only one milk). of severaleligibility criteria, or use a modification of the guidelines? Other programs, although not using the Table 2.-Computations for the 1984annual revision of guidelines as a criterion of individual eligibility, use the ,poverty income guidelines for all States (except them for the purpose of targeting assistanceor services. Alaska and Hawaii) and the District of Columbia1 In some instances, these guidelines may not be in effect ‘:. for certain programs until a regulation or notice spe- Poverty Column 2 cifically applying to the program in question has been is- thresholds multiplied Difference Average Si;e of in 1982 by 1.0322 between difference February sued. , 1I family (weighted price column 3 ’ . in 1984 unit averages) 2 inflator 3 entries column 3 4 guidelines * (1) (2) (3) (4) (5) (6) Definitions 1 ...... 54,901 ss.059 54.980 $1,424 s 1,740 2 ...... 6,28 I 6,483 6,720 1,458 1,740 3 ...... 7,693 7.941 The following’definitions-derived for the ‘most part 2,239 1,740 8,460 4 ...... 9,862 10.180 5 10,200 1,880 1,740 from language’ used ‘in Cur&t Population Rdports- 5 ...... 11,684 12,060 11,940 1,572 1,740 6 ...... 13,207 13,632 13,680 are made available for use in connection with the pover- 1,888 I.740 7 ...... 15,036 IS.520 15,420 1,737 1,746 ty income guidelines. Specific programs may use some- 8 ...... 16.719 17,257 17.160 what different definitions.

l For Alaska and Hawaii, factors of 1.25 and 1.15, respectively, are applied A family is a group of two or more persons related by to the 1984 guideline for a family of 4 for the contiguous States, and the birth, marriage, or adoption who reside together; all results are rounded to multiples of $10. The same factors are applied to the average difference for the contiguous States (column 5) to obtain average dif- such related persons are considered as members of one ferences for Alaska and Hawaii for deriving guidelines for other family sizes. family. (If a household includes more than one family For family units with more than 8 members, add the following amount for each additional person: contiguous States and the District of Columbia, $1,740; and/or more than one unrelated individual, the poverty Alaska, 52,170; and Hawaii, $2,000. guidelines are applied separately to each family and/or 2 Data are from table A-l of Bureau of the Census, Current Population Re- porlr(Series P-60. No. 140). “Money Income and Poverty Status of Families unrelated individual, and not to the household as a and Persons in the United States: 1982 (Advance Data From the March 1983 whole.) Current Population Survey),” July 1983. f Price inflator derived from Department of Labor, CPI Press Release A family’ unit of size one means an unrelated in- USDL-84-25, January 24, 1984, table IA. (The Consumer Price Index for all. dividual as defined by the Census Bureau-that is, a items (CPI-U) was 289.1 for calendar year 1982 and 298.4 forSalendar year 1983. an increase of 3.22 percent.) person aged 15 or older (other than an inmate of an in- 4 The arithmetic average of column 4 entries, rounded to the nearest multiple stitution) who is not living with any relatives. An unre: of $20. 5 Obtained by multiplying the average for a family of 4 lated individual may be the sole occupant of a housing persons in 1982, as published in table A-l (39,862). by the inflation factor from unit, or may be residing in a housing unit (or in group calendar year 1982 to calendar year 1983 (1.0322) and rounding the result up- ward to the nearest whole mulriple of SSO. All other entries in column 6 are ob- tained by successive addition or subtraction of the average difference ($1,740) 4 For example, the eligibility level may be set at 130 percent or 185 to the size-4 1984 guideline entry (5 10.200). percent of theguidelines rather than 100 percent. (

Social Security Bulletin, July 1984/Vol. 47, No. 7 25 ---

quarters such as a rooming house) in which one or more my food plan,” the least costly of four food plans de- persons also reside who are not related to the individual signed by the Department of Agriculture. In essence, in question by birth, marriage, or adoption. (Examples poverty thresholds were established by multiplying the of unrelated individuals residing with others include a cost of the economy food plan for various family sizes lodger, a foster child, a ward, or an employee.) by a factor of three. The factor three was chosen be- Income refers to total annual cash receipts from all cause the Agriculture Department’s 1955 Household sources before taxes. (Income data for part of a year Food Consumption Survey found that, for the average may be annualized to determine eligibility-for in- family of three or more persons, the dollar value of all stance, by multiplying the most recent 3 months of food used at home during a week accounted for about income by four to get equivalent annual income.) In- one-third of its total money income after taxes. For one- come includes money wages and salaries before any de- person and two-person households, the cost of the ductions, but does not include food or rent in lieu of economy food plan was multiplied by slightly higher wages. It includes net receipts from nonfarm or farm factors in order to compensate for the relatively larger self-employment (receipts from a person’s own business fixed expensesof thesesmaller households. or from an owned or rented farm after deductions for Because the Census Bureau has been using the con- businessor farm expenses).It also includes regular pay- cept of pre-tax money income in annual publications ments from Social Security, railroad retirement, since 1947, Census Bureau tabulations on poverty have unemployment compensation, workers’ compensation, applied the SSA poverty thresholds to pre-tax money strike benefits from union funds, veterans’ benefits, income, rather than using the post-tax money income public assistance (including Aid to Families with De- concept used in the Agriculture Department survey pendent Children, Supplemental Security Income, and from which the multiplier factor of three was derived. General Assistance money payments), training stipends, At the time the poverty thresholds were constructed and alimony, child support, military family allotments or for someyears thereafter, families and individuals at the other regular support from an absent family member or poverty level had little or no Federal income tax someone not living in the household, private pensions, liability, government employee pensions, regular insurance or annuity payments, and income from dividends, interest, rents, royalties, or periodic receipts from estates or Table 3.-Poverty guidelines for a family of four, by trusts. For eligibility purposes, income does not include year and issuing agency, 1965-84 the following money receipts: capital gains; any assets Annu income Year and issuing drawn down as withdrawals from a bank, the sale of agency Nonfarm Farm property, a house, or a car; tax refunds, gifts, lump-sum Office of Economic Opportunity: inheritances, one-time insurance payments, or compen- 1965 ...... 53,130 52,190 sation for injury. Also excluded are noncash benefits,, 1967 ...... 3,200 2,200 1968 ...... 3,300 2,300 such as the employer-paid or union-paid portion of 1969 ’ ...... 3.600 health insurance and other employee fringe benefits, I970 ...... 3.800 :%z 1971...... 4.OOtJ 3:400 food or rent receivedin lieu of wages, the value of food 1972 ...... 4,200 3.575 and fuel produced and consumed on farms, the imputed 1973 2 a...... : ...... 4,300 3,653 1974 ...... 4.5JO 3.870 value of rent from owner-occupied nonfarm or farm Community Services Administration: 3 housing, and such Federal programs as Medicare, Medi- 197s ...... 5.050 4.300 1976 ...... s.500 4.680 caid, Food Stamps, school lunches, and public housing. I977 ...... 5.850 4,980 (In most respects,this definition of income is consistent 1978 ...... 6.200 5.270 1979 ...... 6,700 5,700 with the concept of income used in the development of . 1980...... ; ...... 7,450 6,340 the original poverty definition in 1964.) 1981 ...... 8,450 7,190 Department of Health and Human Services: 4 The statistical poverty thresholds are derived from a 1982 ...... 9.300 definition of poverty developed for statistical purposes 1983 5 ...... 9 in 1964 by the Social Security Administration? Revi- 1984 ...... sions to this definition made in 1969 and 1980-81 were t Beginning in 1969, poverty guidelines were derived from revised Census Bu- based on recommendations of Federal interagency com- reau poverty thresholds, with farm thresholds set at 85 percent.rather than 70 percent of nonfarm thresholds. mittees. Annual updates of the statistical poverty 2 A legislative requirement to update the poverty guidelines at least once a thresholds are based on changes in the Consumer Price year was enacted as part of the Economic Opportunity Act Amendments o’f 1972. Index for All Urban Consumers (CPI-U). 3 The Office of Economic Opportunity was replaced by the Community Serv- At the core of the poverty definition was the “econo- ices Administration in 1975. 4 The Community Services Administration was abolished by the Omnibus Budget Reconciliation Act of 1981, which also transferred responsibility for re- vising the poverty guidelines to the Secretary of Health and Human Services. 5 Mollie Orshansky, “Counting the Poor: Another Look at the 5The farm/nonfarm distinction was eliminated by the Census Bureau in Poverty Profile,” Social Security BulletIn, January 1965, pages 3-29. 1981 and in the poverty guidelines in 1983.

26 Social Security Bulletin, July 19841Vol. 47, No. 7 1Elimination’ of the Farm(Nonfarin since ’ 1973 to, compute . the Federal poverty income Distin&oh ’ :T

Social Security Bulletin, July 1984/Vol. 47, No. 7 27