In determining the poverty status of families and unrelated individuals, the Census Bureau uses thresholds (income cutoffs) arranged in a two-dimensional matrix. The matrix consists of family size (from one person to nine or more people) cross-classified by presence and number of family members under 18 years old (from no children present to eight or more children present). Unrelated individuals and two-person families are further differentiated by age of reference person (RP) (under 65 years old and 65 years old and over).

To determine a person's poverty status, one compares the person's total family income in the last 12 months with the poverty threshold appropriate for that person's family size and composition (see example below). If the total income of that person's family is less than the threshold appropriate for that family, then the person is considered "below the poverty level," together with every member of his or her family. If a person is not living with anyone related by birth, marriage, or adoption, then the person's own income is compared with his or her poverty threshold. The total number of people below the poverty level is the sum of people in families and the number of unrelated individuals with incomes in the last 12 months below the poverty threshold.

Since ACS is a continuous survey, people respond throughout the year. Because the income questions specify a period covering the last 12 months, the appropriate poverty thresholds are determined by multiplying the base-year poverty thresholds (1982) by the average of the monthly inflation factors for the 12 months preceding the data collection. See the table in Appendix A titled "Poverty Thresholds in 1982, by Size of Family and Number of RelatedChildren Under 18 Years (Dollars)," for appropriate base thresholds. See the table "The 2011 Poverty Factors" in Appendix A for the appropriate adjustment based on interview month.

For example, consider a family of three with one child under 18 years of age, interviewed in July 2011 and reporting a total family income of $14,000 for the last 12 months (July 2010 to June 2011). The base year (1982) threshold for such a family is $7,765, while the average of the 12 inflation factors is 2.24574 Multiplying $7,765 by 2.24574 determines the appropriate poverty threshold for this family type, which is $17,438 Comparing the family's income of $14,000 with the poverty threshold shows that the family and all people in the family are considered to have been in poverty. The only difference for determining poverty status for unrelated individuals is that the person's individual total income is compared with the threshold rather than the family's income.

Since poverty is defined at the family level and not the household level, the poverty status of the household is determined by the poverty status of the householder. Households are classified as poor when the total income of the householder's family in the last 12 months is below the appropriate poverty threshold. (For nonfamily householders, their own income is compared with the appropriate threshold.) The income of people living in the household who are unrelated to the householder is not considered when determining the poverty status of a household, nor does their presence affect the family size in determining the appropriate threshold. The poverty thresholds vary depending upon three criteria: size of family, number of children, and, for one- and two- person families, age of the householder.

Derivation of the Current Poverty Measure - When the original poverty definition was developed in 1964 by the Social Security Administration (SSA), it focused on family food consumption. The U.S. Department of Agriculture (USDA) used its data about the nutritional needs of children and adults to construct food plans for families. Within each food plan, dollar amounts varied according to the total number of people in the family and the family's composition, that is, the number of children within each family. The cheapest of these plans, the Economy Food Plan, was designed to address the dietary needs of families on an austere budget.

Since the USDA's 1955 Food Consumption Survey showed that families of three or more people across all income levels spent roughly one-third of their income on food, the SSA multiplied the cost of the Economy Food Plan by three to obtain dollar figures for total family income. These dollar figures, with some adjustments, later became the official poverty thresholds. Since the Economy Food Plan budgets varied by family size and composition, so too did the poverty thresholds. For two-person families, the thresholds were adjusted by slightly higher factors because those households had higher fixed costs. Thresholds for unrelated individuals were calculated as a fixed proportion of the corresponding thresholds for two-person families.

The poverty thresholds are revised annually to allow for changes in the cost of living as reflected in the Consumer Price Index for All Urban Consumers (CPI-U). The poverty thresholds are the same for all parts of the country; they are not adjusted for regional, state, or local variations in the cost of living.

Beginning in 2006, the population in group quarters (GQ) is included in the ACS. The part of the group quarters population in the poverty universe (for example, people living in group homes or those living in agriculture workers' dormitories) is many times more likely to be in poverty than people living in households. Direct comparisons of the data would likely result in erroneous conclusions about changes in the poverty status of all people in the poverty universe.

Because of differences in survey methodology (questionnaire design, method of data collection, sample size, etc.), the poverty rate estimates obtained from American Community Survey data may differ from those reported in the Current Population Survey, Annual Social and Economic Supplement, and those reported in Census 2000. Please refer to
(http://www.census.gov/hhes/www/poverty/about/datasources/description.html) for more details.

A household includes all the people who occupy a housing unit. (People not living in households are classified as living in group quarters.) A housing unit is a house, an apartment, a mobile home, a group of rooms, or a single room that is occupied (or if vacant, is intended for occupancy) as separate living quarters. Separate living quarters are those in which the occupants live separately from any other people in the building and which have direct access from the outside of the building or through a common hall. The occupants may be a single family, one person living alone, two or more families living together, or any other group of related or unrelated people who share living arrangements.

A measure obtained by dividing the number of people in households by the number of households. In cases where people in households are cross- classified by race or Hispanic origin, people in the household are classified by the race or Hispanic origin of the householder rather than the race or Hispanic origin of each individual. Average household size is rounded to the nearest hundredth.

Between 1996 and 2007, the question response categories remained the same. In 2008, the "Son or daughter" category was expanded to "Biological son or daughter," "Adopted son or daughter," and "Stepson or stepdaughter." Also "In-law" was expanded to "Parent-in-law" and "Son-in-law or daughter-in-law."

Unlike the Current Population Survey (CPS) and the Survey of Income and Program Participation (SIPP), the ACS relationship question does not have a parent pointer to identify whether both parents are present. For example, if a child lives with unmarried parents, we only know the relationship of the child to the householder, not to the other parent. So a count of children living with two biological parents is not precise.

The relationship categories for the most part can be compared to previous ACS years and to similar data collected in the decennial census, CPS, and SIPP. With the change in 2008 from "In-law" to the 2 categories of "Parent-in-law" and "Son- in-law or daughter-in-law", caution should be exercised when comparing data on in-laws from previous years. "In-law" encompassed any type of in-law such as sister-in-law. Combining "Parent-in-law" and "son-in-law or daughter-in-law" does not represent all "in-laws" in 2008. The same can be said of comparing the 3 categories of "biological" "step", and "adopted" child in 2008 to "Child" in previous years. Before 2008, respondents may have considered anyone under 18 as "child" and chosen that category. The ACS includes "foster child" as a category. However, the 2010 census did not contain this category, and "foster children" were included in the "Other nonrelative" category. Therefore, comparison of "foster child" cannot be made to the 2010 census.