Families and unrelated individuals are classified as above or below the poverty level by comparing their total 1979 income to an income cutoff or "poverty threshold." The income cutoffs vary by family size, number of children, and age of the family householder or unrelated individual. Poverty status is determined for all families (and, by implication, all family members). Poverty status is also determined for persons not in families, except for inmates of institutions, members of the Armed Forces living in barracks, college students living in dormitories, and unrelated individuals under 15 years old. Poverty status is derived on a sample basis.
The 1980 census definition of poverty reflects revisions recommended by a Federal interagency committee in 1979 to a definition adopted in 1969. The index is based on the Department of Agriculture's 1961 Economy Food Plan and reflects the different consumption requirements of families based on their size and composition. It was determined from the Department of Agriculture's 1955 survey of food consumption that families .of three or more persons spend approximately one-third of their income on food; the poverty level for these families was, therefore, set at three times the cost of the economy food plan. For smaller families and persons living alone, the cost of the economy food plan was multiplied by factors that were slightly higher in order to compensate for the relatively larger fixed expenses of these smaller households. The poverty thresholds are updated every year to reflect changes in the Consumer Price Index (CPI). Cutoffs for 1979 income used in poverty statistics in the 1980 census are presented below. As an example, the poverty threshold for a family of four with two related children under 18 can be found in the chart below to be $7,356 in 1979.
Poverty thresholds are computed on a national basis only. No attempt has been made to adjust these thresholds for regional, State, or other local variations in the cost of living.
The poverty status of a person who is a family member is determined by the family income and its relationship to the appropriate poverty threshold for that family. The poverty status of an unrelated individual is determined by his or her own income in relation to the appropriate poverty threshold. Thus, two unrelated individuals living together may not have the same poverty status.
Households below the poverty level are defined as households in which the total income of the family or the householder of a nonfamily household is below the poverty level. The incomes of persons in the household other than members of the family or other than the householder in a nonfamily household are not taken into account when determining poverty status of a household.
Because the poverty levels currently in use by the Federal Government do not meet all the needs of the analysts of the data, variations of the poverty definition are available in terms of various multiples of the official poverty levels. The one most frequently tabulated is 125 percent of the poverty level, where a family or person may have up to 25 percent more income than normally allowed under the poverty threshold appropriate for the family size, etc.
Above poverty level ("nonpoor")
Families or persons whose total family income or unrelated individual income in 1979'was equal to or greater than the poverty threshold specified for the applicable family size, etc. In certain tabulations, this group is further subdivided into those with income "between 100 and 124 percent of poverty level," "between 125 and 149 percent of poverty level," "between 150 and 174 percent of poverty level, "between 175 and 199 percent of poverty level," and "200 percent of poverty level and above."
The team "poverty" connotes a complex set of economic, social, and psychological conditions. The standard statistical definition provides only estimates of economic poverty based on the receipt of money income before taxes. Excluded from the income concept is a measure of the benefits derived from the receipt of in-kind government transfers, such as food stamps, medicaid, and public housing; private transfers such as health insurance premiums paid by employers; the value of the services obtained from the ownership of assets, such as owner-occupied housing units; and the receipt of money from the sale of property, withdrawal of bank deposits, gifts and money borrowed. A comprehensive review of the current poverty definition and its limitations can be found in The Mea sure of Poverty, U.S. Department of Health, Education, and Welfare, April 1976. See also the discussion of limitations under Income In 1979.
Poverty statistics were first included in a decennial census in 1970. Prior to 1980 the poverty thresholds did not distinguish among families with 7, 8, and 9 or more persons; on the other hand, the cutoffs were further differentiated by the sex of the family head or unrelated individual and by farm/nonfarm residence. In the 1970 census, the thresholds for farm residents were set at 85 percent of the thresholds for nonfarm residents. 1979 income thresholds used in the 1980 census represent a weighted average of the nonfarm thresholds used in the past male headed and female headed families. The elimination of the 85-percent threshold for farm families increased the farm population classified as poor by about 174,000 persons or about one-fifth nationwide. The net effect of all three changes on the total number of poor persons is to increase it approximately 380,000 or 1.5 percent.
Since the poverty income cutoffs have been adjusted each year for changes in the CPI, and since the overall impact of the definitional changes is minimal, 1980 census poverty figures for the total and nonfarm population should be reasonably comparable to the 1970 poverty figures. However, because of the definitional changes cited, comparisons involving the farm population should be made with caution.
See also: "Income Deficit".