what is conclusion of poverty

A Conclusion For Poverty

Poverty has become a great issue in our world. Though many organizations have been created to find solutions for this matter nobody could not save our world completely from poverty. The most common fact which we can realize when we consider on information about poverty is that poverty is mostly occurring in developing countries.

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What are the reasons caused for poverty mostly? According to the Borgen Project, reasons for poverty are History, War and Political instability, National Debts, Discrimination and social inequality and vulnerability to natural disasters. Poverty is the significant lack of money or poorness. Precise definitions of poverty are controversial; according to one definition, poverty is having so little money that one cannot pay for basic necessities, such as food and shelter. Sociologists study the effects of poverty as well as who lives in poverty and why.  Many surveys  have been done in order to calculate the accurate number of people who are suffering from the poverty. According to the Global Finance Magazine poorest countries in the world are Central African Republic, Congo, Dem.Rep, Malawi, Liberia, Burundi, Niger, Mozambique and Eritrea. There are many organizations such as CARE, Oxfam, ONE, The hunger Project working to stop poverty. Some of these are non-profit, strategic organizations committed to the sustainable end of poverty and world hunger.

The World Bank data has published data on absolute poverty for 1981 onward, but researchers have tried to reconstruct information of the living standards of the more distant past. The most cited paper was written by  Bourguignon and Morrison  in which the two authors reconstructed measures of poverty as far back as 1820. We can realize that the number of poor people in the present has decreased little than the numbers in early ‘90.

What are the effects of poverty for our world? Do you know that over 21,000 children die every day around the world due to illnesses, conflicts in the world and other different reasons? Most of these are caused by poverty.

As a young student, I would like to suggest some factors which would be helpful in our journey to reduce poverty. Basically we have to take necessary steps to reduce the population in our world. Natural resources don’t increase according to the population which is increasing at a high speed. When we consider the families in poor countries, they have at least six or seven kids. But those kids do not have a proper health or the parents cannot provide proper education for them. And also those parents cannot provide good foods filled with suitable nutrients to their kids due to lack of wealth. Because of that their healthiness decreases by a considerable amount. The development of their brains becomes insufficient and due to that their ability to get a proper education decreases.

So taking necessary steps to develop health and education sectors in these countries is a good way to reduce poverty. So firstly we have to develop services for pregnant women of those countries and provide them good foods filled with proper nutrients to keep the babies in good health. And then the kids will be in good health and their brains will be in a better condition to get a proper education. Developing the education sectors of those countries with the help of charity services and the governments of developed countries is also a good step to develop education systems in those countries. When we take a look at the situation of education in a number of African countries affected by poverty we see: language barriers; a lack of proper facilities; and military conflicts.

Increasing the number of organizations which are working to reduce poverty by educating people of developed countries to be organized and to take actions related to this matter is also another suggestion of mine. Encouraging people who have volunteered to provide facilities such as pure water, foods filled with nutrients, living places to poor people and who’re conducting charity services to develop the lives of them, by offering special rewards and admiring them in various ways would be a good way to increase the number of voluntary workers. So I believe my opinions and suggestions would be a good help to conclude poverty.

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Goal 1: End poverty in all its forms everywhere

Eradicating extreme poverty for all people everywhere by 2030 is a pivotal goal of the 2030 Agenda for Sustainable Development. Extreme poverty, defined as surviving on less than $2.15 per person per day at 2017 purchasing power parity, has witnessed remarkable declines over recent decades.

However, the emergence of COVID-19 marked a turning point, reversing these gains as the number of individuals living in extreme poverty increased for the first time in a generation by almost 90 million over previous predictions.

Even prior to the pandemic, the momentum of poverty reduction was slowing down. By the end of 2022, nowcasting suggested that 8.4 per cent of the world’s population, or as many as 670 million people, could still be living in extreme poverty. This setback effectively erased approximately three years of progress in poverty alleviation.

If current patterns persist, an estimated 7% of the global population – around 575 million people – could still find themselves trapped in extreme poverty by 2030, with a significant concentration in sub-Saharan Africa.

A shocking revelation is the resurgence of hunger levels to those last observed in 2005. Equally concerning is the persistent increase in food prices across a larger number of countries compared to the period from 2015 to 2019. This dual challenge of poverty and food security poses a critical global concern.

Why is there so much poverty

Poverty has many dimensions, but its causes include unemployment, social exclusion, and high vulnerability of certain populations to disasters, diseases and other phenomena which prevent them from being productive.

Why should I care about other people’s economic situation?

There are many reasons, but in short, because as human beings, our well- being is linked to each other. Growing inequality is detrimental to economic growth and undermines social cohesion, increas- ing political and social tensions and, in some circumstances, driving instability and conflicts.

Why is social protection so important?

Strong social protection systems are essential for mitigating the effects and preventing many people from falling into poverty. The COVID-19 pandemic had both immediate and long-term economic consequences for people across the globe – and despite the expansion of social protection during the COVID-19 crisis, 55 per cent of the world’s population – about 4 billion people – are entirely unprotected.

In response to the cost-of-living crisis, 105 countries and territories announced almost 350 social protection measures between February 2022 and February 2023. Yet 80 per cent of these were short-term in nature, and to achieve the Goals, countries will need to implement nationally appropriate universal and sustainble social protection systems for all.

What can I do about it?

Your active engagement in policymaking can make a difference in addressing poverty. It ensures that your rights are promoted and that your voice is heard, that inter-generational knowledge is shared, and that innovation and critical thinking are encouraged at all ages to support transformational change in people’s lives and communities.

Governments can help create an enabling environment to generate pro- productive employment and job opportunities for the poor and the marginalized.

The private sector has a major role to play in determining whether the growth it creates is inclusive and contributes to poverty reduction. It can promote economic opportunities for the poor.

The contribution of science to end poverty has been significant. For example, it has enabled access to safe drinking water, reduced deaths caused by water-borne diseases, and improved hygiene to reduce health risks related to unsafe drinking water and lack of sanitation.

Facts and Figures

Goal 1 targets.

• If current trends continue, 575 million people will still be living in extreme poverty and only one-third of countries will have halved their national poverty levels by 2030.
• Despite the expansion of social protection during the COVID-19 crisis, over 4 billion people remain entirely unprotected. Many of the world’s vulnerable population groups, including the young and the elderly, remain uncovered by statutory social protection programmes.
• The share of government spending on essential services, such as education, health and social protection, is significantly higher in advanced economies than in emerging and developing economies.
• A surge in action and investment to enhance economic opportunities, improve education and extend social protection to all, particularly the most excluded, is crucial to delivering on the central commitment to end poverty and leave no one behind.
• The global poverty headcount ratio at $2.15 is revised slightly up by 0.1 percentage points to 8.5 percent, resulting in a revision in the number of poor people from 648 to 659 million. ( World Bank)

Source: The Sustainable Development Goals Report 2023 

1.1  By 2030, eradicate extreme poverty for all people everywhere, currently measured as people living on less than $2.15 a day

1.2 By 2030, reduce at least by half the proportion of men, women and children of all ages living in poverty in all its dimensions according to national definitions

1.3  Implement nationally appropriate social protection systems and measures for all, including floors, and by 2030 achieve substantial coverage of the poor and the vulnerable

1.4 By 2030, ensure that all men and women, in particular the poor and the vulnerable, have equal rights to economic resources, as well as access to basic services, ownership and control over land and other forms of property, inheritance, natural resources, appropriate new technology and financial services, including microfinance

1.5  By 2030, build the resilience of the poor and those in vulnerable situations and reduce their exposure and vulnerability to climate-related extreme events and other economic, social and environmental shocks and disasters

1.A  Ensure significant mobilization of resources from a variety of sources, including through enhanced development cooperation, in order to provide adequate and predictable means for developing countries, in particular least developed countries, to implement programmes and policies to end poverty in all its dimensions

1.B  Create sound policy frameworks at the national, regional and international levels, based on pro-poor and gender-sensitive development strategies, to support accelerated investment in poverty eradication actions

• United Nations Development Programme
• UN Children’s Fund
• International Monetary Fund
• UN Global Compact
• UN International Strategy for Disaster Reduction

Fast Facts: No Poverty

Infographic: No Poverty

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The World Bank Group is committed to fighting poverty in all its dimensions. We use the latest data, evidence and analysis to help countries develop policies to improve people's lives, with a focus on the poorest and most vulnerable.

Around 700 million people live on less than $2.15 per day, the extreme poverty line. Extreme poverty remains concentrated in parts of Sub-Saharan Africa, fragile and conflict-affected areas, and rural areas.

After decades of progress, the pace of global poverty reduction began to slow by 2015, in tandem with subdued economic growth. The Sustainable Development Goal of ending extreme poverty by 2030 remains out of reach.

Global poverty reduction was dealt a severe blow by the COVID-19 pandemic and a series of major shocks during 2020-22, causing three years of lost progress. Low-income countries were most impacted and have yet to recover. In 2022, a total of 712 million people globally were living in extreme poverty, an increase of 23 million people compared to 2019. 

We cannot reduce poverty and inequality without also addressing intertwined global challenges, including slow economic growth, fragility and conflict, and climate change.

Climate change is hindering poverty reduction and is a major threat going forward. The lives and livelihoods of poor people are the most vulnerable to climate-related risks.

Millions of households are pushed into, or trapped in, poverty by natural disasters every year. Higher temperatures are already reducing productivity in Africa and Latin America, and will further depress economic growth, especially in the world’s poorest regions.

Eradicating poverty requires tackling its many dimensions. Countries cannot adequately address poverty without also improving people’s well-being in a comprehensive way, including through more equitable access to health, education, and basic infrastructure and services, including digital.

Policymakers must intensify efforts to grow their economies in a way that creates high quality jobs and employment, while protecting the most vulnerable.

Jobs and employment are the surest way to reduce poverty and inequality. Impact is further multiplied in communities and across generations by empowering women and girls, and young people.

Last Updated: Apr 02, 2024

Closing the gaps between policy aspiration and attainment

Too often, there is a wide gap between policies as articulated and their attainment in practice—between what citizens rightfully expect, and what they experience daily. Policy aspirations can be laudable, but there is likely to be considerable variation in the extent to which they can be realized, and in which groups benefit from them. For example, at the local level, those who have the least influence in a community might not be able to access basic services. It is critical to forge implementation strategies that can rapidly and flexibly respond to close the gaps.

Enhancing learning, improving data

From information gathered in household surveys to pixels captured by satellite images, data can inform policies and spur economic activity, serving as a powerful weapon in the fight against poverty. More data is available today than ever before, yet its value is largely untapped. Data is also a double-edged sword, requiring a social contract that builds trust by protecting people against misuse and harm, and works toward equal access and representation.

Investing in preparedness and prevention

The COVID-19 pandemic demonstrated that years of progress in reducing poverty can quickly disappear when a crisis strikes. Prevention measures often have low political payoff, with little credit given for disasters averted. Over time, populations with no lived experience of calamity can become complacent, presuming that such risks have been eliminated or can readily be addressed if they happen. COVID-19, together with climate change and enduring conflicts, reminds us of the importance of investing in preparedness and prevention measures comprehensively and proactively.

Expanding cooperation and coordination

Contributing to and maintaining public goods require extensive cooperation and coordination. This is crucial for promoting widespread learning and improving the data-driven foundations of policymaking. It is also important for forming a sense of shared solidarity during crises and ensuring that the difficult policy choices by officials are both trusted and trustworthy.

Overall, with more than 60 percent of the world’s extreme poor living in middle-income countries, we cannot focus solely on low-income countries if we want to end extreme poverty. We need to focus on the poorest people, regardless of where they live, and work with countries at all income levels to invest in their well-being and their future.

The goal to end extreme poverty works hand in hand with the World Bank Group’s goal to promote shared prosperity. Boosting shared prosperity broadly translates into improving the welfare of the least well-off in each country and includes a strong emphasis on tackling persistent inequalities that keep people in poverty from generation to generation.

Our work at the World Bank Group is based on strong country-led programs to improve living conditions—to drive growth, raise median incomes, create jobs, fully incorporate women and young people into economies, address environmental and climate challenges, and support stronger, more stable economies for everyone.

We continue to work closely with countries to help them find the best ways to improve the lives of their least advantaged citizens.

Last Updated: Oct 17, 2023

How the Pandemic Drove Increases in Poverty | Poverty & Shared Prosperity 2022

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Poverty: A Very Short Introduction

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Millions of people worldwide live in poverty. Why is that? What has been done about it in the past? And what is being done about it now? Poverty: A Very Short Introduction explores how the answers to these questions lie in the social, political, economic, educational, and technological processes that impact all of us throughout our lives—from the circumstances of birth and gender to access to clean water and whether it is wartime or peacetime. The degree of vulnerability is all that differentiates us. This VSI looks at the history of poverty, the practical and analytical efforts made to eradicate it, and the prospects for further poverty alleviation in the future.

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What is the cycle of poverty?

How Concern understands extreme poverty shapes our work to end it.

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In 2023, over 648 million people are living in extreme poverty. Since 2020, that number has increased by more than half a million people. Put another way, that means over 8% of the world's population lack basic assets or do not see a return on the assets they have.

For these 648 million people, these circumstances fuel a cycle of poverty that they're unlikely to break on their own. Many have inherited this cycle from their parents. Many will pass it on to their own children.

What does this mean for ending poverty? Here, we explain both what the cycle of poverty is, the two factors that fuel it, and how we at Concern address both in order to break the cycle.

The four types of poverty

Poverty is dynamic, and numbers don’t tell the whole story. Often these numbers only give us a snapshot of people’s lives at one particular moment in time. Many families move in and out of poverty, experiencing it only occasionally or living on less than $2.15 a day for long stretches of time. Broadly, we can look at four different types of poverty:

1. Occasionally Poor

Occasional Poverty and Cyclical Poverty both represent transient poverty. People experiencing either of these types of poverty can expect to spend periods of time living above the poverty line. People experiencing Occasional Poverty are more likely to spend long stretches of time above the poverty line. However, an unexpected event, such as a fire or tsunami, can leave these groups more vulnerable.

Nearly half a million Filipinos face Occasional Poverty each year due to natural disaster. 2013’s Typhoon Haiyan hit the country especially hard: 70% of the country’s fishing community lost income. 65% lost key assets like boats.

Jonel Meranar lost his home and boat. As part of Concern’s Typhoon Haiyan response, he trained in boat repair and was hired at a boatyard in Concepcion. He also received his own boat. Within a year, he rebuilt his fishing business.

2. Cyclically Poor

What if the shocks that trigger periods of poverty for the Occasionally Poor are less severe but more consistent? This is the situation faced by millions of families who rely on agriculture for both their food and their livelihoods around the world. During peak periods, such as harvests, there is usually guaranteed income — either from working on someone else’s farm or from selling what’s harvested at the local market. Even without droughts or floods, hunger seasons between harvests can happen every year, resulting in Cyclical Poverty.

Malawi is 80% agrarian, which means that hunger seasons and poor harvests can leave families financially and nutritionally insecure. These low seasons can last for months, and are even more complicated if a natural disaster strikes — as Cyclone Idai did in 2019.

Agnes Jack participated in Concern’s Graduation program. She received a start-up grant and learned Climate Smart Agriculture techniques, which have improved her harvests and income, offsetting cyclical poverty.

3. Usually Poor

Usual Poverty is an inverse of Occasional Poverty: People experiencing Occasional Poverty are generally above the poverty line and only fall below due to an unexpected setback. People experiencing Usual Poverty are generally below the poverty line with the exception of an unanticipated windfall. This could be in the form of a good rain after a dry spell, or someone finding a short-term job that pulls their family above the poverty line for a few months.

In Niger, men often migrate abroad for work, sending money back home to support their families. However, these gains can be quickly lost if events like conflict or a pandemic prevent international travel, perpetuating a Usually Poor cycle.

Balkissa Matsallabi’s husband was prevented from traveling to the Cote d’Invoire. Programs like Concern’s Community Management of Acute Malnutrition can help to reduce the impact of these situations while families find more sustainable forms of income.

4. Always Poor

Those who are Always Poor, like people experiencing Usual Poverty, tend to be those who experience poverty over long periods of time — in many cases, over generations. Families experiencing Usual Poverty may either benefit from a good harvest or a rare period of high-income labor. However, families classified as Always Poor live consistently below the poverty line, even if there’s some fluctuation in their income following harvests or work opportunities.

In 2010 and 2011, the worst drought in 60 years gripped Somalia, triggering a famine that killed over 260,000. More than decade of poor rains has pushed 43% of the country’s population below the poverty line.

Many families were still recovering from the 2010-11 drought when, in 2015, El Nino events once again led to failed rainy seasons. Somalia avoided a second famine in 2017, thanks to timely interventions and cash transfers. However, unprecedented drought in the Horn of Africa plus the economic impacts of the conflict in Ukraine leave many facing famine-like conditions in 2023.

What fuels the cycle of poverty?

As noted above, while the different types of poverty are centered on lack of assets or lack of a return on those assets, they also suggest different causes and maintainers of poverty. The obstacles that keep a community in Lebanon in extreme poverty may be totally different than those keeping a community in Malawi in extreme poverty. That said, we can boil all of this down into two key dimensions that, when combined, equal poverty: marginalization and risk.

As noted above, while the different types of poverty are centered on lack of assets or lack of a return on those assets, they also suggest different causes and maintainers of poverty . The obstacles that keep a community in Lebanon in extreme poverty may be totally different than those keeping a community in Malawi in extreme poverty. That said, we can boil all of this down into two key dimensions that, when combined, equal poverty: marginalization and risk.

By inequality, we mean the systemic barriers that lead to groups of people without representation in their communities. In order for a community or country to work its way out of poverty, all groups must be involved in the decision-making process — especially when it comes to having a say in the things that determine your place in society.

All types of systemic barriers (including physical ability, religion, race, and caste) serve as compound interest against a marginalization that already accrues most for those living in extreme poverty.

Gender discrimination is one of the biggest inequalities preventing the end of extreme poverty. This impact is felt in education: 650 million girls and women alive today were married before their 18th birthday. Usually, this means that they don’t finish school.

Lenason Dinyero is a farmer from Malawi’s Nsanje district and the chairperson of his local school father’s group. They fight early and forced marriages, as well as other practices that prevent girls from their right to an education.

Risk is the combination of a group’s level of vulnerability and the hazards they face. The more vulnerable a group is — and the more hazards they face — the harder it is to break the cycle of poverty. As noted above, risk often takes the form of emergencies: natural disasters, outbreaks of disease, and conflict all hit more vulnerable groups harder.

As newlyweds, Workitt Kassaw Ali and her husband Ketamaw faced a common challenge among young families in rural Ethiopia: not enough land. In the farming-focused Amhara region, this also means not enough income.

The couple participated in Concern’s ReGRADE program, a variation on our Graduation model, and gained sound financial footing. When Workitt experienced a medical emergency, they were able to cover the medical costs—something they could not have done in the past. “I think it saved my life,” she says.

How do we break the cycle of poverty?

While each situation is different, Concern’s approach to breaking the cycle of poverty focuses on addressing marginalization and risk. Looking at the waves that represent each type of poverty, our goal is to design interventions and programs that straighten each of the waves out, and move the overall line above the poverty line.

Addressing inequality

It stands to reason that, if there’s no one-size-fits-all approach to poverty, there’s also no one-size-fits-all approach to ending it. To address inequality, we consider the different starting points within communities, acknowledging the different skills and means that people already have and addressing the different barriers that people may face. Our approach to building equity is rooted in the knowledge that it’s not enough to focus on giving everyone the same resources to succeed. We have to focus on helping everyone achieve the same results.

For instance, one of the reasons that our work focuses on women and children is that gender inequality remains the most pervasive inequality (and one that intersects with other forms of inequality based on age, ethnicity, race, disability, caste, religion, sexual orientation, or geographical location).

Addressing inequality in action

As part of bringing the Graduation program to DRC, Concern requires that women play a full part in the decision-making process for their communities and works to find opportunities for them to take part in local leadership.

Ngoy Francine is the treasurer of her local water committee in Tanganyika province. The committee charges a small fee for use to cover ongoing maintenance. “If people can’t afford to pay, there is no charge,” she says. “The community supports the most vulnerable.”

In the countries where Concern works, we prioritize understanding the ways that gender disparity presents at the national and local level, and how those inequities affect participation in our programs. We then look for ways to bring women not only into our programs, but also into our staff and leadership in each country. With younger generations, we work to address gender imbalances and gender-based violence in the education system. With adults, we build support groups for both genders — ensuring that we’re not only fixing the symptoms, but addressing the causes to develop lasting equity.

The more we can reduce inequality, the more we can work with communities to consistently earn more and stay above the international poverty line.

Addressing risk

The other lever we can turn in order to break the cycle of poverty is offsetting risk. The more a community is better prepared against hazards, and the more resilient it is against vulnerability, the less prone they are to risk. This also requires a tailored approach given that each situation is unique.

All Concern programs incorporate some degree of disaster risk reduction as we work to offset the potential damage or harm caused by events ranging from climate disasters to conflict. Understanding how each individual hazard may affect a community, along with how they work together, is essential to having an effective response to risk. By focusing on specific vulnerabilities in specific situations, we can plan in advance to offset both catastrophic and everyday risks, creating a more stable and consistent quality of life for the people we serve.

The rainfall in Dar Sila, Chad, is unpredictable. This leads to seasonal food insecurity and malnutrition (among other risks). Concern has addressed this with Community Resilience to Acute Malnutrition. CRAM increases access to clean water and healthcare. Small business owner and mother Khamissa credits it with improving the community.

“We like what we are doing and we hope to continue it as we are witnessing some type of change.”

Who Concern Works with (and Why)

At Concern, our belief is that we must target our work so that it benefits primarily those living in extreme poverty. This means that we don’t always specifically target extremely poor people, but the extreme poor must be the ones who ultimately benefit from our work.

While we primarily work with the Always, Usually, and Cyclical Poor, we will also work with the Occasionally Poor when we believe that work will benefit those living in extreme poverty. This is especially true in times of natural and man-made disaster, such as the 2015 Nepal Earthquake, the ongoing Syrian conflict, or the current COVID-19 pandemic.

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Why even brilliant scholars misunderstand poverty in America

Housing expert Matthew Desmond argues poverty has stagnated in America, but misses something big.

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Matthew Desmond, the acclaimed Princeton sociologist and author of Evicted: Poverty and Profit in the American City , thinks that poverty has barely improved in the United States over the past 50 years — and he has a theory why. Laid out in a long essay for the New York Times Magazine that is adapted from his forthcoming book Poverty, by America , Desmond’s theory implicates “exploitation” in the broadest sense, from a decline in unions and worker power to a proliferation of bank fees and predatory landlord practices, all of which combine to keep the American underclass down.

Desmond, who won a Pulitzer Prize in 2017 for Evicted , is an original and nuanced thinker and I cannot do his 6,000-word argument justice in a short article. But I do know a little bit about how we measure poverty, and I want to back up briefly and interrogate Desmond’s fundamental premise: Has poverty in America persisted ? Is it true that in recent decades, as Desmond writes, “On the problem of poverty ... there has been no real improvement — just a long stasis”? Is it true, as he posits, that the large increase in government spending on antipoverty programs in recent decades (a 130 percent increase from 1980 to 2018, by his numbers) hasn’t made a dent in poverty?

There is widespread disagreement, including among experts, about how to define “poverty.” But contrary to Desmond’s claim that the stagnation “cannot be chalked up to how the poor are counted,” I would insist the answer to whether poverty has fallen or stagnated in America depends entirely on how the poor are counted.

One set of approaches gives a clear answer: Poverty has plummeted dramatically since the 1960s due to a huge increase in government spending on programs that help lower-income people . Another set of approaches suggests that poverty has, as Desmond insists, stagnated (and would have risen absent that government spending ).

Both these approaches have useful, distinct stories to tell us about poverty in America. One point they agree on, though, is that safety net programs like the Supplemental Nutrition Assistance Program (SNAP, sometimes known as food stamps), Medicaid, Social Security, and the earned income tax credit have played an important role in reducing poverty. That is, Desmond’s core premise, that expanding safety net programs haven’t slashed poverty, is wrong. They have. You just need to measure poverty carefully.

How to measure poverty

To come up with a poverty measure, one generally needs two things: a threshold at which a household becomes “poor” and a definition of income. For instance, in 2023, a family of four is defined by the government as officially in poverty in the US if they earn $30,000 or less. That’s the Official Poverty Measure’s threshold, and weirdly it’s the same for 48 states and DC, but higher in Alaska and Hawaii, supposedly due to their higher cost of living.

But what does it mean to earn $30,000 or less? Should we just count cash from a job? What about pensions and retirement accounts? What about Social Security, which is kind of like a pension? What about resources like SNAP that aren’t money but can be spent in some ways like money? What about health insurance?

These aren’t simple questions to answer, and scholars like the late, great Rebecca Blank devoted much of their careers to trying to answer them. But I think it’s fair to say there’s a broad consensus among researchers that income should be defined very broadly. It should at the very least include things like tax refunds and SNAP that are close to cash, and simpler to include than benefits like health insurance.

That’s why there’s also near-unanimous consensus among poverty researchers that the official poverty measure (OPM) in the United States is a disaster . I have written about poverty policy for over a decade and have never heard even one expert argue it is well-designed. I was frankly a little shocked to see Desmond cite it without qualification in his article.

Its biggest flaw is that it uses a restrictive and incoherent definition of income. Some government benefits, like Social Security, Supplemental Security Income (SSI), and Temporary Assistance to Needy Families (TANF), count. But others, like tax credits, SNAP, and health care, don’t count at all. So many programs designed to cut poverty, like SNAP or Medicaid or the earned income tax credit, therefore by definition cannot reduce the official poverty rate because they do not count as income.

The Census Bureau now publishes a supplemental poverty measure (SPM), which uses a much more comprehensive definition of income that includes the social programs the OPM excludes. It also varies thresholds regionally to account for different costs of living, rather than simply breaking off Alaska and Hawaii. That’s a clear improvement.

Some experts, notably economists Bruce D. Meyer and James X. Sullivan , argue that looking for a definition of income is itself a mistake: Poverty is most usefully defined in terms of consumption, the resources people actually buy and consume. They argue this makes conceiving of benefits like Medicaid easier. Getting Medicaid is hard to think of as “income,” but enrollees are definitely “consuming” things like doctor’s visits, prescription drugs, etc, that they would struggle to obtain without those benefits.

But overall, disputes among poverty experts about how to define income or consumption or “resources” tend, in my experience, to be muted compared to disputes over where to draw the thresholds: where to set the poverty line and how to adjust it over time.

The simplest way to approach this is to do what the official poverty measure does: Take a set amount of money and adjust it for inflation over time. Specifically, the poverty rate was devised in 1963 by Mollie Orshansky , an economist at the Social Security Administration, based on the US Department of Agriculture’s 1961 estimate, which itself was based on 1955 data, of how much money a family of four would need for food, if they were really pinching pennies. Orshansky tripled this estimate, since families of three more typically spent a third of their income on food at the time. (Americans now spend only about 10 percent of income on food, though the subset of families that Orshansky was looking at may spend more.)

That was the poverty line, and it has not changed since, with the exception of annual adjustments according to the Consumer Price Index.

That is, of course, an incredibly arbitrary threshold to draw, and it’s almost a cliché at this point to note how dumb it is. There’s an episode of The West Wing with a subplot about how old and dumb and outdated the poverty line is, and that episode is itself now over 21 years old.

But experts are split on what a better line to draw would be.

Absolute versus relative poverty

The official poverty measure is what’s sometimes known as an “absolute” poverty measure. Measures like this generally only adjust their thresholds for inflation. Many are based on less arbitrary numbers than “what people spent on food in 1955,” and many use different measurements of inflation, since a lot of economists think the Consumer Price Index overstates price increases compared to the Personal Consumption Expenditures (PCE) or chained CPI measures. But they fundamentally have a lot in common with the OPM’s approach: They set a dollar threshold for who is and isn’t poor and stick to it.

Absolute poverty measures are crystal clear about what has happened to poverty since the 1960s: It plummeted. The below chart shows three different absolute measures, all of which use expansive income definitions, unlike the official rate. All three have fallen dramatically.

(Many thanks to economist Kevin Corinth for passing along this series from his working paper with Richard Burkhauser, James Elwell, and Jeff Larrimore.)

The primary case for absolute measures like these is that they’re easy to interpret. Because the thresholds only change due to inflation, changes in the poverty rate only happen because people near the bottom get richer or poorer. If poverty falls, it’s because some low-income people gained more money or resources. If it increases, it’s because some low-income people lost out. Insofar as those kinds of material changes at the bottom are the main thing one cares about, absolute measures can be helpful. As a group of Columbia researchers argued in 2016 , absolute measures are “more useful for establishing how families’ resources have changed against a fixed benchmark.”

Applied to the US, the takeaway is that many fewer people are living on a very small amount of money than was the case in the 1960s.

But many poverty scholars prefer to use what are called “relative” measures. Such measures set the threshold as a percentage of the country in question’s median income (usually 50 or 60 percent). Most rich countries other than the US define poverty in this way. The European Union, for instance, uses what it calls an “at risk of poverty” rate , defined as the share of residents in a country living on less than 60 percent of the median disposable income. The United Kingdom uses a “households below average income” (HBAI) statistic, with the main threshold set to 60 percent of median income.

The case for relative measures is that poverty is socially defined, and “being in poverty” is usually thought of as people not being able to exist with the level of comfort that is normal in the society in which they live. A common definition, from the British scholar Peter Townsend , posits that poverty is “the absence or inadequacy of those diets, amenities, standards, services and activities which are common or customary in society.” Commonness or customariness are relative attributes, not absolute ones. Some, like sociologist David Brady, have also argued for relative measures on the grounds that they correlate better with self-reported mental and physical health and well-being .

Looked at in relative terms, poverty hasn’t fallen in the US in recent decades. It’s stagnated:

Advocates of absolute measures counter that relative poverty measures inequality rather than actual deprivation. Bruce Meyer, for instance, cites the experience of Ireland in the 2000s , which experienced “real growth in incomes throughout the distribution including the bottom. However, because the middle grew a bit faster than the bottom, a relative poverty measure shows an increase in poverty. Thus, we have a situation of nearly everyone being better off, but poverty nonetheless rising.” The reverse can happen in recessions, where if median incomes fall faster than incomes at the bottom, poverty can fall, even though everyone’s worse off.

Some measures, sometimes called “quasi-relative” or “semi-relative,” split the difference between the two approaches. They don’t merely vary with inflation, but they’re not a simple percentage of average incomes, either. The US supplemental poverty measure is a good example: It’s based on the 33rd percentile of spending on “food, clothing, shelter, and utilities” (FCSU). That is, researchers rank households by the amount they spend on those categories, find the point such that a third of households are below it and two-thirds are above, and use that as the basis for the SPM line. Because spending on these goods varies year to year, the thresholds change year to year, and not just based on inflation, but the change tends to be minimal compared to the changes in pure relative measures.

Government taxing and spending has become more important in fighting poverty

So … who’s right? The boring but correct answer is that these measures capture different things and each tells us something interesting. The fall in absolute poverty tells us that fewer people are living on very low cash incomes than were in, say, 1980. One estimate suggests that the fall in absolute poverty since 1967 means that 55 million fewer people lived in poverty in 2020 than would have if absolute poverty had stagnated.

The stagnation in relative incomes tells us that income growth at the bottom isn’t faster than growth at the middle and that there’s still a substantial share of America living on substantially below-average incomes — with 23.1 percent of Americans living in poverty under the definition used by the EU and UK (compared to 15.5 percent in the UK and 16.5 percent in the EU).

I do, however, want to highlight a point where absolute and relative poverty measures align: Government spending on social programs plays an important role in reducing poverty, and such spending does more to fight poverty now than it did in the recent past.

One highly cited absolute poverty measure is the “anchored” supplemental poverty measure , produced by Columbia researchers Christopher Wimer, Liana Fox, Irwin Garfinkel, Neeraj Kaushal, and Jane Waldfogel. This measure simply uses the Supplemental Poverty Measure thresholds from 2012 and extends them back to 1967.

This measure shows a substantial decline in poverty — but more importantly, it shows that government transfer programs are the only reason poverty has substantially declined. Before taxes and transfers, the poverty rate by this metric was 26.4 percent in 1967 and 22.5 percent in 2019. In the pandemic year of 2020, it shot up to 24.9 percent, barely different from 53 years previous. But after taxes and transfers, poverty fell from 25 percent in 1967 to 11.2 percent in 2019 — and to 8.4 percent amid the flood of stimulus money in 2020. The big story here is that government programs are doing much more than they did in the 1960s or 1980s to slash poverty.

One sees the same pattern in relative poverty. A 2019 paper by researchers Koen Caminada, Jinxian Wang, Kees Goudswaard, and Chen Wang for LIS, an international research center for income and poverty issues, estimates that in 1985, taxes and transfers in the US reduced relative poverty by 6.2 points. In 2013, the reduction was 9.7 points. Without government intervention, relative poverty would have increased from 1985 to 2013; instead, it merely stagnated.

Desmond, in his essay, spends some time marveling that “federal investments in means-tested programs increased by 130 percent from 1980 to 2018,” a fact he finds hard to square with the official poverty rate remaining flat. Surely that spending should have reduced poverty!

The answer here is simple: It did reduce poverty. The escalation of government investment made a difference, no matter what reputable poverty data you look at, whether absolute or relative. The only data series where it doesn’t make a difference is the official poverty measure, which literally does not consider most of this spending and acts like it does not exist.

The points Desmond makes about forces of exploitation in the markets poor people interact with — from payday lenders to bosses who can take advantage of their monopoly power and weakened unions to set low wages to the landlords he profiled in his breakout book — are well-taken. These could very well help explain why poverty would have stagnated or risen without government intervention, and addressing them might prove effective at fighting poverty. But there’s no need to couple this argument with claims that government spending has done nothing to reduce poverty. It has done a tremendous amount.

Much of the confusion in Desmond’s piece is not his fault, exactly. It’s the fault of the US government and its official poverty measure. Congress and the Department of Health and Human Services urgently need to abolish the OPM. It’s a bad number that tells a misleading story about poverty in America, and acting to replace it would do a lot of good.

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Why Poverty Persists in America

A Pulitzer Prize-winning sociologist offers a new explanation for an intractable problem.

A mother and son living in a Walmart parking lot in North Dakota in 2012. Credit... Eugene Richards

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By Matthew Desmond

• Published March 9, 2023 Updated April 3, 2023

In the past 50 years, scientists have mapped the entire human genome and eradicated smallpox. Here in the United States, infant-mortality rates and deaths from heart disease have fallen by roughly 70 percent, and the average American has gained almost a decade of life. Climate change was recognized as an existential threat. The internet was invented.

On the problem of poverty, though, there has been no real improvement — just a long stasis. As estimated by the federal government’s poverty line, 12.6 percent of the U.S. population was poor in 1970; two decades later, it was 13.5 percent; in 2010, it was 15.1 percent; and in 2019, it was 10.5 percent. To graph the share of Americans living in poverty over the past half-century amounts to drawing a line that resembles gently rolling hills. The line curves slightly up, then slightly down, then back up again over the years, staying steady through Democratic and Republican administrations, rising in recessions and falling in boom years.

What accounts for this lack of progress? It cannot be chalked up to how the poor are counted: Different measures spit out the same embarrassing result. When the government began reporting the Supplemental Poverty Measure in 2011, designed to overcome many of the flaws of the Official Poverty Measure, including not accounting for regional differences in costs of living and government benefits, the United States officially gained three million more poor people. Possible reductions in poverty from counting aid like food stamps and tax benefits were more than offset by recognizing how low-income people were burdened by rising housing and health care costs.

The American poor have access to cheap, mass-produced goods, as every American does. But that doesn’t mean they can access what matters most.

Any fair assessment of poverty must confront the breathtaking march of material progress. But the fact that standards of living have risen across the board doesn’t mean that poverty itself has fallen. Forty years ago, only the rich could afford cellphones. But cellphones have become more affordable over the past few decades, and now most Americans have one, including many poor people. This has led observers like Ron Haskins and Isabel Sawhill, senior fellows at the Brookings Institution, to assert that “access to certain consumer goods,” like TVs, microwave ovens and cellphones, shows that “the poor are not quite so poor after all.”

No, it doesn’t. You can’t eat a cellphone. A cellphone doesn’t grant you stable housing, affordable medical and dental care or adequate child care. In fact, as things like cellphones have become cheaper, the cost of the most necessary of life’s necessities, like health care and rent, has increased. From 2000 to 2022 in the average American city, the cost of fuel and utilities increased by 115 percent. The American poor, living as they do in the center of global capitalism, have access to cheap, mass-produced goods, as every American does. But that doesn’t mean they can access what matters most. As Michael Harrington put it 60 years ago: “It is much easier in the United States to be decently dressed than it is to be decently housed, fed or doctored.”

Why, then, when it comes to poverty reduction, have we had 50 years of nothing? When I first started looking into this depressing state of affairs, I assumed America’s efforts to reduce poverty had stalled because we stopped trying to solve the problem. I bought into the idea, popular among progressives, that the election of President Ronald Reagan (as well as that of Prime Minister Margaret Thatcher in the United Kingdom) marked the ascendancy of market fundamentalism, or “neoliberalism,” a time when governments cut aid to the poor, lowered taxes and slashed regulations. If American poverty persisted, I thought, it was because we had reduced our spending on the poor. But I was wrong.

Reagan expanded corporate power, deeply cut taxes on the rich and rolled back spending on some antipoverty initiatives, especially in housing. But he was unable to make large-scale, long-term cuts to many of the programs that make up the American welfare state. Throughout Reagan’s eight years as president, antipoverty spending grew, and it continued to grow after he left office. Spending on the nation’s 13 largest means-tested programs — aid reserved for Americans who fall below a certain income level — went from $1,015 a person the year Reagan was elected president to $3,419 a person one year into Donald Trump’s administration, a 237 percent increase.

Most of this increase was due to health care spending, and Medicaid in particular. But even if we exclude Medicaid from the calculation, we find that federal investments in means-tested programs increased by 130 percent from 1980 to 2018, from $630 to $1,448 per person.

“Neoliberalism” is now part of the left’s lexicon, but I looked in vain to find it in the plain print of federal budgets, at least as far as aid to the poor was concerned. There is no evidence that the United States has become stingier over time. The opposite is true.

This makes the country’s stalled progress on poverty even more baffling. Decade after decade, the poverty rate has remained flat even as federal relief has surged.

If we have more than doubled government spending on poverty and achieved so little, one reason is that the American welfare state is a leaky bucket. Take welfare, for example: When it was administered through the Aid to Families With Dependent Children program, almost all of its funds were used to provide single-parent families with cash assistance. But when President Bill Clinton reformed welfare in 1996, replacing the old model with Temporary Assistance for Needy Families (TANF), he transformed the program into a block grant that gives states considerable leeway in deciding how to distribute the money. As a result, states have come up with rather creative ways to spend TANF dollars. Arizona has used welfare money to pay for abstinence-only sex education. Pennsylvania diverted TANF funds to anti-abortion crisis-pregnancy centers. Maine used the money to support a Christian summer camp. Nationwide, for every dollar budgeted for TANF in 2020, poor families directly received just 22 cents.

We’ve approached the poverty question by pointing to poor people themselves, when we should have been focusing on exploitation.

A fair amount of government aid earmarked for the poor never reaches them. But this does not fully solve the puzzle of why poverty has been so stubbornly persistent, because many of the country’s largest social-welfare programs distribute funds directly to people. Roughly 85 percent of the Supplemental Nutrition Assistance Program budget is dedicated to funding food stamps themselves, and almost 93 percent of Medicaid dollars flow directly to beneficiaries.

There are, it would seem, deeper structural forces at play, ones that have to do with the way the American poor are routinely taken advantage of. The primary reason for our stalled progress on poverty reduction has to do with the fact that we have not confronted the unrelenting exploitation of the poor in the labor, housing and financial markets.

As a theory of poverty, “exploitation” elicits a muddled response, causing us to think of course and but, no in the same instant. The word carries a moral charge, but social scientists have a fairly coolheaded way to measure exploitation: When we are underpaid relative to the value of what we produce, we experience labor exploitation; when we are overcharged relative to the value of something we purchase, we experience consumer exploitation. For example, if a family paid $1,000 a month to rent an apartment with a market value of $20,000, that family would experience a higher level of renter exploitation than a family who paid the same amount for an apartment with a market valuation of $100,000. When we don’t own property or can’t access credit, we become dependent on people who do and can, which in turn invites exploitation, because a bad deal for you is a good deal for me.

Our vulnerability to exploitation grows as our liberty shrinks. Because labor laws often fail to protect undocumented workers in practice, more than a third are paid below minimum wage, and nearly 85 percent are not paid overtime. Many of us who are U.S. citizens, or who crossed borders through official checkpoints, would not work for these wages. We don’t have to. If they migrate here as adults, those undocumented workers choose the terms of their arrangement. But just because desperate people accept and even seek out exploitative conditions doesn’t make those conditions any less exploitative. Sometimes exploitation is simply the best bad option.

Consider how many employers now get one over on American workers. The United States offers some of the lowest wages in the industrialized world. A larger share of workers in the United States make “low pay” — earning less than two-thirds of median wages — than in any other country belonging to the Organization for Economic Cooperation and Development. According to the group, nearly 23 percent of American workers labor in low-paying jobs, compared with roughly 17 percent in Britain, 11 percent in Japan and 5 percent in Italy. Poverty wages have swollen the ranks of the American working poor, most of whom are 35 or older.

One popular theory for the loss of good jobs is deindustrialization, which caused the shuttering of factories and the hollowing out of communities that had sprung up around them. Such a passive word, “deindustrialization” — leaving the impression that it just happened somehow, as if the country got deindustrialization the way a forest gets infested by bark beetles. But economic forces framed as inexorable, like deindustrialization and the acceleration of global trade, are often helped along by policy decisions like the 1994 North American Free Trade Agreement, which made it easier for companies to move their factories to Mexico and contributed to the loss of hundreds of thousands of American jobs. The world has changed, but it has changed for other economies as well. Yet Belgium and Canada and many other countries haven’t experienced the kind of wage stagnation and surge in income inequality that the United States has.

Those countries managed to keep their unions. We didn’t. Throughout the 1950s and 1960s, nearly a third of all U.S. workers carried union cards. These were the days of the United Automobile Workers, led by Walter Reuther, once savagely beaten by Ford’s brass-knuckle boys, and of the mighty American Federation of Labor and Congress of Industrial Organizations that together represented around 15 million workers, more than the population of California at the time.

In their heyday, unions put up a fight. In 1970 alone, 2.4 million union members participated in work stoppages, wildcat strikes and tense standoffs with company heads. The labor movement fought for better pay and safer working conditions and supported antipoverty policies. Their efforts paid off for both unionized and nonunionized workers, as companies like Eastman Kodak were compelled to provide generous compensation and benefits to their workers to prevent them from organizing. By one estimate, the wages of nonunionized men without a college degree would be 8 percent higher today if union strength remained what it was in the late 1970s, a time when worker pay climbed, chief-executive compensation was reined in and the country experienced the most economically equitable period in modern history.

It is important to note that Old Labor was often a white man’s refuge. In the 1930s, many unions outwardly discriminated against Black workers or segregated them into Jim Crow local chapters. In the 1960s, unions like the Brotherhood of Railway and Steamship Clerks and the United Brotherhood of Carpenters and Joiners of America enforced segregation within their ranks. Unions harmed themselves through their self-defeating racism and were further weakened by a changing economy. But organized labor was also attacked by political adversaries. As unions flagged, business interests sensed an opportunity. Corporate lobbyists made deep inroads in both political parties, beginning a public-relations campaign that pressured policymakers to roll back worker protections.

A national litmus test arrived in 1981, when 13,000 unionized air traffic controllers left their posts after contract negotiations with the Federal Aviation Administration broke down. When the workers refused to return, Reagan fired all of them. The public’s response was muted, and corporate America learned that it could crush unions with minimal blowback. And so it went, in one industry after another.

Today almost all private-sector employees (94 percent) are without a union, though roughly half of nonunion workers say they would organize if given the chance. They rarely are. Employers have at their disposal an arsenal of tactics designed to prevent collective bargaining, from hiring union-busting firms to telling employees that they could lose their jobs if they vote yes. Those strategies are legal, but companies also make illegal moves to block unions, like disciplining workers for trying to organize or threatening to close facilities. In 2016 and 2017, the National Labor Relations Board charged 42 percent of employers with violating federal law during union campaigns. In nearly a third of cases, this involved illegally firing workers for organizing.

Corporate lobbyists told us that organized labor was a drag on the economy — that once the companies had cleared out all these fusty, lumbering unions, the economy would rev up, raising everyone’s fortunes. But that didn’t come to pass. The negative effects of unions have been wildly overstated, and there is now evidence that unions play a role in increasing company productivity, for example by reducing turnover. The U.S. Bureau of Labor Statistics measures productivity as how efficiently companies turn inputs (like materials and labor) into outputs (like goods and services). Historically, productivity, wages and profits rise and fall in lock step. But the American economy is less productive today than it was in the post-World War II period, when unions were at peak strength. The economies of other rich countries have slowed as well, including those with more highly unionized work forces, but it is clear that diluting labor power in America did not unleash economic growth or deliver prosperity to more people. “We were promised economic dynamism in exchange for inequality,” Eric Posner and Glen Weyl write in their book “Radical Markets.” “We got the inequality, but dynamism is actually declining.”

As workers lost power, their jobs got worse. For several decades after World War II, ordinary workers’ inflation-adjusted wages (known as “real wages”) increased by 2 percent each year. But since 1979, real wages have grown by only 0.3 percent a year. Astonishingly, workers with a high school diploma made 2.7 percent less in 2017 than they would have in 1979, adjusting for inflation. Workers without a diploma made nearly 10 percent less.

Lousy, underpaid work is not an indispensable, if regrettable, byproduct of capitalism, as some business defenders claim today. (This notion would have scandalized capitalism’s earliest defenders. John Stuart Mill, arch advocate of free people and free markets, once said that if widespread scarcity was a hallmark of capitalism, he would become a communist.) But capitalism is inherently about owners trying to give as little, and workers trying to get as much, as possible. With unions largely out of the picture, corporations have chipped away at the conventional midcentury work arrangement, which involved steady employment, opportunities for advancement and raises and decent pay with some benefits.

As the sociologist Gerald Davis has put it: Our grandparents had careers. Our parents had jobs. We complete tasks. Or at least that has been the story of the American working class and working poor.

Poor Americans aren’t just exploited in the labor market. They face consumer exploitation in the housing and financial markets as well.

There is a long history of slum exploitation in America. Money made slums because slums made money. Rent has more than doubled over the past two decades, rising much faster than renters’ incomes. Median rent rose from $483 in 2000 to $1,216 in 2021. Why have rents shot up so fast? Experts tend to offer the same rote answers to this question. There’s not enough housing supply, they say, and too much demand. Landlords must charge more just to earn a decent rate of return. Must they? How do we know?

We need more housing; no one can deny that. But rents have jumped even in cities with plenty of apartments to go around. At the end of 2021, almost 19 percent of rental units in Birmingham, Ala., sat vacant, as did 12 percent of those in Syracuse, N.Y. Yet rent in those areas increased by roughly 14 percent and 8 percent, respectively, over the previous two years. National data also show that rental revenues have far outpaced property owners’ expenses in recent years, especially for multifamily properties in poor neighborhoods. Rising rents are not simply a reflection of rising operating costs. There’s another dynamic at work, one that has to do with the fact that poor people — and particularly poor Black families — don’t have much choice when it comes to where they can live. Because of that, landlords can overcharge them, and they do.

A study I published with Nathan Wilmers found that after accounting for all costs, landlords operating in poor neighborhoods typically take in profits that are double those of landlords operating in affluent communities. If down-market landlords make more, it’s because their regular expenses (especially their mortgages and property-tax bills) are considerably lower than those in upscale neighborhoods. But in many cities with average or below-average housing costs — think Buffalo, not Boston — rents in the poorest neighborhoods are not drastically lower than rents in the middle-class sections of town. From 2015 to 2019, median monthly rent for a two-bedroom apartment in the Indianapolis metropolitan area was $991; it was $816 in neighborhoods with poverty rates above 40 percent, just around 17 percent less. Rents are lower in extremely poor neighborhoods, but not by as much as you would think.

Yet where else can poor families live? They are shut out of homeownership because banks are disinclined to issue small-dollar mortgages, and they are also shut out of public housing, which now has waiting lists that stretch on for years and even decades. Struggling families looking for a safe, affordable place to live in America usually have but one choice: to rent from private landlords and fork over at least half their income to rent and utilities. If millions of poor renters accept this state of affairs, it’s not because they can’t afford better alternatives; it’s because they often aren’t offered any.

You can read injunctions against usury in the Vedic texts of ancient India, in the sutras of Buddhism and in the Torah. Aristotle and Aquinas both rebuked it. Dante sent moneylenders to the seventh circle of hell. None of these efforts did much to stem the practice, but they do reveal that the unprincipled act of trapping the poor in a cycle of debt has existed at least as long as the written word. It might be the oldest form of exploitation after slavery. Many writers have depicted America’s poor as unseen, shadowed and forgotten people: as “other” or “invisible.” But markets have never failed to notice the poor, and this has been particularly true of the market for money itself.

The deregulation of the banking system in the 1980s heightened competition among banks. Many responded by raising fees and requiring customers to carry minimum balances. In 1977, over a third of banks offered accounts with no service charge. By the early 1990s, only 5 percent did. Big banks grew bigger as community banks shuttered, and in 2021, the largest banks in America charged customers almost $11 billion in overdraft fees. Previous research showed that just 9 percent of account holders paid 84 percent of these fees. Who were the unlucky 9 percent? Customers who carried an average balance of less than $350. The poor were made to pay for their poverty.

In 2021, the average fee for overdrawing your account was $33.58. Because banks often issue multiple charges a day, it’s not uncommon to overdraw your account by $20 and end up paying $200 for it. Banks could (and do) deny accounts to people who have a history of overextending their money, but those customers also provide a steady revenue stream for some of the most powerful financial institutions in the world.

Every year: almost $11 billion in overdraft fees, $1.6 billion in check-cashing fees and up to $8.2 billion in payday-loan fees.

According to the F.D.I.C., one in 19 U.S. households had no bank account in 2019, amounting to more than seven million families. Compared with white families, Black and Hispanic families were nearly five times as likely to lack a bank account. Where there is exclusion, there is exploitation. Unbanked Americans have created a market, and thousands of check-cashing outlets now serve that market. Check-cashing stores generally charge from 1 to 10 percent of the total, depending on the type of check. That means that a worker who is paid $10 an hour and takes a $1,000 check to a check-cashing outlet will pay $10 to $100 just to receive the money he has earned, effectively losing one to 10 hours of work. (For many, this is preferable to the less-predictable exploitation by traditional banks, with their automatic overdraft fees. It’s the devil you know.) In 2020, Americans spent $1.6 billion just to cash checks. If the poor had a costless way to access their own money, over a billion dollars would have remained in their pockets during the pandemic-induced recession.

Poverty can mean missed payments, which can ruin your credit. But just as troublesome as bad credit is having no credit score at all, which is the case for 26 million adults in the United States. Another 19 million possess a credit history too thin or outdated to be scored. Having no credit (or bad credit) can prevent you from securing an apartment, buying insurance and even landing a job, as employers are increasingly relying on credit checks during the hiring process. And when the inevitable happens — when you lose hours at work or when the car refuses to start — the payday-loan industry steps in.

For most of American history, regulators prohibited lending institutions from charging exorbitant interest on loans. Because of these limits, banks kept interest rates between 6 and 12 percent and didn’t do much business with the poor, who in a pinch took their valuables to the pawnbroker or the loan shark. But the deregulation of the banking sector in the 1980s ushered the money changers back into the temple by removing strict usury limits. Interest rates soon reached 300 percent, then 500 percent, then 700 percent. Suddenly, some people were very interested in starting businesses that lent to the poor. In recent years, 17 states have brought back strong usury limits, capping interest rates and effectively prohibiting payday lending. But the trade thrives in most places. The annual percentage rate for a two-week $300 loan can reach 460 percent in California, 516 percent in Wisconsin and 664 percent in Texas.

Roughly a third of all payday loans are now issued online, and almost half of borrowers who have taken out online loans have had lenders overdraw their bank accounts. The average borrower stays indebted for five months, paying $520 in fees to borrow $375. Keeping people indebted is, of course, the ideal outcome for the payday lender. It’s how they turn a $15 profit into a $150 one. Payday lenders do not charge high fees because lending to the poor is risky — even after multiple extensions, most borrowers pay up. Lenders extort because they can.

Every year: almost $11 billion in overdraft fees, $1.6 billion in check-cashing fees and up to $8.2 billion in payday-loan fees. That’s more than $55 million in fees collected predominantly from low-income Americans each day — not even counting the annual revenue collected by pawnshops and title loan services and rent-to-own schemes. When James Baldwin remarked in 1961 how “extremely expensive it is to be poor,” he couldn’t have imagined these receipts.

“Predatory inclusion” is what the historian Keeanga-Yamahtta Taylor calls it in her book “Race for Profit,” describing the longstanding American tradition of incorporating marginalized people into housing and financial schemes through bad deals when they are denied good ones. The exclusion of poor people from traditional banking and credit systems has forced them to find alternative ways to cash checks and secure loans, which has led to a normalization of their exploitation. This is all perfectly legal, after all, and subsidized by the nation’s richest commercial banks. The fringe banking sector would not exist without lines of credit extended by the conventional one. Wells Fargo and JPMorgan Chase bankroll payday lenders like Advance America and Cash America. Everybody gets a cut.

Poverty isn’t simply the condition of not having enough money. It’s the condition of not having enough choice and being taken advantage of because of that. When we ignore the role that exploitation plays in trapping people in poverty, we end up designing policy that is weak at best and ineffective at worst. For example, when legislation lifts incomes at the bottom without addressing the housing crisis, those gains are often realized instead by landlords, not wholly by the families the legislation was intended to help. A 2019 study conducted by the Federal Reserve Bank of Philadelphia found that when states raised minimum wages, families initially found it easier to pay rent. But landlords quickly responded to the wage bumps by increasing rents, which diluted the effect of the policy. This happened after the pandemic rescue packages, too: When wages began to rise in 2021 after worker shortages, rents rose as well, and soon people found themselves back where they started or worse.

Antipoverty programs work. Each year, millions of families are spared the indignities and hardships of severe deprivation because of these government investments. But our current antipoverty programs cannot abolish poverty by themselves. The Johnson administration started the War on Poverty and the Great Society in 1964. These initiatives constituted a bundle of domestic programs that included the Food Stamp Act, which made food aid permanent; the Economic Opportunity Act, which created Job Corps and Head Start; and the Social Security Amendments of 1965, which founded Medicare and Medicaid and expanded Social Security benefits. Nearly 200 pieces of legislation were signed into law in President Lyndon B. Johnson’s first five years in office, a breathtaking level of activity. And the result? Ten years after the first of these programs were rolled out in 1964, the share of Americans living in poverty was half what it was in 1960.

But the War on Poverty and the Great Society were started during a time when organized labor was strong, incomes were climbing, rents were modest and the fringe banking industry as we know it today didn’t exist. Today multiple forms of exploitation have turned antipoverty programs into something like dialysis, a treatment designed to make poverty less lethal, not to make it disappear.

This means we don’t just need deeper antipoverty investments. We need different ones, policies that refuse to partner with poverty, policies that threaten its very survival. We need to ensure that aid directed at poor people stays in their pockets, instead of being captured by companies whose low wages are subsidized by government benefits, or by landlords who raise the rents as their tenants’ wages rise, or by banks and payday-loan outlets who issue exorbitant fines and fees. Unless we confront the many forms of exploitation that poor families face, we risk increasing government spending only to experience another 50 years of sclerosis in the fight against poverty.

The best way to address labor exploitation is to empower workers. A renewed contract with American workers should make organizing easy. As things currently stand, unionizing a workplace is incredibly difficult. Under current labor law, workers who want to organize must do so one Amazon warehouse or one Starbucks location at a time. We have little chance of empowering the nation’s warehouse workers and baristas this way. This is why many new labor movements are trying to organize entire sectors. The Fight for $15 campaign, led by the Service Employees International Union, doesn’t focus on a single franchise (a specific McDonald’s store) or even a single company (McDonald’s) but brings together workers from several fast-food chains. It’s a new kind of labor power, and one that could be expanded: If enough workers in a specific economic sector — retail, hotel services, nursing — voted for the measure, the secretary of labor could establish a bargaining panel made up of representatives elected by the workers. The panel could negotiate with companies to secure the best terms for workers across the industry. This is a way to organize all Amazon warehouses and all Starbucks locations in a single go.

Sectoral bargaining, as it’s called, would affect tens of millions of Americans who have never benefited from a union of their own, just as it has improved the lives of workers in Europe and Latin America. The idea has been criticized by members of the business community, like the U.S. Chamber of Commerce, which has raised concerns about the inflexibility and even the constitutionality of sectoral bargaining, as well as by labor advocates, who fear that industrywide policies could nullify gains that existing unions have made or could be achieved only if workers make other sacrifices. Proponents of the idea counter that sectoral bargaining could even the playing field, not only between workers and bosses, but also between companies in the same sector that would no longer be locked into a race to the bottom, with an incentive to shortchange their work force to gain a competitive edge. Instead, the companies would be forced to compete over the quality of the goods and services they offer. Maybe we would finally reap the benefits of all that economic productivity we were promised.

We must also expand the housing options for low-income families. There isn’t a single right way to do this, but there is clearly a wrong way: the way we’re doing it now. One straightforward approach is to strengthen our commitment to the housing programs we already have. Public housing provides affordable homes to millions of Americans, but it’s drastically underfunded relative to the need. When the wealthy township of Cherry Hill, N.J., opened applications for 29 affordable apartments in 2021, 9,309 people applied. The sky-high demand should tell us something, though: that affordable housing is a life changer, and families are desperate for it.

We could also pave the way for more Americans to become homeowners, an initiative that could benefit poor, working-class and middle-class families alike — as well as scores of young people. Banks generally avoid issuing small-dollar mortgages, not because they’re riskier — these mortgages have the same delinquency rates as larger mortgages — but because they’re less profitable. Over the life of a mortgage, interest on $1 million brings in a lot more money than interest on $75,000. This is where the federal government could step in, providing extra financing to build on-ramps to first-time homeownership. In fact, it already does so in rural America through the 502 Direct Loan Program, which has moved more than two million families into their own homes. These loans, fully guaranteed and serviced by the Department of Agriculture, come with low interest rates and, for very poor families, cover the entire cost of the mortgage, nullifying the need for a down payment. Last year, the average 502 Direct Loan was for $222,300 but cost the government only $10,370 per loan, chump change for such a durable intervention. Expanding a program like this into urban communities would provide even more low- and moderate-income families with homes of their own.

We should also ensure fair access to capital. Banks should stop robbing the poor and near-poor of billions of dollars each year, immediately ending exorbitant overdraft fees. As the legal scholar Mehrsa Baradaran has pointed out, when someone overdraws an account, banks could simply freeze the transaction or could clear a check with insufficient funds, providing customers a kind of short-term loan with a low interest rate of, say, 1 percent a day.

States should rein in payday-lending institutions and insist that lenders make it clear to potential borrowers what a loan is ultimately likely to cost them. Just as fast-food restaurants must now publish calorie counts next to their burgers and shakes, payday-loan stores should publish the average overall cost of different loans. When Texas adopted disclosure rules, residents took out considerably fewer bad loans. If Texas can do this, why not California or Wisconsin? Yet to stop financial exploitation, we need to expand, not limit, low-income Americans’ access to credit. Some have suggested that the government get involved by having the U.S. Postal Service or the Federal Reserve issue small-dollar loans. Others have argued that we should revise government regulations to entice commercial banks to pitch in. Whatever our approach, solutions should offer low-income Americans more choice, a way to end their reliance on predatory lending institutions that can get away with robbery because they are the only option available.

In Tommy Orange’s novel, “There There,” a man trying to describe the problem of suicides on Native American reservations says: “Kids are jumping out the windows of burning buildings, falling to their deaths. And we think the problem is that they’re jumping.” The poverty debate has suffered from a similar kind of myopia. For the past half-century, we’ve approached the poverty question by pointing to poor people themselves — posing questions about their work ethic, say, or their welfare benefits — when we should have been focusing on the fire. The question that should serve as a looping incantation, the one we should ask every time we drive past a tent encampment, those tarped American slums smelling of asphalt and bodies, or every time we see someone asleep on the bus, slumped over in work clothes, is simply: Who benefits? Not: Why don’t you find a better job? Or: Why don’t you move? Or: Why don’t you stop taking out payday loans? But: Who is feeding off this?

Those who have amassed the most power and capital bear the most responsibility for America’s vast poverty: political elites who have utterly failed low-income Americans over the past half-century; corporate bosses who have spent and schemed to prioritize profits over families; lobbyists blocking the will of the American people with their self-serving interests; property owners who have exiled the poor from entire cities and fueled the affordable-housing crisis. Acknowledging this is both crucial and deliciously absolving; it directs our attention upward and distracts us from all the ways (many unintentional) that we — we the secure, the insured, the housed, the college-educated, the protected, the lucky — also contribute to the problem.

Corporations benefit from worker exploitation, sure, but so do consumers, who buy the cheap goods and services the working poor produce, and so do those of us directly or indirectly invested in the stock market. Landlords are not the only ones who benefit from housing exploitation; many homeowners do, too, their property values propped up by the collective effort to make housing scarce and expensive. The banking and payday-lending industries profit from the financial exploitation of the poor, but so do those of us with free checking accounts, as those accounts are subsidized by billions of dollars in overdraft fees.

Living our daily lives in ways that express solidarity with the poor could mean we pay more; anti-exploitative investing could dampen our stock portfolios. By acknowledging those costs, we acknowledge our complicity. Unwinding ourselves from our neighbors’ deprivation and refusing to live as enemies of the poor will require us to pay a price. It’s the price of our restored humanity and renewed country.

Matthew Desmond is a professor of sociology at Princeton University and a contributing writer for the magazine. His latest book, “Poverty, by America,” from which this article is adapted, is being published on March 21 by Crown.

An earlier version of this article referred incorrectly to the legal protections for undocumented workers. They are afforded rights under U.S. labor laws, though in practice those laws often fail to protect them.

An earlier version of this article implied an incorrect date for a statistic about overdraft fees. The research was conducted between 2005 and 2012, not in 2021.

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What Is Poverty?

Understanding poverty, aspects of poverty, discrimination and poverty, how poverty is measured, how to reduce poverty, the bottom line, what is poverty meaning, causes, and how to measure.

James Chen, CMT is an expert trader, investment adviser, and global market strategist.

Thomas J Catalano is a CFP and Registered Investment Adviser with the state of South Carolina, where he launched his own financial advisory firm in 2018. Thomas' experience gives him expertise in a variety of areas including investments, retirement, insurance, and financial planning.

Investopedia / Laura Porter

The term poverty refers to the state or condition in which people or communities lack the financial resources and other essentials for a minimum standard of living . As such, they cannot meet their basic human needs.

People and families who live in poverty may go without proper housing, clean water, healthy food, and medical attention. Each nation may have its own criteria for determining the poverty line and counting how many of its people live in poverty.

Poverty is a socioeconomic condition that is the result of multiple factors—not just income. These factors include race, sexual identity, sexual orientation, and access to education, among others.

Key Takeaways

• Poverty is a state or condition in which a person or community lacks the financial resources and other essentials for a minimum standard of living.
• Poverty-stricken people and families might go without proper housing, clean water, healthy food, and medical attention.
• Poverty is an individual concern as well as a broader social problem.
• Welfare programs are used by governments to help alleviate poverty.
• Poverty is the result of a confluence of factors, and not determined solely by income.

Poverty refers to the lack of adequate financial resources such that individuals, households, and entire communities don't have the means to subsist or to acquire the basic necessities for a flourishing life. This absence of means can result in struggles to obtain food, clothing, shelter, and medicine.

Poverty is both an individual concern as well as a broader social problem. At the individual or household level, not being able to make ends meet can lead to a range of social, physical, and mental issues. At the societal level, high poverty rates can be a damper on economic growth and be associated with problems like crime, unemployment , urban decay, poor education, and poor public health.

Governments often put social welfare programs in place to help lift individuals, families, and communities out of poverty. Some countries have stronger welfare states (social safety nets) than others. For instance, the United States tends to be much more individualistic and has relatively limited welfare programs. European countries, in comparison, have a much broader range of welfare programs and supports for those in need.

37.9 Million

According to the latest census, the number of people in the U.S. who lived in poverty in 2022, or 11.5% of the nation's population.

Poverty in the U.S.

Poverty status in the U.S. is assigned to people whose income falls under a certain threshold, which is set by the Department of Health and Human Services (HHS) . U.S. poverty rates, or the percentage of the U.S. population living in poverty, are calculated by the U.S.  Census Bureau .

When measuring poverty, the Census Bureau excludes the following people:

• Institutionalized people
• People living in military quarters
• People living in college dormitories
• Individuals under the age of 15

U.S. Poverty Thresholds

Each year, the Census Bureau updates its poverty threshold statistics. The table below shows the 2022 income thresholds for those in poverty. Each column represents the number of people living in a household under the age of 18.

• The poverty income threshold for a family of four with two children under the age of 18 was $29,678 per year.
• For two people over age 65 with no children under 18, the poverty threshold was $17,689 per year.

Poverty thresholds, as well as the number of children under the age of 18 in a home, are important because they help determine how government aid such as food assistance and medical care should be allocated. The measurement for those in poverty uses pretax income or income before taxes are taken out by the Internal Revenue Service (IRS) .

Global Poverty

Poverty has decreased in developed countries since the Industrial Revolution . Increased production reduced the cost of goods, making them more affordable, while advancements in agriculture increased crop yields , as well as food production.

The international poverty line is a monetary threshold under which an individual is considered to be living in poverty. This figure is calculated by taking the poverty threshold from each country—given the value of the goods needed to sustain one adult—and converting it into U.S. dollars. The current international poverty line is $2.15 per day.

Many people around the globe still struggle to make ends meet. According to the World Bank , an estimated 700.6 million people lived in extreme poverty in September 2023.

It's estimated that more than 40% of the world's population lives in poverty, with the U.S. scoring the worst among developed nations. According to a report published in the journal Frontiers in Public Health, communities of color are more susceptible to poverty because of "racist notions of racial inferiority and frequent denial of the structural forms of racism and classism" globally and within the U.S.

COVID-19 was responsible for plunging roughly 100 million more people into extreme poverty, according to the World Bank.

Poverty and Children

The impact of poverty on children is substantial. Children who grow up in poverty typically suffer from severe and frequent health problems. Infants born into poverty have an increased chance of low birth weight, which can lead to physical and mental disabilities.

In certain developing countries, poverty-stricken infants are nine times more likely to die in their first month compared to babies born in high-income countries. Those who live may have hearing and vision problems.

Children in poverty tend to miss more school due to sickness and endure more stress at home. Homelessness is particularly hard on children because they often have little to no access to healthcare and lack proper nutrition, which often results in frequent health issues.

What Causes Poverty?

Poverty is a difficult cycle to break and can pass from one generation to the next. It is often determined by socioeconomic status, ethnicity, gender, and geography.

Many people are born into poverty and have little hope of overcoming it. Others may fall into poverty because of negative economic conditions, natural disasters , or surging living costs, as well as drug addiction, depression, and mental health issues.

Other root causes of poverty include:

• Limited to no job growth
• Poor infrastructure
• Conflict and war
• High cost of living
• Social barriers
• Lack of government support

For those able to move out of poverty, progress is often temporary. Economic shocks, food insecurity , and climate change threaten their gains and may force them back into poverty.

Typical consequences of poverty include alcohol and substance abuse, little to no access to education, poor housing and living conditions, and increased levels of disease. Access to good schools, healthcare, electricity, clean drinking water, and other critical services remains elusive for many in poverty.

Heightened poverty is likely to cause increased tensions in society as inequality increases and, in turn, lead to rising crime rates.

As noted above, poverty isn't simply related to income levels. In fact, there are a number of factors that can push people to or below the poverty line. Discrimination is just one of them.

In some cases, governments may pass certain laws and regulations that prevent certain individuals or communities from accessing services, such as healthcare, education, or social services. These people may also be denied access to the labor market or housing, which can prevent them from reaching a suitable standard of living. In other cases, deep-rooted societal beliefs can isolate individuals, families, and entire communities.

Some of the most common groups of people who may experience this type of discrimination include:

• People living with HIV/AIDS
• Black, Indigenous, and People of Color
• Women, including single mothers
• Members of the LGBTQ+ community

According to the most recent statistics from the Williams Institute at the UCLA School of Law, poverty rates among members of the LGBTQ+ community have dropped since the COVID-19 pandemic. But rates are still higher than for those who don't identify as LGBTQ+. The most recent report showed that:

• 17% of LGBT people in the U.S. lived in poverty in 2021 compared to 12% in non-LGBT communities
• 21% of transgender people lived in poverty in the U.S. in 2021 compared to 20% of cisgender bisexual women
• 26% of LGBT families with children experienced poverty in 2021

The report also indicated that LGBTQ+ people of color—notably, "Black, Latinx/Hispanic, Native Hawaiian/Pacific Islander (NH/PI), American Indian/Alaskan Native (AI/AN), and Multiracial people"—are more likely to experience poverty compared to White or Asian Americans.

Poverty is commonly measured using income thresholds in many countries. Centralized bodies like the Census Bureau collect data and update the information on an annual basis based on inflation .

This information, which, in the U.S., is reported through the Consumer Price Index for All Urban Consumers (CPI-U) , generally includes income thresholds compiled from different sizes and types of families or households. Each family member in a household that falls under the threshold is considered to be in poverty, according to the Census Bureau.

Certain types of individuals are not included in the count, as their level of poverty cannot be determined. These groups include:

• People within certain group settings like prisons and nursing homes
• Individuals living in military barracks
• Those living in college dorms
• People under the age of 15 whose income cannot be determined

Keep in mind that using income thresholds is just one way that countries measure poverty.

The United Nations and the World Bank are major advocates of reducing world poverty. The World Bank has an ambitious target of reducing poverty to less than 3% of the global population by 2030. Some of the actionable plans to eliminate poverty include the following:

• Installing wells that provide access to clean drinking water
• Educating farmers on how to produce more food
• Constructing shelter for those in need
• Building schools to educate disadvantaged communities
• Providing enhanced access to better healthcare services by building medical clinics and hospitals

For poverty to be eradicated as the World Bank intends, communities, governments, and corporations need to collaborate to implement strategies that improve living conditions for the world’s poor.

Some of these strategies may include boosting socioeconomic conditions, fighting and eliminating systemic racism, establishing minimum wages that align with the cost of living, providing paid leave, and promoting pay equity .

What Countries Have the Highest Poverty Rates?

The countries with the highest poverty rates include South Sudan (82.30%), Equatorial Guinea (76.80%), Madagascar (70.70%), Central African Republic (68.80%), and Burundi (64.09%).

Which States Have the Highest Poverty Rates?

As of 2024, the states with the highest poverty rates were Louisiana (19.60%), Mississippi (19.40%), New Mexico (18.40%), West Virginia (16.80%), and Kentucky (16.50%). The District of Columbia's poverty rate is 16.50%.

Can Poverty Be Solved?

The answer to this question is complicated and nuanced. Social welfare programs and private philanthropy are some avenues through which to provide for those in poverty, along with access to essentials like clean water, good food, and adequate healthcare. However, more is needed. Programs that encourage and help impoverished individuals to obtain skills, jobs, and education are crucial for a longer-term cure.

Poverty is defined as the state or condition where people and communities cannot meet a minimum standard of living because they lack the proper resources . These include (but aren't limited to) financial resources, basic healthcare and education, clean drinking water, and infrastructure.

Living in the socioeconomic condition of poverty is a result of multiple factors such as race, sexual identity, sexual orientation, and access to education, among others.

Organizations such as the United Nations and the World Bank, which believe that poverty will continue to grow well beyond 2030, urge nations to fight it by implementing policies and regulations that can drastically improve the quality of living for all communities.

U.S. Census Bureau. " Poverty in the United States: 2022 ."

U.S. Department of Health & Human Services. " Poverty Guidelines ."

U.S. Census Bureau. " Differences Between Available Surveys & Programs for Poverty ."

U.S. Census Bureau. " How the Census Bureau Measures Poverty ."

U.S. Census Bureau. " Poverty Thresholds ."

U.S. Department of Health & Human Services. " Programs that Use the Poverty Guidelines as a Part of Eligibility Determination ."

The World Bank. " Fact Sheet: An Adjustment to Global Poverty Lines ."

The World Bank. " Global Poverty Monitoring Technical Note: September 2023 Update to the Poverty and Inequality Platform (PIP) ."

Frontiers. " Poverty, Racism, and the Public Health Crisis in America ."

The World Bank. " Poverty ."

National Library of Medicine. " Distribution and Determinants of Low Birth Weight in Developing Countries ."

The World Bank. " A Child Under 15 Dies Every Five Seconds Around the World – UN Report ."

UNICEF. " Levels and Trends in Child Mortality ."

UCLA School of Law Williams Institute. " LGBT Poverty in the United States ."

The World Bank. " Ending Extreme Poverty ."

World Population Review. " Poverty Rate by Country 2024 ."

World Population Review. " Poverty Rate by State 2024 ."

• A History of Income Inequality in the United States 1 of 30
• How Education and Training Affect the Economy 2 of 30
• Education vs. Experience: Which One Gets the Job? 3 of 30
• Unemployment Rate by State 4 of 30
• Can a Family Survive on the U.S. Minimum Wage? 5 of 30
• The Economics of Labor Mobility 6 of 30
• Forced Retirement: What it is, How it Works, FAQ 7 of 30
• Predatory Lending: How to Avoid, Examples and Protections 8 of 30
• Unbanked: What It Means, Statistics, Solutions 9 of 30
• Underbanked: What It Is and Who They Are 10 of 30
• Underinsurance: What it is, How it Works, FAQ 11 of 30
• The History of Unions in the United States 12 of 30
• What Is Middle Class Income? Thresholds, Is It Shrinking 13 of 30
• What Is Poverty? Meaning, Causes, and How To Measure 14 of 30
• Gini Index Explained and Gini Coefficients Around the World 15 of 30
• Measuring Inequality: Forget Gini, Go with the Palma Ratio Instead 16 of 30
• Lorenz Curve 17 of 30
• What Is the Human Development Index (HDI)? 18 of 30
• What Are the Criticisms of the Human Development Index (HDI)? 19 of 30
• Poverty Trap: Definition, Causes, and Proposed Solutions 20 of 30
• Conflict Theory Definition, Founder, and Examples 21 of 30
• America's Middle Class Is Losing Ground Financially 22 of 30
• Hollowing Out: What It Means, How It Works 23 of 30
• Social Justice Meaning and Main Principles Explained 24 of 30
• Economic Justice: Meaning, Examples of How to Achieve It 25 of 30
• Welfare Economics Explained: Theory, Assumptions, and Criticism 26 of 30
• Egalitarianism: Definition, Ideas, and Types 27 of 30
• The Nordic Model: Pros and Cons 28 of 30
• Equity-Efficiency Tradeoff: Definition, Causes, and Examples 29 of 30
• The Economic Message Behind Martin Luther King Jr.'s 'Dream' Speech 30 of 30

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Why some people receiving federal benefits don’t consider themselves poor − even though poverty rates have increased since the COVID-19  pandemic

Associate Professor of Cultural Anthropology, Wake Forest University

Disclosure statement

Sherri Lawson Clark has received funding from the Department of Housing and Urban Development (1999), The Center for Rural Pennsylvania (2005), The Center for Housing Policy (2008), the Strong@Home Partnership (NC) (2016-19). She is affiliated with Financial Pathways of the Piedmont (NC).

Wake Forest University provides funding as a member of The Conversation US.

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For the past 25 years, my research as a cultural anthropologist has taken me into the homes and neighborhoods of people living in poverty in cities and rural communities throughout the U.S.

To better understand their day-to-day lives, I also have spent time in grocery stores, churches, nightclubs, parks and health clinics.

I’ve asked countless questions, ranging from how many times they had moved to the types of social services they received.

But of all the answers, none has perplexed me more than the one I receive when I ask, “Are you poor?”

Not one has ever answered yes.

One mother was almost indignant. “My kids have food in their bellies, a roof over their heads, and clothes on their backs, so, no, I’m not poor,” she told me.

A decent standard of living

Who, then, decides who is poor in America?

The answer is the federal government, which has spent nearly the past 60 years trying to define and measure poverty and, ultimately, allocate money to provide families with a financial safety net.

Though many of the people I’ve interviewed over the years did not consider themselves poor, their incomes made them eligible to receive government subsidies such as cash assistance, Medicaid or public housing, thus placing them in categories the government considers poor.

Poverty in the U.S. is based on a person’s ability to purchase the things they need to achieve a certain standard of living. According to 2022 U.S. Census Bureau data – the most recent available – poverty for a family of four was an annual income of at or below US$29,960. For a single person, the poverty threshold was $14,891.

To put those numbers in perspective, the median U.S. household income in 2022 was $74,580 – more than two times the poverty threshold. About 38 million Americans – nearly 12% – live at or below the poverty line. And 16.1 of children under the age of 6 live in poverty.

Measuring US poverty

In the early 1960s, Mollie Orshansky , a government statistician, developed the official poverty measure that is still in use today.

In her earlier statistical work with the U.S. Department of Agriculture, Orshansky had calculated that people spend roughly a third of their incomes on food. Known as the bread basket method, the income level used to define poverty was calculated based on the cost of feeding a family.

Since the 1960s, the rate of people living in poverty has held steady between 11% and 15%.

But the measurement has a few shortcomings.

Take the regional differences in costs for the same products. In early 2024, for instance, a loaf of bread in Los Angeles, California, was $4.73, while in Louisville, Kentucky, the same loaf was $2.46.

Another flaw is the definition of what constitutes a family of four members.

The costs of feeding a family of four can be vastly different for a single mother with three school-age children than a married couple with two infant children.

The politics of poverty

Starting in 2011, the second metric that the Census Bureau officials use is the supplemental poverty rate .

Unlike the official poverty rate, the supplemental rate takes into account various types of government aid such as food, housing and energy assistance, as well as tax credits and stimulus payments. The measurement also calculates regional differences in the cost of living, medical care and housing.

Though distinct, these two measurements are often used by politicians to score points over their political rivals.

Such was the case in September 2023 when the Census Bureau found that the supplemental rate had spiked from 7.8% in 2021 to 12.4% in 2022, the largest increase since 2010.

The same measurement for the share of children living in poverty also hit 12.4%, more than doubling from 5.2% in 2021.

When the numbers were released by the Census Bureau in September 2023, former President Donald Trump immediately attacked President Joe Biden and compared the decline in poverty during his presidency with an increase in poverty during Biden’s term.

But Trump left out key facts.

The supplemental rates did decline from 14% in 2016, before Trump took office in 2017, to 9.2% in his last full year as president in 2020 . But the drop was due in large part to coronavirus relief payments that were made available to qualifying people and families during the COVID-19 pandemic.

The relief payments also helped lower the number of people in poverty under the Biden administration.

But those COVID-19 era payments expired in 2021. Without that same aid – and help from Biden’s American Rescue Plan – the share of people considered poor went up in 2022 under Biden. The sharp increase that year came on the heels of the previous year when the percentage of people in poverty was at its lowest level on record.

Temporary relief?

Starting after the Great Depression, U.S. presidents have made reducing poverty a priority in their administrations. Most notably, Franklin D. Roosevelt had the New Deal and Lyndon Johnson had the Great Society .

But thus far during the 2024 presidential campaign, the issue of reducing poverty has been overshadowed by Trump’s legal troubles and Biden’s inability to force an end to the Israel-Hamas war.

In the world’s richest nation, more than 23 million people – a little more than 1 in 10 adults – live in households where there was not enough food to eat, according to the Census Bureau’s March 2024 Household Pulse Survey . And many of these people have jobs.

Despite trillions of U.S. dollars spent on lifting people out of poverty – $1.9 trillion in 2022 alone – it appears the federal government’s ability to provide a safety net for all those in need has fallen short.

As economist Bob Pfeiffer once said: “Our welfare system is designed to make lives more comfortable, not to solve poverty.”

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