Measuring Poverty

Poverty is defined by comparing household income with the minimum income required for basic needs. People whose income is below the threshold are considered poor. These metrics are used as a measurement of economic well-being. They are also used to determine eligibility and benefit levels for some government programs and as the basis for distributing resources across states.

The official poverty measure, produced each year by the Census Bureau, has significant limitations. It is based on spending patterns for food from the 1960s that are updated annually for inflation. Yet, it fails to consider costs for medical care, housing, and child-care expenses. These expenses have become a larger share of family budgets and have risen at a rate outpacing inflation. The measure also fails to account for tax credits and in-kind benefits provided through current government programs such as housing subsidies and food assistance. Furthermore, the current poverty measure for those age 65 and older is lower than the threshold for the rest of the population. This inaccurately assumes that spending on basic needs decreases with age.

Due to these limitations, the Census Bureau also produces the Supplemental Poverty Measure (SPM), which uses a broader concept of material well-being. It takes into consideration the costs of food, clothing, shelter, and utilities. The SPM also accounts for out-of-pocket medical spending. Since medical costs are a sizable burden for older adults with low incomes, the poverty rate for Americans age 65 and older is usually higher using the SPM.

In 2023, the official poverty rate was 11.1 percent, a slight decrease from 11.5 percent in 2022. The SPM rate was 12.9 percent, a slight increase from 12.4 percent in 2022. The official poverty rate among those ages 18 to 64 fell from 10.6 to 10 percent between 2022 and 2023. Similarly, the poverty rate among those ages 65 and older decreased from 10.2 percent to 9.7 percent. Overall, in 2023 there were 36.8 million people living in poverty, including 5.8 million older adults.