Have you ever worked with data about the federal poverty level and wondered what that level was? There are two different U.S. poverty measures, both often referred to as “poverty level”—one based on poverty thresholds and one based on poverty guidelines. Each has its own interpretation and application, but one can easily be confused for the other.
Poverty Thresholds Define and Quantify Poverty in the United States
What is it? The poverty thresholds, updated annually by the U.S. Census Bureau, are used to define and quantify poverty in the United States. A poverty threshold is a specified dollar amount considered to be the minimum level of resources necessary to meet the basic needs of a family unit1. Thresholds vary by the number and age of adults and the number of children under age 18 in the family unit, but they are the same for all states.2 If a family’s annual before-tax income is less than the threshold for their family size and type, all individuals in the family are considered poor.
How is it used? The thresholds are widely used to gauge the rise or fall in poverty over time and to compare poverty statistics across geographic areas and demographic groups.
What’s an example? A researcher might use poverty thresholds to assess how the poverty rate varies by age and sex. Poverty estimates from surveys like the Current Population Survey and American Community Survey are based on poverty thresholds.
Poverty Guidelines Determine Financial Eligibility for Some Programs and Benefits
What is it? The poverty guidelines, issued by the Department of Health and Human Services (DHHS), are simplified versions of the poverty thresholds. Like the thresholds, the poverty guidelines vary by family/household size. For instance, the 2018 poverty guideline for a family of four is $25,100. Unlike the poverty thresholds, the guidelines do not vary by the age of adults or number of children in a family/household. They do vary by geography—Alaska and Hawaii have separate guidelines.
How is it used? Poverty guidelines are used to determine financial eligibility for many programs and benefits.3 Typically, a percentage multiple of the guideline is used as the basis to determine program eligibility.
What’s an example? A researcher might use the poverty guidelines to estimate the number of adults in a community who are eligible for Medicaid. (Adults in Medicaid-expansion states qualify for Medicaid if their household income falls below 138 percent of their poverty guideline).
Confused Over Which Measurement Is Which?
Some surveys report data by “poverty level,” but may not clearly specify whether thresholds or guidelines were used. In these cases, the best approach is to read the technical documentation for details.
In addition, researchers often use income-to-poverty ratios to analyze the number of people in families at specified income levels. Similar to the program eligibility levels described above, these ratios may be expressed as percentage multiples (for example, the estimated number of people below 125 percent of poverty). But the ratios should not be confused with eligibility levels derived from the poverty guidelines. Again, the best approach, when in doubt, is to read the methodology or technical documentation for the report or survey you’re working with.
The following table shows how the two poverty measures can vary for a four-person household. Under the poverty guidelines, only one income value is provided for a household of a given size (column 3), regardless of the household’s composition (column 1). The poverty thresholds provide different values for given household sizes depending on the household’s composition (column 2). In households with more than one family, thresholds are determined independently for each family unit.
Poverty Thresholds Versus Poverty Guidelines for Households With Four People, 2017
Household Size and Composition
|Two parents, two children||
|One adult, three children||
|Four unrelated adults||
$12,752 (for each adult under age 65)
$11,756 (for each adult age 65 or older)
|One adult (mother), two children (family 1), one unrelated adult under age 65 (family 2)||
$19,749 (family 1)
$12,752 (family 2)
|Two parents, one child, one relative (for example, aunt)||
Notes : All children are related and are less than 18 years old. Guideline values are for the 48 contiguous states and the District of Columbia. (The guidelines would be $31,380 for Alaska and $28,870 for Hawaii.) The poverty guidelines issued in January 2018 are designated as the 2018 poverty guidelines, but only reflect inflation through calendar year 2017. As such, they are approximately equal to the Census Bureau poverty thresholds for calendar year 2017.
Which Poverty Measure to Use Depends on Your Application
Here’s a quick reference for which measure to use based on the type of information you’re seeking. While not a comprehensive list, it may help orient you to the measure that will provide you with your desired data.
Use poverty thresholds if you want to:
- Determine how many people (number or percent) are in poverty.
- Identify how many families (number or percent) have income below 200 percent of poverty.
Use poverty guidelines if you want to:
- Obtain an estimate of the number of families/households in a community eligible to participate in a particular program, such as the Supplemental Nutrition Assistance Program (formerly known as food stamps).
Check Survey Documentation!
When working with survey data to estimate poverty, make sure you check the documentation to determine which measure is being used. While many federal surveys such as the American Community Survey and the Current Population Survey report data based on poverty thresholds, others—such as the National Health and Nutrition Examination Survey—use the Department of Health and Human Services guidelines.
1. It is important to note that the official poverty measure has received criticism from policy analysts, academics, and others because its methodology has not changed since it was developed in the 1960s. Alternative poverty measures have been proposed and created. The Supplemental Poverty Measure is an example of an alternative measure that reflects modern spending patterns, geographic differences in housing costs, and noncash government benefits and tax liabilities.
2. It is assumed that all individuals who are living together and are related by birth, marriage, or adoption, share income.
3. No standard definition of income is used to determine eligibility. For example, one program may use before-tax income while another may use after-tax income. Not all means-tested programs use the poverty guidelines in determining eligibility. For examples of programs that do and do not use the poverty guidelines, reference the frequently asked questions page from ASPE.
Explore These Resources for More Information
Poverty (U.S. Census Bureau).
Frequently Asked Questions Related to the Poverty Guidelines and Poverty(Office of the Assistant Secretary for Planning and Evaluation, U.S. Department of Health and Human Services).
What Are Poverty Thresholds and Poverty Guidelines?(Institute for Research on Poverty).