In order to qualify for certain government programs, an individual must prove their income is insufficient to meet their basic needs. Although government agencies use different standards to determine eligibility, many use poverty thresholds in their calculations.
The federal government defines an individual or family as low income if their income is twice (or 200 per cent of) the federal poverty threshold. The poverty threshold for a family of four in 2009 was £14,332. Therefore, a family of four with an income at or below £28,665 would qualify as low-income.
According to the U.S. Department of Health and Human Services, poverty thresholds are used as eligibility criterion by a number of federal programs such as Head Start, the food stamp program and WIC. Many charities, companies and local governments also use federal poverty guidelines for programs geared to low-income individuals. There are, however, a number of government programs that do not use poverty thresholds (e.g., Temporary Assistance for Needy Families, Supplemental Security Income and Section 8 housing).
The original poverty thresholds were developed in 1963 by economist Mollie Orshansky. The poverty threshold formula was cost of food multiplied by three, operating on the assumption that a family spent one-third of their income on food, which was true in the 1950s.
According the Center for Economic Opportunity, the federal thresholds do not "reflect current spending patterns, differences in cost of living across the nation, or how changes in the American standard of living ought to affect our sense of who should be considered poor." In 2006, New York City implemented a poverty measure developed by the National Academy of Sciences and found 23 per cent of residents were impoverished, 5 per cent more than indicated by federal data.
- US Department of Health and Human Services: The 2009 HHS Poverty Guidelines
- US Department of Health and Human Services: Frequently Asked Questions
- Social Security Administration: The Development and History of the Poverty Thresholds
- New York City Center for Economic Opportunity: The CEO Poverty Measure