Even if there is no starving in America, there is poverty, which leads to malnutrition and illnesses that are not often associated with First World nations. As a result, life expectancy is drastically reduced. All too frequently, poverty is handed down from generation to generation, contradicting the notion of America as a land of limitless opportunity.

This concretizes the problem of poverty and leads to the collection of data in order to raise awareness of the issue and provide clarity on how to overcome it.

In the United States, poverty is assessed by comparing a person's or family's income to a predetermined poverty level or the least amount of money required to meet basic necessities. People whose income falls below their poverty line are termed impoverished. In order to more or less stabilize their financial situation, some people use faxless payday loans, which can help cover some necessary expenses quickly.

The federal agency in charge of gauging poverty is the United States Census Bureau. It does this via the use of two key measures: the official poverty measure and the Supplemental Poverty Measure.

Official Poverty Indicator

The Census Bureau calculates poverty status by comparing pre-tax cash income to a threshold established at three times the cost of a basic food diet in 1963 and adjusted for family size. The OPM estimates the proportion of the population that is poor by calculating these three elements: income, threshold, and family.

The official poverty estimates are based on the Current Population Survey Annual Social and Economic Supplement (CPS ASEC), which is performed in February, March, and April each year and includes a sample of around 100,000 addresses.

The OPM national poverty rate was 11.4% in 2022, the most recent year for which statistics are available. Nearly 40 million individuals lived in poverty.

Supplemental Poverty Index

In 2010, the Census Bureau launched the Supplemental Poverty Measure (SPM) to give an alternate picture of poverty in the United States that better represents living in the twenty-first century, including current social and economic realities and government policies.

The SPM, as the name implies, supplements but does not replace the official poverty measure, which remains the nation's source for official poverty data and means-tested program eligibility.

The Census Bureau emphasizes variations in measuring units, poverty threshold, threshold modifications (e.g., by family size), updating thresholds, and what counts as resources, among other things, in a side-by-side comparison of the official poverty measure and the SPM.

How Is Poverty Data Gathered?

The Current Population Survey and the American Community Survey are the two principal sources of poverty data in the United States.

The Yearly Social and Economic Supplement to the Current Population Survey is used to determine the official annual estimates of national poverty levels (CPS ASEC). The CPS ASEC, a cooperative initiative of the Census Bureau and the Bureau of Labor Statistics, gathers data on income and benefits received during the preceding calendar year and is best utilized for national-level estimates.

Due to the limited sample size, the Census Bureau suggests using multiyear averages to compare CPS ASEC data across states (approximately 100,000 households per year).

Every year, the Census Bureau's American Community Survey (ACS) questions around 3.5 million addresses on a variety of issues, including their income the previous year. ACS 1-year estimates, unlike CPS ASEC, may be utilized at the state level.

Although margins of error may be too great for smaller geographic regions or demographic subgroups, five-year ACS estimates may be used to evaluate poverty for geographic areas as small as block groups.

Through its Small Area Income and Poverty Estimates (SAIPE) program, the Census Bureau also generates single-year poverty estimates for counties and school districts. SAIPE data are model-based estimates that integrate ACS data with administrative records and are the most recent source of substate poverty indicators.

Measures of Poverty by State

Many groups have created their own poverty measurements in order to examine economic inequities and track trends in their own states. The California Poverty Measure (CPM) was established by the Public Policy Institute of California and the Stanford University Center on Poverty and Inequality to better understand poverty in California and how patterns differ among counties (see map).

The CPM, like the SPM, accounts for changes in local living expenses and Earned Income Tax Credit advantages. However, the CPM takes into consideration non-cash benefits specific to California, such as CalFresh and CalWORKs. 15 Measures of this kind have been established in New York and Oregon.

Poverty Reasons in the USA

While there are several causes of poverty in America, we've selected three of the most significant here.

Poor Economic Situation

America's weak economy has resulted in a rise in unemployment. Some businesses have been compelled to slash staff or even shut their doors. Others have decided to move their manufacturing abroad in order to save money by recruiting lower-wage foreign labor.

All of these corporate actions were a direct consequence of the economy, and if these firms had not cut employees or relocated them abroad, they would have most certainly closed their doors as well. Unemployment impacts not just people but also their families.

Scarcity of Affordable Housing

The rising disparity between wage wages and housing costs in the United States has left millions of families and individuals unable to make ends meet. Families throughout the nation would need to earn a 'housing wage' of $15.37 per hour to afford a two-bedroom apartment at the average fair market rent, according to the National Low Income Housing Coalition.

Medical Bills

Many Americans, wealthy and poor alike, suffer from serious ailments that need prompt medical treatment. Many of these ailments strike without warning and need lengthy hospital stays, costly medicines, therapies, and sometimes surgery. Yes, medical insurance may help cover some of these fees, but not all of them, and there is generally an upfront payment.

This leaves the patients, whether able or not, to pay the balance of the debt. These costs may quickly push a low-income or middle-class individual into poverty. Financial ruin might be only one mishap or sickness away for people who do not have health insurance.

Conclusion

Poverty in the US is a very serious problem and should be addressed. You should always be familiar with the statistics and the main causes of poverty and plan your financial well-being accordingly, avoiding risk as much as possible. It is also important to master the basics of financial literacy in order to be able to properly plan a budget, save money and invest it.