Poverty in the United States in 2017

                                  

In 2017, approximately 39.7 million people, or 12.3% of the population, had incomes below the official definition of poverty in the United States. Poverty statistics provide a measure of economic hardship. The official definition of poverty for the United States uses dollar amounts called poverty thresholds that vary by family size and the members’ ages. Families with incomes below their respective thresholds are considered to be in poverty. The poverty rate (the percentage that was in poverty) fell from 12.7% in 2016. This was the third consecutive year since the most recent recession that the poverty rate has fallen.

The poverty rate for female-householder families (25.7%) was higher in 2017 than that for male- householder families (12.4%) or married-couple families (4.9%). None of these poverty rates registered a discernible change from 2016.

Among the working-age population (18 to 64 year olds), the poverty rate fell to 11.2% in 2017, down from 11.6% in 2016. Neither children (people under 18) nor the aged (people ages 65 and older) had discernible changes to their poverty rates over the period.Of the three age groups—children, the working-age population, and the aged—the latter used to have the highest poverty rates but now has the lowest: 28.5% of the aged population was poor in 1966, but 9.2% was poor in 2017. People under 18, in contrast, have the highest poverty rate of the three age groups: 17.5% were poor in 2017.

Poverty is not equally prevalent in all parts of the country. The poverty rate for Mississippi (19.8%) appeared to be the highest but was in a statistical tie with New Mexico (19.7%), Louisiana (19.7%), and West Virginia (19.1%). New Hampshire’s poverty rate (7.7%) was the lowest in 2017.

Criticisms of the official poverty measure have inspired poverty measurement research and eventually led to the development of the Supplemental Poverty Measure (SPM). The SPM uses different definitions of needs and resources than the official measure.The SPM includes the effects of taxes and in-kind benefits (such as housing, energy, and food assistance) on poverty, while the official measure does not. Because some types of tax credits are used to assist the poor (as are other forms of assistance), the SPM may be of interest to policymakers.The poverty rate under the SPM (13.9%) was about 1.6 percentage points higher in 2017 than the official poverty rate (12.3%).

Under the SPM, the profile of the poverty population is slightly different than under the official measure. Compared with the official measure, poverty rates under the SPM were lower for children (15.6% compared with 17.5%) and higher for working-age adults (13.2% compared with 11.2%) and the population age 65 and older (14.1% compared with 9.2%).

While the SPM reflects more current measurement methods, the official measure provides a comparison of the poor population over a longer time period, including some years before many current anti-poverty assistance programs had been developed. In developing poverty-related legislation and conducting oversight on programs that aid the low-income population, policymakers may be interested in these historical trends.

Source: Congressional Research Service, using data from U.S. Census Bureau, Current Population Survey, 2018 Annual Social and Economic Supplement, https://www2.census.gov/programs-surveys/demo/tables/p60/263/ pov_table4.xls, downloaded October 10, 2018.

The History 

Poverty rates fell through the 1960s. Since then, they have generally risen and fallen according to the economic cycle, though during the most recent two expansions poverty rates did not fall measurably until four to six years into the expansion. Historically notable lows occurred in 1973 (11.1%) and 2000 (11.3%). Poverty rate peaks occurred in 1983 (15.2%), 1993 (15.1%), and 2010 (15.1%).

Poverty rates tend to rise during and after recessions, as opposed to leading economic indicators such as new housing construction, whose changes often precede changes in the performance of the overall economy. The poverty rate’s lag is explainable in part by the way it is measured: it uses income from the entire calendar year.

Notably, the poverty rate in 2017 registered a third consecutive annual decrease since the most recent recession, though it remained higher than the rate in 2000, the most recent low point.The poverty rates in 1973 and 2000, the lowest point estimates on record, are not statistically different from each other and are considered to be “tied” for lowest poverty rate.

These poverty rates may not necessarily be distinguishable from the poverty rates in their adjacent years.

Source: Congressional Research Service, based on poverty data from U.S. Census Bureau, Current Population Survey, 1960-2018 Annual Social and Economic Supplements, Historical Poverty Table 2, http://www2.census.gov/ programs-surveys/cps/tables/time-series/historical-poverty-people/hstpov2.xls, downloaded October 9, 2018.

(HHS). Though the HHS poverty guidelines use the official thresholds as part of their computation, the guidelines are collectively a distinct poverty definition and are often used as a criterion in federal assistance programs. The guidelines are often referred to as the “federal poverty level” or FPL.

Poverty Rate by Demographics

The drop in the U.S. poverty rate (from 12.7% in 2016 to 12.3% in 2017) affected some demographic groups more than others, notably the population ages 18 to 64, people of Hispanic origin, and part-time workers; it was not a broad-based decline. Details for selected demographic groups are described below.

Because poverty status is determined at the family level by comparing resources against a measure of need, vulnerability to poverty may differ among families of different compositions. In this section, poverty data by family structure are presented using the official poverty measure, along with a definition of “family” that the Census Bureau has used in the CPS ASEC for nearly four decades.10 In the “Supplemental Poverty Measure” section of this report, a different definition will be used.

Families with a female householder and no husband present (female-householder families) have historically had higher poverty rates than both married-couple families and families with a male householder and no wife present (male-householder families). This remained true in 2017: female-householder families experienced a poverty rate of 25.7%, compared with 4.9% for married-couple families and 12.4% for male-householder families. None of these groups registered a significant decrease from 2016, although families as a whole (i.e., all family types together) did—from 9.8% in 2016 to 9.3% in 2017, a drop of 0.4 percentage points after rounding).Among individuals not living in families, the poverty rate was 20.7% in 2017, not distinguishable from the previous year.

Source: All data in this section were obtained from Semega, Fontenot, and Kollar, Income and Poverty in the United States: 2017 unless otherwise noted. Data for families are available in Table 4 of that report; data for the other demographic groups are available in Table 3.

  

Age

When examining poverty by age, three main groups are noteworthy for distinct reasons: under 18, 18 to 64, and 65 and older. People under age 18 are typically dependent on other family members for income, particularly young children below their state’s legal working age. People ages 18 to 64 are generally thought of as the working-age population and typically have wages and salaries as their greatest source of income. People 65 years and older, referred to as the aged population, are often eligible for retirement, and those who do retire typically experience a change in their primary source of income.

For the working-age population, the poverty rate, but not the number of persons in poverty (22.2 million), registered a decline. In 2017, 11.2% of the working-age population was in poverty (down from 11.6% in 2016). Neither children nor the aged registered any significant changes in their poverty rate or number in poverty from 2016. Among children, 12.8 million (or 17.5%) were poor; among the aged population, 4.7 million (or 9.2%) were poor.

From a historical standpoint, the poverty rate for those 65 and over used to be the highest of the three groups. In 1966, the aged had a poverty rate of 28.5%, compared with 17.6% for those under 18 and 10.5% for working-age adults. By 1974, the poverty rate for people 65 and over had fallen to 14.6%, compared with 15.4% for people under 18 and 8.3% for working-age adults. Since then, people under 18 have had the highest poverty rate of the three age groups.

The poverty rate may fall without any corresponding change in the number of poor if the population grows overall (with the growth concentrated among the nonpoor population). Additionally, small changes in the number of poor may not be possible to distinguish from sampling variability.

 

 Source: Congressional Research Service, using data from U.S. Census Bureau, Current Population Survey, 1960- 2018 Annual Social and Economic Supplements, Historical Poverty Table 3, http://www2.census.gov/programs- surveys/cps/tables/time-series/historical-poverty-people/hstpov3.xls, downloaded October 10, 2018. Recession dates obtained from National Bureau of Economic Research, http://www.nber.org/cycles/cyclesmain.html.

Poverty rates vary by race and Hispanic origin, 

In surveys, Hispanic origin is asked separately from race; accordingly, people identifying as Hispanic may be of any race. The poverty rate fell for Hispanics (from 19.4% in 2016 to 18.3% in 2017). Among blacks (21.2%), Asians(10.0%), and non-Hispanic whites (8.7%), the poverty rate did not change discernibly from 2016.

Since 2002, federal surveys ask respondents to identify with one or more races; previously they could choose only one. The groups in this section represent those who identified with one race alone. Another approach is to include those who selected each race group either alone or in combination with one or more other races. Those data are also available on the Census Bureau’s website at https://www.census.gov/library/publications/2018/demo/p60-263.html where they are published in Appendix B in Income and Poverty in the United States: 2017 and in accompanying historical data table.

Work Status

While having a job reduced the likelihood of being in poverty, it did not guarantee that a person or his or her family would avoid poverty. Among the 18 to 64 year old population living in poverty, 36.6% had jobs in 2017. However, workers were less likely to be in poverty in 2017 (5.3%) than they were the year before (5.8%). Among full-time year-round workers, 2.2% were poor in 2017, not measurably changed from the previous year. Among part-time or part-year workers, 13.4% were poor, down from 14.7% in 2016. No change was detected among those who did not work at least one week in 2017 (30.7% were poor).

Because poverty is a family-based measure, the change in one member’s work status can affect the poverty status of his or her entire family. Among all 18 to 64 year olds who did not have jobs in 2017, 58.1% lived in families in which someone else did have a job. Among poor 18 to 64 year olds without jobs, 19.1% lived in families where someone else worked.

Poverty in the United States in 2017

 With the poverty rate in Mississippi (19.8%) among the highest in the nation, and not statistically different from the rates in New Mexico (19.7%), Louisiana (19.7%), and West Virginia (19.1%). The poverty rate in New Hampshire (7.7%) was lowest. When comparing poverty rates geographically, it is important to remember that the official poverty thresholds are not adjusted for geographic variations in the cost of living—the same thresholds are used nationwide. As such, an area with a lower cost of living accompanied by lower wages will appear to have a higher poverty rate than an area with a higher cost of living and higher wages, even if individuals’ purchasing power were exactly the same in both areas.

The District of Columbia and 20 states experienced poverty rate declines from 2016 to 2017: six in the Midwest (Illinois, Indiana, Iowa, Michigan, Missouri, and Ohio), three in the Northeast (Maine, New York, and Pennsylvania); eight in the South (District of Columbia, Florida, Georgia, Kentucky, Mississippi, North Carolina, Tennessee, and Texas); and four in the West (Arizona, California, Colorado, and Idaho).Delaware and West Virginia were the only states to experience increases, and 28 states, as well as Puerto Rico, experienced no significant change.

Source: Congressional Research Service, based on poverty data from Alemayehu Bishaw and Craig Benson, Poverty: 2016 and 2017, U.S. Census Bureau, American Community Survey Brief ACSBR/17-02, Table 1, issued September 2018, using 2017 American Community Survey (ACS) and 2017 Puerto Rico Community Survey, https://www.census.gov/library/publications/2018/acs/acsbr17-02.html.

What can be done to fix poverty?

There needs to be improvements were to have the poverty thresholds reflect the costs of food, clothing, shelter, utilities, and a little bit extra to allow for miscellaneous needs; to broaden the definition of “family;” to include geographic adjustments as part of the measure’s computation; to include the out-of-pocket costs of medical expenses in the measure’s computation; and to subtract work- related expenses from income.