“Poverty” is an umbrella term for a state of being extremely poor. Those living in poverty may experience life differently from one another, but at the core, poverty generally indicates a struggle to afford basic necessities like: food, shelter, or clothing. Though the level of income required to meet a defined term of poverty is different, depending on a variety of different factors, the difficulties associated with poverty are generally the same.
More important than simply understanding what poverty means, is understanding how it’s caused and what it means for the people experiencing it. Everything from education to family background and health can influence a person’s poverty status. Even just being in poverty can exacerbate the very factors which contribute to it, leading to something known as the “poverty cycle” or “poverty trap.”
There are a lot of myths associated with poverty that can serve to divide those with economic differences even more. Fortunately, understanding the causes and effects of poverty can lead to more solutions to help. Poverty isn’t an issue affecting a singular person or their family; poverty is an issue affecting the community and the nation collectively.
Though poverty exists in many forms around the world, the United States has an official definition and income threshold for measuring it.
The Federal Poverty Level (FPL) is a measure of income in a household issued each year by the Department of Health and Human Services (HHS). It’s also known as the “poverty line.” The FPL is used to determine a household’s eligibility for programs and benefits such as health insurance, Medicaid, Food Stamps, Children’s Health Insurance Program (CHIP), etc.
Since the FPL is based on income, and federal incomes taxes serve as the legal record of income, household size is based on federal tax returns. Only those claimed on the same tax return belong to the same household. In other words, roommates do not count as members of a household just because they live together; the same goes for members of the same family. For example, a parent must claim their child or children as dependents for them to count as part of the household. An adult child living at home while working, earning money, and filing taxes independently is not part of that parent’s household. Likewise, if a parent is supporting their child through college, even if the student doesn’t live at home, he or she could still be claimed as a dependent and therefore part of the parent’s household.
Each year, the HHS will use information provided by the US Census Bureau called the”federal poverty threshold” and set a yearly FPL per family size. For 2018, the FPL for a single person household was set at $12,140, except for Hawaii and Alaska, which both have a higher FPL due to an inflated cost of living. The FPL is designed to change each year in accordance with inflation. Some programs use an after tax income, some use a before tax income to decide eligibility.
According to the 2017 census, the official poverty rate in 2017 was 12.3 percent, down 0.4 percentage points from 12.7 percent in 2016. Though the overall rate is down for the U.S., not all states are showing this trend. Some have gone up, others have gone down. Understanding poverty in the U.S. is about understanding how the poverty line is defined. It’s about understanding the various different types of poverty and what they mean.
These terms for types of poverty and poverty measurements may help those above the poverty line understand why poverty happens, what it means for someone’s experience, and how to help. People can experience many different types of poverty and poverty measurements at the same time.
Not all types of poverty are created equal. In fact, there are different types of poverty to understand in order to gain a full grasp of the poverty line and the different situations involved with each one.
Absolute poverty: a condition that does not change with economic growth and is defined by a household’s income being so low that it is insufficient to afford the basic necessities of life such as food and shelter. Someone in absolute poverty would have to focus on day-to-day survival.
Relative poverty: changes with economic growth. It is defined as a household receiving 50% less income than the average median income and is based on society’s average standard of living.
Situational poverty: caused by a sudden crisis like a natural disaster, severe health problems, divorce, etc. These situations lead to financial problems or a removal of some of the basic necessities of life.
Generational poverty: a situation in which at least two generations have been born into poverty. This makes it incredibly difficult for any current or future generations to have the tools to get out of poverty themselves.
Urban poverty: deals with many stressors rural poverty does not, such as: overcrowding, violence, and noise. Urban poverty is a situation that only occurs in metropolitan areas with populations of 50,000 people or more.
Rural poverty: poverty in areas with 50,000 people or less. Rural poverty situations often have less access to programs to help impoverished families, such as educational opportunities or disability services.
Chronic poverty: experienced over many years or even a lifetime which can turn into generational poverty.
Extreme poverty: Those who live in extreme poverty subsist on an average of $1.25 or less per day. Someone in extreme poverty lacks the opportunity to make choices that will sustainably improve their life.
Concentrated poverty: a situation in which a high percentage of residents in an area are in poverty. If, according to the Census, the poverty rate is 40% or more in a given geographical area, they are in a concentrated poverty area.
Because poverty is so relative, it can be difficult to quantify. As a result, there are different ways to measure poverty in order to see the larger picture of these economic differences for families experiencing financial hardship.
Poverty Line: another term for the Federal Poverty Level (FPL) discussed earlier. This line is created in order set a line for state programs to determine eligibility for certain programs and benefits to help with poverty.
Income-to-poverty ratio: The income-to-poverty ratio is a family’s income divided by the poverty threshold which creates a number called the income deficit or income surplus depending on the outcome.
Income deficit: Whereas an income-to-poverty ratio that shows an income surplus for families above poverty, an income-to-poverty ratio will show an income deficit for families in poverty.
Working Poor: The working poor refers to a group of people who spend 27 weeks of a given year either working or trying to find work but still fall below the poverty line.
Food Insecurity: an aspect of poverty in which a person has a lack of consistent access to enough food for an active, healthy lifestyle. In 2017, 1 in 8 Americans were food insecure. This includes more than 12 million children.
Poverty is linked to many issues that are personal and often controversial. For that reason, there are plenty of myths surrounding poverty. Some of them minimize the issue of poverty, and some vilify those who experience poverty. These myths cloud an issue affecting every single community. For that reason, it’s important for people to be educated on the issues causing poverty and the issues affected by poverty in order to find actionable ways to help.
Myth: Even if you’re poor in the U.S., you’re doing pretty well.
The picture of poverty in the U.S. isn’t accurate for many people. The U.S. is not a third world country, but poverty is very real, and being extremely poor can leave people without a home, without food, and without shelter. In 2017, about one third of the homeless population were in unsheltered locations. That is not the definition of “doing pretty well.”
Myth: Few U.S. children are homeless.
In 2017, 20.7% of all homeless Americans were under the age of 18. “Few” is a relative term that is hard to define, but a fifth of the entire homeless population probably exceeds any reasonable definition. Though this number has gone down in recent years, it’s still a problem affecting many children in families, and some not in families as they battle homelessness as a result of extreme poverty.
Myth: The U.S. doesn’t have much poverty.
This myth can be easy to believe for the majority of Americans living above the poverty line, but the truth is that 1 in 6 Americans live below the poverty line and the United States has one of the highest poverty rates in the developing world.
Myth: You can live well on government benefits.
According to the Center on Budget and Policy Priorities, Temporary Assistance for Needy Families (TANF) benefits in 2017 were not enough to meet 60% of the federal poverty line in every single state. The myth that you can live well on government benefits is just one aspect of the villainized view of poverty in America. Government benefits are lacking, not pushing more people to remain on these benefits and live off the government.
Myth: Poor people don’t want to work.
This myth stems from the idea that you can choose not to work and live off government benefits, which we’ve already discovered is a myth within itself. In truth, 59% of adults living in poverty who can work do so, but still live in poverty. Those who do not work cite reasonings like being retired, pursuing higher education, being ill or disabled, or taking care of family members such as children. With childcare costs skyrocketing, many find that the income gained by working doesn’t offset the cost of childcare.
Myth: Drug users make up a majority of those in poverty seeking assistance.
People in poverty experience much harsher criminal punishments, imprisonment, and suspicion for drug offenses despite not using drugs at a higher rate than the rest of society. Drug testing programs for those on welfare represent a tremendous waste of government and taxpayer money each time they are used. One program in Florida cost the state $172 million, with only 2% of those tested failing. In Tennessee, after 6 months and 16,000 drug tests, just 37 people had tested positive. In Arizona, after 108,000 drug tests, only 2 applicants were disqualified because of positive drug tests.
The causes of poverty can be a combination of many factors, both personal and systemic. From financial strain to health problems, the causes can be a mixture of many things from situational poverty to generational poverty.
The normalization of debt across all income levels has hit those living in poverty the hardest. Getting out of debt with little to no extra income becomes almost impossible. For those who are in poverty or close to it, financial strain tends to have a snowballing effect. Not paying debt leads to tarnished credit and fees, paying off the debt requires you to pay the fees when you can’t even pay the debt, and thus the snowball continues to grow. With the desperation of poverty and things like payday loans that can feel like the only option, it can become impossible to get out from under debt.
According to the the Census Bureau, 11.2 million individuals were pushed below the poverty line in 2015, thanks to out-of-pocket medical spending, including insurance premiums, prescription drug costs, and doctor’s office co-pays. Health can either be a financial problem causing poverty, something keeping families in poverty, or both. Getting out of medical debt can be difficult, and the result of unpaid medical debt can mean substantial damage to your credit and liquid finances making it even harder to afford housing, bills, a car, etc.
In the U.S., a full-time minimum-wage employee can’t afford a one-bedroom apartment in almost any state. In 2014, even two such jobs won’t rent a two-bedroom apartment in 29 states and the District of Columbia. In California, three won’t and in Hawaii, four won’t. Rising housing costs mean that less and less of a paycheck can go towards anything else, which leads to people having to make impossible decisions about their spending.
Young people living in poverty find it extremely difficult to get out of poverty. One of the many causes of that generational poverty cycle is a lack of effective educational systems in impoverished areas. Without a proper education, poverty seems inevitable — especially for those already born into poverty. Education is one of the tools people need in order to be successful in the aspects of life that can keep a person out of poverty, or allow them to leave an impoverished situation.
For those in poverty, the view of a career isn’t self-fulfillment and delayed gratification. A career has to put food on the table now. Those living in poverty can struggle to think long term about their career because of other, more immediate needs. This makes it difficult to progress forward in any career. Job loss can create situational poverty that is difficult to come back from despite the opportunities for employment help. Sometimes the debt accrued in that time is enough to create more financial stress.
The effects of poverty are the most difficult aspects of how poverty affects each person, family, and community. Poverty can hurt a person’s education, their safety, their health, and their overall standing within their community. The heartbreaking reality of poverty is the effect it has on each person living with it.
Both a cause and an effect, education is relevant to prevention and recovery from poverty. Impoverished children routinely have poorer education performance at all levels compared to other children. And, as we’ve discovered, lower levels of education make it difficult for children to get out of poverty.
One extreme effect of poverty is the absence of shelter — one of the basic necessities for a person’s needs and standard of living. On a single night in 2017, 553,742 people were
experiencing homelessness in the United States. Some were families with children, some unaccompanied youth, some veterans. Though there are some housing programs to help, there are still plenty of people without shelter in the United States. Lack of a permanent address can lead to poorer health, impact a person’s ability to get a job, or even receive benefits and public assistance.
Yet another cause and effect of poverty can be a person’s physical health and mental health. Financial problems linked to health can be a major factor in poverty, and once you’re in poverty, your health can suffer even more. Not only that, but your mental health takes a big hit as an impoverished individual as well. If a mental illness is contributing to a person’s poverty, it’s also going to be exacerbated by situations of extreme stress caused by poverty as well.
Those living in poverty are more likely to be involved in violent crime for a variety of different reasons. Living in poverty or being homeless are both situations of high-risk environmental factors. Poverty is high-stress and it leaves people feeling desperate. Some people in poverty are involved in the villainized aspects of poverty such as crime or drugs that can lead to violent situations. When resources are needed, it’s not uncommon to find theft to be a solution to those resources. When substance abuse is a problem, the stress of poverty or homelessness can lead to feelings of helplessness not conducive to sobriety creating a snowballing effect. Not only that, but the resources available for those living with addiction or mental health concerns are not always attainable from a low-income standpoint.
Another aspect of violence in poverty is that untreated mental health issues can make individuals more likely to experience violence. Exposure to violence can exacerbate mental health issues as well as perpetuate other types of vulnerability that in turn make it harder to escape poverty.
In the same realm of violence and crime in poverty is the discrimination faced by impoverished individuals. One aspect of that discrimination is the inconsistency in punishment involved in the more poor communities. Those in poverty tend to face harsher punishments for a crime than those in better socioeconomic standing. Things like access to legal resources and representation or even the ability to get time off from work to appear in court or pay fines can disproportionately punish lower income individuals. Discrimination can be even more explicit, as there is a definite correlation between race and poverty and the discrimination that accompanies people who are in the ethnic and racial minority. This can lead to racial discrimination in a variety of different ways that can affect a person’s financial health.
Discrimination against those in poverty can also be reflexive; that is, that those in poverty must somehow deserve it. There’s a notion that those in poverty are there because of their own choices, not because of social, environmental, or even systemic factors beyond their influence or control. Many discriminate against those in poverty because they believe they are lazy, that they are manipulating the system by living on government benefits, or that they are feeding an addiction. Poverty is villainized, and with that comes a discrimination for those in a lower socioeconomic standing.
In order to help reduce poverty in the U.S. and help those in need, there have been a variety of different programs built to aid those in need. Each of these programs is designed for a specific group of people in need from children, to the elderly, to people with low income, etc.
Supplemental Nutrition Assistance Program (SNAP): SNAP offers nutrition assistance to millions of eligible, low-income individuals and families and provides economic benefits to communities.
Children’s Health Insurance Program (CHIP): CHIP provides low-cost health coverage to children in families that earn too much money to qualify for Medicaid.
The Earned Income Tax Credit (EITC): The Earned Income Tax Credit, EITC or EIC, is a benefit for working people with low to moderate income.
Women, Infants and Children (WIC): The Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) provides Federal grants to States for supplemental foods, health care referrals, and nutrition education for low-income pregnant, breastfeeding, and non-breastfeeding postpartum women, and to infants and children up to age five who are found to be at nutritional risk.
Temporary Assistance for Needy Families (TANF): The Temporary Assistance for Needy Families (TANF) program is designed to help needy families achieve self-sufficiency.
Supplemental Security Income (SSI): Supplemental Security Income (SSI) is designed to help aged, blind, and disabled people, who have little or no income; and it provides cash to meet basic needs for food, clothing, and shelter.
Social Security: Social Security is the foundation of economic security for American retirees, disabled persons, and families of retired, disabled, or deceased workers.
Unemployment Insurance: The U.S. Department of Labor’s Unemployment Insurance (UI) programs provide unemployment benefits to eligible workers who become unemployed through no fault of their own.
Medicare/Medicaid: Medicare is a federal program that provides health coverage if you are 65 and older or have a severe disability, no matter your income. Medicaid is a state and federal program that provides health coverage if you have a very low income.
Though poverty is a massive issue, it is possible for even an individual to make a meaningful difference. There are many ways to get involved with the issue of poverty whether that be on a smaller scale within your community, on a larger scale across the U.S., or even on a worldwide scale across the globe. How you choose to help should not only coincide within your own financial resources and abilities, but also in your passions and interests. It’s so important to remember that any help you can offer is a huge step forward despite poverty being such an overwhelming problem in many of our communities.
Volunteerism is an extremely important aspect of community involvement. Fortunately, there are many different volunteering opportunities in order to find the one that is the best fit for you. Call a local nonprofit that helps with the poor in your community and ask how you can help them. Volunteer with Big Brothers Big Sisters, serve food at the Ronald McDonald House in your area, or volunteer to help with a community garden. Do some research on the local volunteer opportunities in your area.
Donation is another aspect of help that can be extremely beneficial to those in poverty in your area. Donating can include financial help, a sponsorship, or even a donation of goods. You might consider donating blankets to your local homeless shelter, canned food to your local food bank, or a donation of other goods to a thrift store. If you have a skill, you can consider donating something associated with that skill as well. For instance, crocheting hats for kids, providing tech support for a local nonprofit, or helping to build affordable housing.
Being educated and using that education to vote for initiatives like the ones listed above is one example of a large scale way to help those in poverty. Get educated on the issues and how each one can help those with low income. Pay attention to minimum wage increases, labor protections, and proposed cuts to the programs benefiting the poor.
Being vocal, encouraging your employer to take part in community projects, and raising your children in an environment that prioritizes giving back to those who are less fortunate can really help to lead by example. It can help raise awareness for these issues, and help to reverse the myths and discrimination against those who are impoverished in our communities. Be present in your community, discuss opportunities with your employer, and include your children in your efforts. This example can mean a world of difference to spread the need for help and compassion.
Understanding poverty is the first step in understanding how to help. There are so many different types of poverty and measurements of poverty needed to paint an accurate picture of the variety of different scenarios that can cause poverty, or be caused by poverty, or both. A misunderstanding of these terms can lead to the common poverty myths we see constantly. Fortunately, there are initiates, strategies, and programs that have been created in order to reduce or mitigate poverty in America. By voting with impoverished individuals in mind, donating what you can, volunteering your time, and leading by example, you can be a solution to the poverty issue and help those in your community.
This site is part of an affiliate sales network and receives compensation for sending traffic to partner sites, such as CreditCards.com. This compensation may impact how and where links appear on this site. This site does not include all financial companies or all available financial offers.
Need Help Fixing Your Credit?
Subscribe & Learn More About The
Top 5 Credit Repair Companies Available!