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Poverty

In 2010, 15.1 percent of the U.S. population, 46.2 million people, lived at or below the official poverty level. Poverty rates vary by social group membership. In 2010, non-Hispanic whites, at 10 percent, had the lowest poverty rate, followed by Asian Americans at 12.1 percent, Hispanics at 26.6 percent, and African Americans at 27.4 percent. A large number of these individuals did not participate in the labor force. Many were either too young to legally work (the childhood poverty rate was 22 percent) or older than the normal retirement age (9 percent). Still, a substantial number of poor, prime-age workers did not work in 2010. This entry first gives an overview of how poverty is measured in the United States, then outlines the recent trends in the poverty population, and lastly details some of the prevailing barriers to labor force participation for the poor.

Defining Poverty

Most research on poverty relies on the U.S. Census Bureau's official definition of poverty. To determine who is poor and who is not poor, the Census Bureau calculates an income threshold for varying family sizes and compositions. If family income does not exceed the threshold, members of the family are considered poor. In 2010, the poverty threshold for a family of four was $22,314.

Family income is calculated as gross cash income, and the threshold does not account for geographic differences in the cost of living. Because of these shortcomings and others, the Census Bureau developed the Supplemental Poverty Measure (SPM) in 2011. The SPM offers a different view of poverty in the United States. By the standards of the SPM, 16 percent of all people in the United States were poor in 2010, a 2.5 million person increase compared to the official poverty measure.

Recent Trends in Poverty

In 1964, President Lyndon B. Johnson declared a War on Poverty. In the following years, poverty rates steadily declined, dropping from 19 percent in 1964 to 11 percent in 1973, yet the trend was short-lived, and by the mid-1970s progress had stalled. From the mid-1970s to the present, poverty rates have remained stagnant, hovering between 11 and 16 percent.

The recent Great Recession has had notable effects on the poverty rate. In particular, since 2007, the poverty rate has steadily increased. The poverty rate in 2010 was the highest it has been since 1993 but was still 7 percentage points lower than the poverty rate in 1959, the first year for which poverty estimates are available. However, because of population growth, the 46.2 million people in poverty in 2010 was the greatest number of individuals in poverty in the 52 years for which poverty estimates are available.

Educational Attainment and Skill Level

The poor face numerous barriers to labor force participation. A key obstacle is the limited supply of well-paying jobs available to individuals with low levels of educational attainment. Educational attainment is not only a strong predictor of poverty status but also a strong predictor of employment status among the poor. Recent labor market changes have worsened the economic position of the low-skill poor. In particular, demand for workers with a high school education or less has decreased in recent years, and the wages for low-skill workers have stagnated.

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