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Image: Rural Economy & Population

Poverty Overview

A Note About the Data Sources

Up to 2012, the poverty statistics presented below come from the U.S. Census Bureau’s Annual Social and Economic Supplement (ASEC) to the Current Population Survey (CPS), which is the source of official Federal poverty statistics. Individuals or families are defined as poor if their annual pre-tax cash income falls below a dollar amount, or poverty threshold, that is determined by the Census Bureau each year. For example, an individual with an annual cash income below $12,071 was poor in 2014. That same person would have been considered poor in 2013 with an annual cash income below $11,888. (See How Is Poverty Defined? for more about definitions and income thresholds used in determining poverty rates.) The 2014 CPS ASEC (2013 poverty income year) utilized a split sample to test a redesigned set of income questions (See Redesigned Questions). As a result, the source of the 2013 poverty income data is restricted to the portion of the sample that received the income questions consistent with the 2013 CPS ASEC. That included approximately two-thirds of the full CPS sample. For purposes of producing subnational and subpopulation poverty estimates, the Census Bureau now recommends using the American Community Survey (ACS), which has a much larger sample size. 

Following Census Bureau recommendations, we now use the ACS in place of the CPS for subnational poverty statistics. The ACS, however, does not allow for the same historical perspective as the CPS. Therefore, we begin the ACS series in 2009 and continue to provide annual CPS poverty rates up to 2012. The two surveys should not be directly compared, though, given that the ACS survey design differs from the CPS in a variety of ways and may produce somewhat different poverty estimates. (See Differences between CPS ASEC and ACS and Poverty and Deep Poverty Increasing in Rural America for more information.) For example, in 2012 the U.S. poverty rate was estimated to be 15.9 percent based on the ACS, compared to 15.0 percent based on the CPS. Poverty estimates for the population living in nonmetropolitan (nonmetro) areas in 2012 were 18.2 percent for the ACS and 17.7 percent for the CPS. The metropolitan (metro) area poverty rates were 15.5 percent (ACS) and 14.5 percent (CPS). The ACS poverty rates for the most current year (2014) were 15.5 percent U.S., 18.1 percent nonmetro, and 15.1 percent metro.

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According to CPS data estimates, the higher incidence of nonmetro poverty relative to metro poverty has existed since the 1960s when poverty rates were first officially recorded. In the 1980s, average poverty rates were 4.5 percentage points higher in nonmetro areas than in metro areas; in the 1990s, the average difference was 2.6 percentage points; from 2000 to 2009, the average difference was 2.7 percentage points. The difference in 2010 (1.6 percentage points) was the smallest on record and was only the second time since 1959 that the nonmetro/metro poverty rate gap had fallen below 2 percentage points (it was 1.8 in 1994). The uneven pace of the economic recovery following the 2007-09 recession has reversed, at least temporarily, the narrowing rural/urban poverty gap.

During the 1990s, the nonmetro poverty rate declined fairly steadily from a high of 17.2 percent in 1993 to a record-low rate of 13.4 percent in 2000. The decline in poverty during the 1990s was mirrored by growth in the economy overall. Between 1993 and 2000, the economy grew by 4 percent per year, significantly higher than the average growth rate of 2.7 percent during the 20 years prior to 1993. Nonmetro poverty rose during the 2001 recession to 14.2 percent where it remained for 3 consecutive years before increasing once again. The average nonmetro poverty rate from 2004 to 2007 was 15.0 percent. The nonmetro poverty rate grew by 1.9 percentage points from 2008 (15.1 percent) to 2011 (17.0 percent). In 2012 it increased again, to 17.7 percent, reaching its highest rate since 1986 when it was 18.1 percent. 

In comparison, the ACS nonmetro poverty rate was 18.2 percent in 2012 and it peaked in 2013 at 18.4 percent. The ACS poverty rate is consistently higher than the CPS poverty rate due to a number of survey design factors, including: a larger rolling sample, a rolling reference period for income calculation and related Consumer Price Index adjustments, and differences in family composition and weighting. (See What is the impact of methodology? for further explanation of ACS and CPS poverty estimate differences.) In 2014, the ACS nonmetro poverty rate was 18.1 percent. The metro poverty rate was three percentage points lower; the same nonmetro/metro poverty rate gap as in 2013.

Child Poverty

An important indicator of the nation’s long-term well-being is poverty among children, since child poverty often has an impact that carries throughout a lifetime, particularly if the child lived in poverty at an early age. As with the early 1980s recession, rural children have been disproportionately affected by the recent economic downturn. Child poverty is more sensitive to labor market conditions than overall poverty, as children depend on the earnings of their parents. Older members of the labor force, including empty nesters and retirees, are less affected by job downturns, and families with children need higher incomes to stay above the poverty line than singles or those married without children. Like the overall poverty rate, nonmetro child poverty has also been historically higher than metro child poverty, and increased to record high levels in 2012 (26.7 percent CPS). According to ACS estimates, the nonmetro child poverty rate peaked in 2011 (26.3 percent) and stood at 26.2 percent in 2012 and 2013, which was more than four percentage points higher than the metro child rate for the same years. In 2014, the ACS nonmetro child poverty rate was one percentage point lower (25.2 percent) than it was in 2013, but it remained more than four percentage points higher than the metro rate (21.1 percent).

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Deep Poverty

"Deep poverty" is commonly defined as having cash income below half of one’s poverty threshold. In 2014, that meant a subsistence level of about $1,000 a month for a family of 4. A total of 6.8 percent of the U.S. population experienced deep poverty in 2014. Unlike trends in the official poverty statistics, there is not a pronounced and consistent nonmetro/metro gap in the share of the population experiencing deep poverty over time. Nonetheless, the slow rate of economic recovery from the 2007-09 recession for nonmetro areas is evident in deep poverty trends. According to ACS estimates, the nonmetro deep poverty rate continued to grow post-recession, reaching a high of 7.8 percent in 2013. In metro areas, deep poverty peaked in 2011 (at 7.0 percent) and was not significantly different in 2013 (6.9 percent). In 2014 the nonmetro area deep poverty rate was 7.7 percent, compared to 6.7 percent in metro areas. 

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How Is Poverty Defined?

In the U.S., being in poverty is officially defined as having an income below a federally determined poverty threshold. Poverty thresholds were developed in the 1960s and are adjusted annually to account for inflation. They represent the Federal Government’s estimate of the point below which a family of a given size has cash income insufficient to meet basic needs. Any family/individual with total income less than an amount deemed to be sufficient to purchase food, shelter, clothing, and other essential goods and services is classified as poor. (For details, see "How the Census Bureau Measures Poverty.") The amount of income necessary to purchase these basic needs is set by the Office of Management and Budget (OMB). The 2014 poverty line was $12,316 for an individual under 65 years of age and $11,354 for those 65 years or older. The poverty line for a three-person family with one child and two adults was $19,055 in 2014; for a family with two adults and three children the poverty line was $28,252. For a complete list of poverty lines by size of family and number of children, see the U.S. Census Bureau's tables of Poverty Thresholds.) Income includes cash income (pretax income and cash welfare assistance), but excludes in-kind welfare assistance, such as Supplemental Nutrition Assistance Program (SNAP) benefits and Medicaid. Poverty thresholds are set for families by size and composition, and they are updated annually to correct for inflation.

While metro-nonmetro comparisons of poverty rates are useful for determining areas where poverty is concentrated, some measurement issues that are worth bearing in mind. As one example, U.S. poverty rates do not make any adjustments for differences in cost of living across areas. If the cost of purchasing basic needs is lower in nonmetro areas, then the nonmetro poverty rate would overstate the actual level of poverty experienced by nonmetro residents. There are many other examples though, and the effect they would have on an area’s actual level of poverty can go in either direction. For example, the poverty thresholds do not account for the possibility that basic needs and living standards will differ across areas. Transportation to work in nonmetro areas may be much more expensive than in metro areas where access to public transit is greater. Housing may be less expensive in nonmetro areas than in metro areas, but the quality of housing may also be lower with a higher rate of substandard housing units. Similarly, the measure of poverty does not account for access to other "public goods" such as health care, schooling, or communication networks, or "public bads" such as noise and air pollution, which also differ systematically across metro and nonmetro areas.

An alternative to the official poverty measure that accounts for some of the aforementioned nonmetro-metro comparison issues is the Supplemental Poverty Measure (SPM). The SPM is a more complex statistic incorporating additional items such as tax payments and work expenses in its family resource estimates. SPM thresholds are derived from Consumer Expenditure Survey expenditure data on basic necessities (food, shelter, clothing and utilities) and are adjusted for geographic differences in the cost of housing. See Experimental Poverty Measures for more technical information on SPM.

Poverty measure concepts for the official poverty measure (OPM) and supplemental poverty measure (SMP)


Official Poverty Measure (OPM)

Supplemental Poverty Measure (SPM)

Measurement units Families and unrelated individuals All related individuals who live at the same address, including any coresident unrelated children who are cared for by the family (such as foster children)and any cohabitors and their relatives
Poverty threshold Three times the cost of a minimum food diet in 1963 The 33rd percentile of expenditures on food, clothing, shelter, and utilities of consumer units with exactly two children, multiplied by 1.2
Threshold adjustments Vary by family size, composition, and age of householder Geographic adjustments for differences in housing costs by tenure and a three parameter equivalence scale for family size and composition
Updating thresholds Consumer Price Index, all items Five year moving average of expenditures on food, clothing, shelter, and utilities
Resource measure Gross before-tax cash income Sum of cash income, plus noncash benefits that families can use to meet their needs for food , clothing, shelter, and utilities, minus taxes (or plus tax credits), minus work expenses, minus out-of-pocket medical expenses and child support paid to another household
Source: U.S. Census Bureau.

Unlike the official poverty thresholds, SPM thresholds are not intended to assess eligibility for government programs, but rather, to serve as an additional indicator of economic well-being and to provide a deeper understanding of economic conditions and policy effects. (See SNAP Benefits Alleviate the Incidence and Intensity of Poverty for use of SPM in estimating policy effects.) SPM income and expenditure data are collected through the CPS; the ACS does not include the detailed income and expenditure questions needed for SPM estimates. This limits the use of SPM to summary statistics given that CPS does not provide the same geographic detail as the ACS. However, when used, SPM yields significantly lower nonmetro poverty estimates, leading to a reduction or reversal of the nonmetro-metro poverty rate gap. This is in large part due to the adjustment for geographic differences in cost of living. For example, the Council for Economic Advisers (see the analysis in Opportunity for All: Fighting Rural Child Poverty) found that for 2013 the SPM rural child poverty rate (14.3 percent) was lower than the OPM rural child poverty rate (23.0 percent) and that the corresponding SPM rate for urban children (16.9 percent) was higher than the rural rate. Another important factor in the lower estimates for SPM compared to OPM is the treatment of the earned income tax credit and other refundable tax credits, which lower both rural and urban poverty rates, but to a greater extent for rural. (See Federal Tax Policies and Low Income Rural Households for more on the effects of tax policies on rural income and poverty).

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Last updated: Monday, November 30, 2015

For more information contact: Tracey Farrigan