Poverty

Social stratification means that some groups occupy more privileged positions in a society and others occupy less privileged positions. People who live in or near poverty have the least social privilege and power. They are also at the greatest risk of experiencing the negative consequences of social stratification. Poverty implies living with inadequate resources. There are different ways to measure poverty, both within a society and when comparing societies around the world.

Absolute poverty is a measure of a person's inability to obtain the necessities of life, such as food, clothing, and shelter. This type of measure is used by organizations such as the United Nations and the World Bank to define poverty and extreme poverty. For example, in 2018 the World Bank defined extreme poverty as living on $1.90 or less per day. This is a set standard that can be used to compare countries. Relative poverty is a measure of inequality based on the standard of living for the majority of people in a society. Poor people in high-income nations often have more absolute wealth and a higher standard of living than people in low-income nations. Relative poverty is a way to measure stratification within one society based on the costs and standard of living in that society.

In the United States the federal government has two ways to determine and measure poverty. These are both measures of relative poverty, looking at wealth and poverty within the context of the United States. The Department of Health and Human Services sets annual federal poverty guidelines, also called the federal poverty level (FPL). These are used to determine eligibility for various assistance programs, such as Medicaid, housing subsidies, and food assistance. The guidelines use a set income for single people and households of various sizes to determine poverty. Incomes for each type of household earning more than poverty-level income are described in terms of a percentage above the set poverty level. For example, in 2018 the federal poverty line for a one-person household was an annual income of $12,140. A single person making $18,210 per year has an income at 150 percent of the poverty line. A single person making $36,420 is at 300 percent of the poverty line. Eligibility for assistance programs varies—some programs serve households at or below the poverty line, and others serve those at 125 percent, 150 percent, or 185 percent. Federal tax credits are sometimes tied to the poverty guidelines. For example, tax credits to help pay for health insurance are available for people whose household incomes are between 100 percent and 400 percent of the federal poverty level. States and local governments also often use the percentages of the federal poverty guidelines to determine eligibility for programs and services. The poverty line was originally calculated in the 1960s, using the assumption that the average family spends one-third of its budget on food. The poverty line was set at three times the subsistence food budget, defined as the amount of food aid needed on a temporary or emergency basis, when funds are low. This basic formula is still in use in the 21st century even though food costs comprise about 12 percent of the average family's budget. Housing costs have risen since the 1960s; average housing costs represent about one-third of a family's budget. Thus the current formula, based on the proportion of food spent in the 1960s, undercounts the number of poor people in the United States.

Another measure used to determine and measure poverty in the United States is annual poverty thresholds. These are issued annually by the U.S. Census Bureau and are used to determine how many people live in poverty. Like the federal poverty guidelines, poverty thresholds are based on household size. Federal poverty guidelines and federal poverty thresholds do not always match up exactly. It is possible for a person or household to live at or below the poverty threshold but be above the federal poverty guideline, and vice versa. Definitions of poverty are often subject to debate, particularly when federal poverty guidelines—those used to determine eligibility for assistance—are higher than poverty thresholds. Both measures are often criticized as setting income levels so low that many poor Americans are not counted as impoverished and do not receive assistance.

In addition to FPL and poverty thresholds, sociologists also examine data about extreme poverty. There are different ways to define extreme poverty in the United States. For example, researchers can use the World Bank definition (an absolute measure) of $1.90 per day. They might also look at the percentage of individuals or of households that earn the least. One common way to assess income is to divide the population by quintiles, or five equal groups (each group representing 20 percent of the population or 20 percent of earned income). Sociologists also examine data related to poverty for particular social groups, including numbers and rates of poverty for children, women, unmarried people, specific racial groups, disabled people, and others. Researchers use different measures of poverty and wealth depending on the particular question they want to investigate.