7 Key Trends in Poverty in the United States
Last Updated November 26, 2024
The U.S. Census Bureau recently released their annual poverty report, which details the extent and depth of poverty in the United States. The report reveals important variations in poverty over time and across demographics while also providing insight on the causes and effects of poverty for the nation, economy, and federal budget. Below are seven key trends to help understand poverty in the United States.
1. Two primary measures of poverty exist.
There are two primary measures used by the Census Bureau to produce estimates of poverty — the official poverty measure (OPM) and supplemental poverty measure (SPM). While both estimates measure the resources of a family or individual against a poverty threshold, the measures differ in several ways. For example, the OPM is based on pre-tax cash income, whereas the SPM includes both cash and non-cash resources. Therefore, the SPM includes many federal programs designed to aid low-income families. Each estimate also measures the poverty threshold differently — the threshold under the OPM multiplies the cost of a minimum food diet, whereas the SPM considers expenditures for food, clothing, shelter, and utilities. The OPM is used by the federal government to determine eligibility for several programs that aid low-income households, whereas the SPM is often used to assess the effects of government transfers and anti-poverty programs.
2. The poverty rate has varied in the past few years.
In the decade before COVID (2010-2019), poverty gradually fell, as measured by both the OPM and SPM. Since the pandemic, however, those two measures have diverged. The OPM rose moderately in the first year of the pandemic, from 10.5 percent in 2019 to 11.5 percent in 2020, and has remained elevated since then — reaching 11.1 percent in 2023. Since the SPM captures the effects of federal programs like unemployment insurance and stimulus payments, that measure sharply declined during the pandemic, dropping from 11.7 percent in 2019 to 7.8 percent in 2021, as federal programs were enhanced or enacted to provide relief to many Americans. However, the SPM rose in 2022, jumping to 12.4 percent that year, as much of that aid expired. The SPM continued to rise in 2023, reaching 12.9 percent, partially due to an increase in the amount of resources a family or individual needs in order to be considered above the poverty line.
3. Deep poverty affects millions of people.
The income-to-poverty ratio helps to better understand how many people live near poverty, as well as the depths of poverty, in the United States. Of the 13 percent of Americans (43 million people) living in poverty in 2023, 34 percent of those people (15 million) lived in deep poverty. Meanwhile, 15 percent of Americans (49 million) lived just above the poverty line at 100 percent to 149 percent of the poverty threshold.
4. Poverty is not experienced equally.
While poverty rates for Black and Hispanic Americans are lower today than they were over a decade ago, the share of such individuals in poverty remains well above the average compared to other groups. The SPM for Black Americans and Hispanic Americans also increased by more than other groups in the last two years — 64 percent and 87 percent respectively. (See how income also varies by race and ethnicity.)
5. The poverty rate among children increased in 2023.
The SPM among children was at its lowest recorded level in 2021 largely due to COVID-19 relief that increased resources for families with children, such as the stimulus payments and the enhanced Child Tax Credits. The expiration of that aid contributed to the spike in the SPM among children, which climbed from 5.2 percent in 2021 to 13.7 percent in 2023. Meanwhile, the official poverty rate for children under 18 — which does not include that federal relief — increased by 0.3 percentage points over the past year, from 15 percent to 15.3 percent.
6. Poverty is unequally distributed by region.
According to the U.S. Census, each region had a different poverty rate. In 2023, the Midwest had the lowest percentage of people living in poverty (9.8 percent) whereas the West had the highest rate of people living in poverty (15.0 percent). (See how income also varies across region.)
7. Social Security moved nearly 28 million individuals out of poverty in 2023.
Social Security was the most effective anti-poverty program in 2023, lifting nearly 28 million people out of poverty. Refundable tax credits, which include the Earned Income Tax Credit and refundable portion of the Child Tax Credit, were the second-most effective anti-poverty program, lifting 6.4 people from poverty. However, medical expenses and payments associated with the Federal Insurance Contribution Act — a payroll tax — brought 7.4 million and 4.6 million people into poverty, respectively.
Conclusion
Poverty remains a significant structural challenge in America. As the United States continues to face global challenges, understanding the nature of poverty will be essential to identify the most efficient use of federal dollars for anti-poverty programs and initiatives that will help raise up more Americans out of poverty and, in turn, support inclusive and widely shared economic growth for the future.
Image credit: Photo by Getty Images
Further Reading
The Cost of Doing Nothing About Social Security
Any change to Social Security will impact how Americans approach retirement decisions, but the costliest choice would be doing nothing.
How Much Government Spending Goes to Children?
Interest costs on the national debt are expected to rapidly outstrip spending on children in coming years.
The Fed Reduced Short-Term Rates, but Interest Costs Remain High
Higher short- and long-term Treasury rates mean that the federal government’s borrowing costs will also rise.