Poverty in the United States: 2007

Poverty in the United States: 2007
Updated August 27, 2008
Thomas Gabe
Specialist in Social Policy
Domestic Social Policy Division

Poverty in the United States: 2007
Summary
In 2007, 37.3 million people were counted as poor in the United States. The
poverty rate, or percent of the population considered poor under the official
definition, was reported at 12.5%. The incidence of poverty varies widely across the
population, according to age, education, labor force attachment, family living
arrangements, and area of residence, among other factors. Under the official poverty
definition, an average family of four was considered poor in 2007 if its pretax cash
income for the year was below $21,203. This report will be updated on an annual
basis, following release of U.S. Census Bureau annual income and poverty estimates.
Supporting data are based on the following: U.S. Census Bureau, Income,
Poverty, and Health Insurance Coverage in the United States: 2007; Current
Population Report No. P60-235, August 2008; U.S. Census Bureau, Income,
Earnings, and Poverty Data From the 2007 American Community Survey, ACS-09,
August 2008; and, unpublished Census Bureau tables.

Contents
Trends in Poverty..................................................1
Definition of Poverty...............................................3
Poverty Among Selected Groups......................................5
Racial and Ethnic Minorities.....................................5
Children .....................................................5
Adults with Low Education, Unemployment, or Disability..............6
The Aged....................................................6
Receipt of Welfare Among the Poor...................................8
The Geography of Poverty...........................................8
Appendix. U.S. Poverty Statistics: 1959-2007..........................11
List of Figures
Figure 1. Trend in Poverty Rate and Number of Poor Persons: 1959-2007.....2
Figure 2. U.S. Poverty Rates by Age Group, 1959-2007....................7
Figure 3. Poverty Rates for the 50 States and the District of Columbia:
2007 American Community Survey (ACS) Data.....................10
List of Tables
Table 1. Poverty Rates for Selected Groups, 1959-2007..................11

Poverty in the United States: 2007
Trends in Poverty
The poverty rate tends to reflect changes in the economy in general, changes in
the distribution of income within the economy, and changes in the composition of
the U.S. population. The poverty rate, or percent of the population considered poor,
was 12.5% in 2007 — statistically unchanged from that estimated in 2006 of 12.3%.
In 2007, an estimated 37.3 million people were counted as poor — a statistically
significant increase from the 36.5 million estimated as poor in 2006. The 2007
poverty rate of 12.5% was still well below the most recent peak of 15.1%, in 1993.
A strong economy during most of the 1990s is generally credited with the declines
in poverty that occurred over the later half of the decade, resulting in a record-tying
historic low poverty rate of 11.3% in 2000 (a rate statistically tied with the previous
lowest recorded rate of 11.1% in 1973). The poverty rate increased each year from
2001 through 2004, a trend generally attributed to the economic recession that
occurred from March to November of 2001, but has yet to head back towards its pre-
recession low. As shown in Figure 1, with the exception of the recession in the early
1960s, poverty rates have tended to increase in periods corresponding to economic
recession.
Changes in household and family composition, especially the growth in the
number of single-parent families who tend to have a high incidence of poverty, have
contributed to higher overall poverty rates, and especially higher rates of child
poverty over the years.
Government income transfer programs have helped to reduce the incidence of
poverty and the depth of poverty among the U.S. population. Social security in
combination with a maturing pension system has helped greatly to reduce the
incidence of poverty among the aged over the years. In contrast to social security,
cash welfare programs, which are targeted on the poor, tend to lift few families’
incomes above the poverty line, but in combination with other noncash aid, such
programs help to reduce the depth of income and material deprivation poor families
incur.

CRS-2
Figure 1. Trend in Poverty Rate and Number of Poor Persons:

1959-2007

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Changes in cash welfare programs implemented since passage of the 1996
welfare reform law (Personal Responsibility and Work Opportunity Reconciliation
Act (PRWORA), P.L. 104-193) continue to be assessed in terms of their possible
impacts on economically vulnerable populations.¹ The welfare reform law ended the
Aid to Families with Dependent Children (AFDC) program, replacing it with the
Temporary Assistance for Needy Families (TANF) program.² Among other features,
TANF sets a five-year lifetime limit on receipt of cash assistance (allowing lower
limits at state option), imposes strong work requirements, and allows states to impose
sanctions reducing or denying benefits to families who fail to comply with program
requirements.
Definition of Poverty
The Census Bureau’s poverty thresholds form the basis for statistical estimates³
of poverty in the United States. The thresholds reflect crude estimates of the amount
of money individuals or families, of various size and composition, need per year to
purchase a basket of goods and services deemed as “minimally adequate,” according
to the living standards of the early 1960s. The thresholds are updated each year for
changes in consumer prices. In 2007, for example, the average poverty threshold for
an individual living alone was $10,590; for a two-person family, $13,540; for a
family of four, $21,203.
Persons are considered poor, for statistical purposes, if their family’s countable
money income is below its corresponding poverty threshold. Annual poverty
estimates are based on a Census Bureau household survey (Current Population
Survey) conducted each March. The official definition of poverty counts most
sources of money income received by families during the prior year (e.g., earnings,
social security, pensions, cash public assistance, interest and dividends, alimony and
child support, among others). For purposes of officially counting the poor, noncash
benefits (such as the value of Medicare and Medicaid, public housing, or employer
provided health care) and “near cash”benefits (e.g., food stamps) are not counted as
income, nor are tax payments subtracted from income, nor are tax credits added (e.g.,
Earned Income Tax Credit (EITC)).
There is mounting interest in including the value of noncash benefits and tax
credits when assessing progress against poverty. These benefits represent a growing
share of assistance to the poor. In FY2007 the federal government provided an
estimated $30.4 billion in Food Stamp benefits, most of which went to poor

¹ See CRS Report RL30797, Trends in Welfare, Work and the Economic Well-Being of
Female-Headed Families with Children: 1987-2005, by Thomas Gabe.
² See CRS Report RS20807, Short History of the 1996 Welfare Reform Law, by Joe
Richardson and Vee Burke.
³ The Department of Health and Human Services (HHS) releases poverty income guidelines
that are similar to the census poverty thresholds. These guidelines are used by HHS and
other federal agencies for administering programs, particularly determining program
eligibility.

households. The EITC program is the fastest growing form of cash aid for children.
In FY2007, the Treasury paid an estimated $36.5 billion in EITC to families with
relatively low earnings who owed no income tax. Neither Food Stamp benefits nor
the EITC are counted as income under the official poverty definition. The Census
Bureau provides a variety of alternate measures of poverty, based on various
combinations of cash, noncash, and after tax income. These alternative measures are
still considered experimental; none have displaced the official measure.
The poverty rate is the estimated percentage of the national population living
alone or in families whose money income is below the poverty threshold. Under an
alternate experimental definition of poverty, the poverty rate would be lower than
under the official definition of poverty, based on pre-tax cash-income. Using a more
comprehensive definition of income measured against the poverty line (one which
includes the value of noncash benefits and the effect of taxes) the estimated poverty⁴
rate would have been 10.3% in 2005, as opposed to 12.6% under the official
measure in 2005.
Major changes to the way in which poverty is defined and measured in the U.S.
have been recommended by a congressionally commissioned study conducted by a
National Academy of Sciences (NAS) panel of experts.⁵ The NAS panel
recommended that the poverty level be reset to take into account improvements in the
U.S. standard of living that have occurred over the past 40-plus years (i.e., since the
current poverty measure was originally devised). The Academy recommended that
noncash benefits, taxes, and tax credits be counted with cash income, and that certain
expenses (e.g., work related child care expenses, housing, and out of pocket medical
expenses) be deducted from income in determining families’ poverty status. The
effect of these, and other changes, would result in comparatively more working
families being counted as poor. The NAS panel also recommended that the poverty
income levels be adjusted for area cost of living differences. The current poverty
income thresholds are uniform across the 50 states and the District of Columbia.
Most experts agree that the current measure underestimates the extent of poverty in
high cost of living areas. If adopted, a cost of living adjustment to the poverty
thresholds would result in comparatively higher levels of measured poverty in the
Northeast and West, compared to the South and Midwest.

⁴ Alternative poverty estimates for 2007 will not be available until late fall, 2008.
Alternative poverty estimates for 2005 are from U.S. Bureau of the Census, The Effect of
Taxes and Transfers on Income and Poverty in the United States: 2005, Current Population
Report No. P60-233 [http://www.census.gov/prod/2007pubs/p60-232.pdf].
⁵ For estimates of the effects of the NAS panel recommendations, see U.S. Bureau of the
Census. Experimental Poverty Measures: 1999. Current Population Report No. P60-216,
October 2001.

Poverty Among Selected Groups
Even during periods of general prosperity, poverty is concentrated among
certain groups and in certain areas. Minorities, women and children, the very old, the
unemployed, those with low levels of educational attainment, low skills or disability,
among others, are especially prone to poverty.
Racial and Ethnic Minorities⁶
African Americans and Hispanics have poverty rates that exceed the white
poverty rate by several times. In 2007, 24.5% of blacks (9.2 million) and 21.5% of
Hispanics (9.9 million) had incomes below poverty, compared to 8.2% of non-
Hispanic whites (16.0 million) and 10.2% of Asians (1.3 million). Although blacks
represent only 12.6% of the total population, they make up 24.8% of the poor
population; Hispanics, who represent 15.4% of the population, account for 26.5% of
the poor.
Children⁷
In 2007, 12.8 million children (17.6%) were poor — a statistically significant
increase in the number poor (up from 12.3 million) and in the poverty rate (up from
16.9%) from 2006. The lowest recorded rate of child poverty was in 1969, when
13.8% of children were counted as poor. Children living in single female-headed
families are especially prone to poverty. In 2007, a child living in a single female-
headed family was five times more likely to be poor than a child living in a married-
couple family. In 2007, 43.0% of all children living in single female-headed families
were poor. In contrast, 8.5% of children living in married-couple families were poor.
The increased share of children who live in single female-headed families has
contributed to the high overall child poverty rate. In 2007, 24.1% of children were
living in female-headed families, about double the share who lived in such families
when the overall child poverty rate was at its historic low (1969). Among all poor
children, nearly six in ten (58.9%) lived in female-headed families in 2007.
In 2007, 34.3% of black children were poor (3.8 million), compared to 28.3%
of Hispanic children (4.3 million) and 9.7% of white non-Hispanic children (4.0
million). Among children living in single female-headed families, the poverty rate
for black children was 50.4% and for Hispanic children, 51.6%; non-Hispanic white
children in such families had a poverty rate of 32.4%. The poverty rate among

⁶ Beginning with the March 2003 CPS, the Census Bureau allows survey respondents to
identify themselves as belonging to one or more racial groups. In prior years, respondents
could select only one racial category. Consequently, poverty statistics for different racial
groups for 2002 and after are not directly comparable to earlier years’ data. The term
blacks and whites above, refers to persons who identified with only a single racial group.
The term Hispanic refers to individuals’ ethnic, as opposed to racial, identification.
Hispanics may be of any race.
⁷ Related children in families. For an in-depth discussion of child poverty, see CRS Report
RL32682, Children in Poverty: Profile, Trends, and Issues, by Vee Burke, Thomas Gabe,
and Gene Falk.

Hispanic children who live in married-couple families (19.2%) was over one-and-
three-quarters higher than that of black children (11.0%), and more than four times
that of white non-Hispanic children (4.7%) who live in such families. Contributing
to the high rate of overall black child poverty is the large share of black children who
live in single female-headed families (55.3%) compared to Hispanic children (26.4%)
or white non-Hispanic children (15.7%).
Adults with Low Education, Unemployment, or Disability
Adults with low education, those who are unemployed, or who have a work-
related disability are especially prone to poverty. In 2007, among persons age 25 to
34, 33.0 who had no high school diploma were poor, compared to 15.8% who had
a high school diploma only and 4.3% who had at least a bachelor’s degree. (About
12% of 25 to 34 year-olds lack a high school diploma.) Among persons between the
ages of 16 and 64 who were unemployed in March 2008, 23.1% were poor based on
their families’ incomes in 2007; among those who were employed, 5.6% were poor.
In 2007, persons who reported a work disability represented 10.3% of the age 16 to
64 population, and 26.4% of the poor population within this age range. Among those
with a severe work disability, 33.4% were poor, compared to 13.5% of those with a
less severe disability and 9.1% who reported having no work-related disability.
The Aged
The poverty rate of persons age 65 and older in 2007 was 9.7% (3.6 million
poor). The poverty rate among the aged in 2007 was statistically tied with its
historic low rate of 9.4% in 2006. Among those age 75 and over, 10.6% were poor
in 2007, compared to 8.8% of those age 65 to 74. Although the aged poverty rate
tends to be lower than the child poverty rate, many of the aged live just slightly above
the poverty line. As measured by a slightly raised poverty standard (125% of the
poverty threshold), 16.1% of the aged could be considered poor or “near poor,”
14.0% who are age 65 to 74, and 18.4% who are 75 years of age and over. In
comparison 23.8% of children (persons under age 18) could be considered poor or
“near poor.”

CRS-7
Figure 2. U.S. Poverty Rates by Age Group, 1959-2007

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Receipt of Welfare Among the Poor
About two thirds of persons (67.8%) who were poor in 2006⁸ lived in
households that received any means-tested assistance during the year. Such
assistance could include cash aid, such as: Temporary Assistance for Needy Families
(TANF), Supplemental Security Income (SSI) payments, Food Stamps, Medicaid,
subsidized housing, free or reduced price school lunches, and other programs. In

2006, only 19.5% of poor persons lived in households that received cash aid, 37.6%

received Food Stamps, 54.6% where one or more household members were covered
by Medicaid, and 16.5% lived in subsidized housing. Poor single-parent families
with children are among those families most likely to receive cash aid. Among poor
children who were living in single female-headed families, 27.5% were in households
that received government cash aid in 2006. The share of poor children in single
female-headed families receiving cash aid is well below historical levels. In 1993,
70.2% of these children’s families received cash aid. In 1995, the year prior to
passage of sweeping welfare changes under PRWORA, 65% of such children were
in families receiving cash aid.
The Geography of Poverty
Poverty is more highly concentrated in some areas than in others, about twice
as high in center cities as in suburban areas and nearly three times higher in the
poorest states than in the least poor states.
Within metropolitan areas, the incidence of poverty in central city areas is
considerably higher than in suburban areas, 16.5% versus 9.0%, respectively, in
2007. Nonmetropolitan areas had a poverty rate of 15.4%. In 2003 (the most recent
year’s data available for this comparison), over one-third (34.8%) of the Nation’s
poor lived in neighborhoods of concentrated poverty (areas based on census tracts
and minor civil divisions with a poverty rate of 20% or higher based on the 1990
census). Poor racial and ethnic minorities are more likely to live in areas of
concentrated poverty than non-Hispanic whites. Among poor African Americans,
52.9% lived in areas of concentrated poverty; among poor Hispanics, 47.5%. In
contrast, 18.8% of poor non-Hispanic whites lived in areas of concentrated poverty.
In 2007, poverty rates were lowest in the Midwest (11.1%), Northeast (11.4%), and
West (12.0%) and highest in the South (14.2%).

⁸ Census Bureau estimates for 2007 were not available at the time this report was produced.
See [http://pubdb3.census.gov/macro/032007/pov/new26_002_01.htm].

Up to this point, the poverty statistics presented in this report come from the
U.S. Census Bureau’s Annual Social and Economic Supplement (ASEC) to the
Current Population Survey (CPS). For purposes of producing state and substate
poverty estimates, the Census Bureau now recommends using the American
Community Survey (ACS) — because of its much larger sample size, the ACS
produces estimates with a much smaller margin of statistical error than does the
ASEC/CPS. However, it should be noted that the ACS survey design differs from
the ASEC/CPS in a variety of ways,and produces somewhat different estimates
than those obtained from the ASEC/CPS. For example, the ASEC/CPS estimates
that 12.5% of the nation’s population was poor in 2007, whereas the ACS
estimates that 13.0% of the population was poor in the prior 12 months from when
the survey was administered. The ACS estimates are based on income information
collected between January and December 2007, for the prior 12 months. For
example, for the sample with data collected in January, the reference period is
from January 2006 to December 2006, and for the sample with data collected in
December, from December 2006 to November 2007. The ACS data consequently
cover a time span of 23 months, with the data centered at mid-December 2006.
Figure 3 shows estimated poverty rates for the United States and for each of the
50 states and the District of Columbia on the basis of the 2007ACS. In addition to
the point estimates, the figure displays a 90% statistical confidence interval around
each state’s estimate, indicating the degree to which these estimates might be
expected to vary based on sample size. Although the states are sorted from lowest
to highest by their respective poverty rate point estimates, the precise ranking of each
state is not possible because of the depicted margin of error around each state’s
estimate. For example, New Hampshire would appear to have the lowest poverty
rate (7.1%), but it overlaps with Connecticut (7.9%) and Hawaii (8.0%). Mississippi
stands out as having the highest poverty rate (20.6%) and is followed by three states
that appear to be statistically tied: Louisiana (18.6%), New Mexico (18.1%) and
Arkansas (17.9%).

Figure 3. Poverty Rates for the 50 States and the District of
Columbia: 2007 American Community Survey (ACS) Data

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Appendix. U.S. Poverty Statistics: 1959-2007
Table 1. Poverty Rates for Selected Groups, 1959-2007
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^2004r^12.7^17.3^41.9⁹^.7^11.3⁹^.8^10.8^8.7^24.7^21.9^b^b^b
²⁰⁰³^12.5^17.2^41.8⁹^.6^10.8^10.2^10.5^8.2^24.4^22.5^b^b^b
²⁰⁰²^12.1^16.3^39.6⁹^.2^10.6^10.4^10.2^8.0^24.1^21.8
²⁰⁰¹^11.7^15.8^39.3⁸^.8^10.1^10.1⁹^.9^7.8^22.7^21.4
^2000r^11.3^15.6^40.1⁸^.6^9.6⁹^.9^9.5⁷^.4^22.5^21.5
¹⁹⁹⁹^11.8^16.3^41.9⁹^.0^10.0⁹^.7^9.8⁷^.7^23.6^22.8
¹⁹⁹⁸^12.7^18.3^46.1⁹^.7^10.5^10.5^10.5⁸^.2^26.1^25.6
¹⁹⁹⁷^13.3^19.2^49.0^10.2^10.⁹^10.5^11.0⁸^.6^26.5^27.1
¹⁹⁹⁶^13.7^19.8^49.3^10.9^11.³^10.8^11.2⁸^.6^28.4^29.4
¹⁹⁹⁵^13.8^20.2^50.3^10.7^11.⁴^10.5^11.2⁸^.5^29.3^30.3
¹⁹⁹⁴^14.5^21.2^52.9^11.7^11.⁹^11.7^11.7⁹^.4^30.6^30.7
¹⁹⁹³^15.1^22.0^53.7^12.4^12.⁴^12.2^12.2⁹^.9^33.1^30.6
^1992r^14.8^21.6^54.6^11.8^11.⁹^12.9^11.9⁹^.6^33.4^29.6
^1991r^14.2^21.1^55.5^11.1^11.⁴^12.4^11.3⁹^.4^32.7^28.7
¹⁹⁹⁰^13.5^19.9^53.4^10.7^10.⁷^12.2^10.7⁸^.8^31.9^28.1
¹⁹⁸⁹^12.8^19.0^51.1^10.4^10.²^11.4^10.0⁸^.3^30.7^26.2
^1988r^13.0^19.0^52.9^10.0^10.⁵^12.0^10.1⁸^.4^31.3^26.7
^1987r^13.4^19.7^54.7^10.9^10.⁶^12.5^10.4⁸^.7^32.4^28.0
¹⁹⁸⁶^13.6^19.8^54.4^10.8^10.⁸^12.4^11.0⁹^.4^31.1^27.3
¹⁹⁸⁵^14.0^20.1^53.6^11.7^11.³^12.6^11.4⁹^.7^31.3^29.0
¹⁹⁸⁴^14.4^21.0^54.0^12.5^11.7^12.4^11.5^10.0^33.8^28.4
¹⁹⁸³^15.2^21.8^55.5^13.5^12.4^13.8^12.2^10.8^35.7^28.1
¹⁹⁸²^15.0^21.3^56.0^13.0^12.0^14.6^12.0^10.6^35.6^29.9
¹⁹⁸¹^14.0^19.5^52.3^11.6^11.¹^15.3^11.1⁹^.9^34.2^26.5
¹⁹⁸⁰^13.0^17.9^50.8^10.4^10.¹^15.7^10.2⁹^.1^32.5^25.7
¹⁹⁷⁹^11.7^16.0^48.6⁸^.5^8.9^15.2⁹^.0^8.1^31.0^21.8
¹⁹⁷⁸^11.4^15.7^50.6⁷^.9^8.7^14.0⁸^.7^7.9^30.6^21.6
¹⁹⁷⁷^11.6^16.0^50.3⁸^.5^8.8^14.1⁸^.9^8.0^31.3^22.4
¹⁹⁷⁶^11.8^15.8^52.0⁸^.5^9.0^15.0⁹^.1^8.1^31.1^24.7
¹⁹⁷⁵^12.3^16.8^52.7⁹^.8^9.2^15.3⁹^.7^8.6^31.3^26.9
¹⁹⁷⁴^11.2^15.1^51.5⁸^.3^8.3^14.6⁸^.6^7.7^30.3^23.0
¹⁹⁷³^11.1^14.2^52.1⁷^.6^8.3^16.3⁸^.4^7.5^31.4^21.9
¹⁹⁷²^11.9^14.9^53.1⁸^.6^8.8^18.6⁹^.0^n/a^33.3^n/a
¹⁹⁷¹^12.5^15.1^53.1⁹^.3^9.3^21.6⁹^.9^n/a^32.5ⁿ^/a
¹⁹⁷⁰^12.6^14.9^53.0⁹^.2^9.0^24.6⁹^.9^n/a^33.5ⁿ^/a
¹⁹⁶⁹^12.1^13.8^54.4⁸^.6^8.7^25.3⁹^.5^n/a^32.2ⁿ^/a
¹⁹⁶⁸^12.8^15.3^55.2^10.2⁹^.0^25.0^10.0ⁿ^/a^34.7ⁿ^/a
^{1967 14.2}^16.3^54.3^11.5^10.0^29.5^11.0ⁿ^/a^39.3ⁿ^/a
¹⁹⁶⁶^14.7^17.4^58.2^12.6^10.5^28.5^11.3ⁿ^/a^41.8ⁿ^/a
¹⁹⁵⁹^22.4^26.9^72.2^22.4^17.0^35.2^18.1ⁿ^/a^55.1ⁿ^/a
^S^o^u^rce:^T^a^b^l^{e p}^r^ep^ared^b^y^t^h^{e Co}ⁿ^g^ressi^oⁿ^a^l^Research^S^e^rvi^{ce u}^sⁱⁿ^{g U.}^S^.^Bu^reau^o^f^t^h^{e Cen}^s^u^s^d^a^t^a^.
^Notes:^{r = Revi}^sed^estⁱ^m^at^es.ⁿ^/^{a = No}^t^avai^l^a^b^l^e.
^a^.^Be^gⁱ^nning^{in 1979, re}^s^t^ric^t^e^d^{to c}^h^ildre^{n in prim}^a^r^y^f^a^m^ilie^s^only^.^Be^f^o^re^{1979, inc}^l^ude^s^c^h^ildreⁿⁱⁿ^unre^l^a^t^e^d^s^ubf^a^m^ilie^s.
^{b. B}^e^gⁱ^nning^{in 2002, C}^P^{S r}^e^s^ponde^nts^c^{ould ide}ⁿ^tif^y^the^m^s^e^lv^e^s^a^s^be^ing^of^m^o^r^e^thaⁿ^one^r^ace.^Coⁿ^s^eq^u^eⁿ^t^l^y^,^raci^al^d^a^t^a
^f^o^r^{2002 a}^{nd a}^f^te^r^a^r^e^not^c^o^m^p^a^r^a^b^le^to^e^a^r^lie^r^y^e^a^r^s^.^H^e^r^e^,ⁱⁿ^{2002 a}^{nd a}^f^te^r^,^the^te^r^m^w^h^ite^m^e^aⁿ^s^of^w^h^ite^r^{ace al}^oⁿ^e
^an^d^t^h^{e t}^e^rm^b^l^{ack m}^ean^{s o}^f^b^l^{ack race al}^oⁿ^e^.^Hi^sp^anⁱ^c^s,^w^h^o^m^a^y^b^e^o^f^an^y^race,^areⁱⁿ^cl^u^d^e^d^am^oⁿ^g^w^hⁱ^t^e^s^an^d^b^l^acks
^unle^s^s^othe^r^w^is^e^note^d^.