Following the Office of Management and Budget’s (OMB) Statistical Policy Directive 14, the Census Bureau uses a set of money income thresholds that vary by family size and composition to determine who is in poverty.
The Census Bureau assigns each person or family one out of 48 possible poverty thresholds. Thresholds vary by the size of the family and age of the members. The same thresholds are used throughout the United States (they do not vary geographically). Thresholds are updated annually for inflation using the Consumer Price Index for All Urban Consumers (CPI-U). Although the thresholds in some sense reflect a family’s needs, they are intended for use as a statistical yardstick, not as a complete description of what people and families need to live.
To calculate total family income, the incomes of all related family members that live together are added up to determine poverty status. If an individual or group of individuals (such as housemates) are not living with family members, their own individual income is compared with their individual poverty threshold. Thus, all family members have the same poverty status, and some families may be composed of single unrelated individuals. If total family income is less than the poverty threshold for that family – that family and everyone in it is considered to be in poverty. If total family income equals or is greater than the poverty threshold – the family is not considered to be in poverty. Poverty status cannot be determined for people in:
– Institutional group quarters (such as prisons or nursing homes)
– College dormitories
– Military barracks
– Living situations without conventional housing (and who are not in shelters)
Additionally, poverty status cannot be determined for unrelated individuals under age 15 (such as foster children) because income questions are asked of people age 15 and older and, if someone is under age 15 and not living with a family member, their income is not known. Since one cannot determine their poverty status, they are excluded from the “poverty universe” (datasets totals).