A poverty test, in the context of the United States, compares a person or family's income to a pre-determined poverty threshold. This threshold represents the minimum income needed to meet basic needs. If a person's or family's income falls below this threshold, they are considered to be below the poverty line.
Understanding Poverty Thresholds
The poverty threshold isn't a single number; it varies based on factors like:
- Family size: Larger families have higher thresholds.
- Household composition: The presence of children, elderly individuals, or dependents affects the threshold.
- Geographic location: The cost of living differs across regions, impacting the threshold calculation. A family needing a certain income to survive in New York City would require less to survive in a rural area.
These thresholds are established annually by the U.S. government and are used to determine eligibility for various social programs and assistance. These programs, from food stamps to housing assistance, rely on the poverty guidelines to allocate resources effectively.
How it Works
The process is relatively straightforward:
- Determine household income: This includes all sources of income for everyone in the household.
- Identify the appropriate poverty threshold: This depends on the household size, composition, and location.
- Compare income to threshold: If income is below the threshold, the household is considered impoverished.
Example
Let's say a family of four in a specific region has a poverty threshold of $26,500 per year. If their annual income is $20,000, they fall below the poverty line and would be considered impoverished according to this test.
Note: The poverty threshold is just one measure of poverty and doesn't capture the full complexity of economic hardship. It focuses solely on income, overlooking factors like wealth, assets, and access to resources.
