President Obama Embraces New Poverty Formula

The President has embraced a new formula for determining poverty in America. At the current time, this is only an experiment reports the N.Y. Times, but it should be a step in the direction of eliminating the old formula.

The old formula which is still being used focuses on the cost of food and the cash income a family receives annually.

There are many critics that do not want to change the poverty formula.

Poverty statistics are responsible for how federal dollars are allocated to states and cities across the country. There is a fear by some that changing the formula will increase poverty in some areas and increase their share of federal dollars while decreasing federal assistance to other states.

The new formula will continue to focus on the cost of food while also acknowledging that this amount has become a smaller percentage of a families' total cost. The new one will strive to take the bigger picture into account for a family.

The new formula will also consider government benefits such as food stamps and tax credits which will increase the a families' annual cash income. At the same time, the new formula will consider health care costs, home mortgages, child care, and utilities which would all lower a families' annual income.


The old formula was based on 2 parents and 2 children. The new formula will be based on 1 parent and 2 children which is a more accurate of a family living in poverty today versus the 1960's when the old formula was created.