It’s simple . The Census Bureau categorizes an individual or family as being in poverty if they have low-income. But they don’t take welfare benefits into account when they measure the income. Therefore if a person is in poverty because their income is $5,000 below the poverty line but they collect $10,000 in welfare benefits they are still labeled as in a poverty status. But they aren’t living in poverty. Welfare benefits raise their well-being.
The Census Bureau reports that 15% of the U.S. population is in a poverty status. They ought to also track how many people are actually living in poverty after welfare benefits are considered. Without that data we are flying blind on the true state of poverty in the U.S.
Based on a review of the income distribution of those in poverty and an overlay of the welfare system, we estimate less than 3% of the population really lives in poverty. See the full analysis on the Poverty Level Page. If we are right, than 80% of those in a poverty status don’t really live in poverty. The Census Bureau says that over 80% of those in poverty are satisfied with their housing and have amenities such as a microwave oven and a cell phone. Makes sense to us.
The real issue is why up to 3% of the population is living in poverty when welfare benefits are available to pull them out. We wish the Census Bureau would track that. That data would really be informative – even more so than counting microwave ovens.