What Is Poverty? Meaning, Causes, and How To Measure

What Is Poverty?

The term poverty refers to the state or condition in which people or communities lack the financial resources and other essentials for a minimum standard of living. As such, they cannot meet their basic human needs.

People and families who live in poverty may go without proper housing, clean water, healthy food, and medical attention. Each nation may have its own criteria for determining the poverty line and counting how many of its people live in poverty.

Poverty is a socioeconomic condition that is the result of multiple factors—not just income. These factors include race, sexual identity, sexual orientation, and access to education, among others.

Understanding Poverty

Poverty refers to the lack of adequate financial resources such that individuals, households, and entire communities don't have the means to subsist or to acquire the basic necessities for a flourishing life. This absence of means can result in struggles to obtain food, clothing, shelter, and medicine.

Poverty is both an individual concern as well as a broader social problem. At the individual or household level, not being able to make ends meet can lead to a range of social, physical, and mental issues. At the societal level, high poverty rates can be a damper on economic growth and be associated with problems like crime, unemployment, urban decay, poor education, and poor public health.

Governments often put social welfare programs in place to help lift individuals, families, and communities out of poverty. Some countries have stronger welfare states (social safety nets) than others. For instance, the United States tends to be much more individualistic and has relatively limited welfare programs. European countries, in comparison, have a much broader range of welfare programs and supports for those in need.

Aspects of Poverty

Poverty in the U.S.

Poverty status in the U.S. is assigned to people whose income falls under a certain threshold, which is set by the Department of Health and Human Services (HHS). U.S. poverty rates, or the percentage of the U.S. population living in poverty, are calculated by the U.S. Census Bureau.

When measuring poverty, the Census Bureau excludes the following people:

• Institutionalized people
• People living in military quarters
• People living in college dormitories
• Individuals under the age of 15

U.S. Poverty Thresholds

Each year, the Census Bureau updates its poverty threshold statistics. The table below shows the 2022 income thresholds for those in poverty. Each column represents the number of people living in a household under the age of 18.

• The poverty income threshold for a family of four with two children under the age of 18 was $29,678 per year.
• For two people over age 65 with no children under 18, the poverty threshold was $17,689 per year.
  

Poverty thresholds, as well as the number of children under the age of 18 in a home, are important because they help determine how government aid such as food assistance and medical care should be allocated. The measurement for those in poverty uses pretax income or income before taxes are taken out by the Internal Revenue Service (IRS).

Global Poverty

Poverty has decreased in developed countries since the Industrial Revolution. Increased production reduced the cost of goods, making them more affordable, while advancements in agriculture increased crop yields, as well as food production.

The international poverty line is a monetary threshold under which an individual is considered to be living in poverty. This figure is calculated by taking the poverty threshold from each country—given the value of the goods needed to sustain one adult—and converting it into U.S. dollars. The current international poverty line is $2.15 per day.

Many people around the globe still struggle to make ends meet. According to the World Bank, an estimated 700.6 million people lived in extreme poverty in September 2023.

It's estimated that more than 40% of the world's population lives in poverty, with the U.S. scoring the worst among developed nations. According to a report published in the journal Frontiers in Public Health, communities of color are more susceptible to poverty because of "racist notions of racial inferiority and frequent denial of the structural forms of racism and classism" globally and within the U.S.

Poverty and Children

The impact of poverty on children is substantial. Children who grow up in poverty typically suffer from severe and frequent health problems. Infants born into poverty have an increased chance of low birth weight, which can lead to physical and mental disabilities.

In certain developing countries, poverty-stricken infants are nine times more likely to die in their first month compared to babies born in high-income countries. Those who live may have hearing and vision problems.

Children in poverty tend to miss more school due to sickness and endure more stress at home. Homelessness is particularly hard on children because they often have little to no access to healthcare and lack proper nutrition, which often results in frequent health issues.

What Causes Poverty?

Poverty is a difficult cycle to break and can pass from one generation to the next. It is often determined by socioeconomic status, ethnicity, gender, and geography.

Many people are born into poverty and have little hope of overcoming it. Others may fall into poverty because of negative economic conditions, natural disasters, or surging living costs, as well as drug addiction, depression, and mental health issues.

Other root causes of poverty include:

• Limited to no job growth
• Poor infrastructure
• Conflict and war
• High cost of living
• Social barriers
• Lack of government support

For those able to move out of poverty, progress is often temporary. Economic shocks, food insecurity, and climate change threaten their gains and may force them back into poverty.

Typical consequences of poverty include alcohol and substance abuse, little to no access to education, poor housing and living conditions, and increased levels of disease. Access to good schools, healthcare, electricity, clean drinking water, and other critical services remains elusive for many in poverty.

Heightened poverty is likely to cause increased tensions in society as inequality increases and, in turn, lead to rising crime rates.

Discrimination and Poverty

As noted above, poverty isn't simply related to income levels. In fact, there are a number of factors that can push people to or below the poverty line. Discrimination is just one of them.

In some cases, governments may pass certain laws and regulations that prevent certain individuals or communities from accessing services, such as healthcare, education, or social services. These people may also be denied access to the labor market or housing, which can prevent them from reaching a suitable standard of living. In other cases, deep-rooted societal beliefs can isolate individuals, families, and entire communities.

Some of the most common groups of people who may experience this type of discrimination include:

• People living with HIV/AIDS
• Black, Indigenous, and People of Color
• Women, including single mothers
• Members of the LGBTQ+ community

According to the most recent statistics from the Williams Institute at the UCLA School of Law, poverty rates among members of the LGBTQ+ community have dropped since the COVID-19 pandemic. But rates are still higher than for those who don't identify as LGBTQ+. The most recent report showed that:

• 17% of LGBT people in the U.S. lived in poverty in 2021 compared to 12% in non-LGBT communities
• 21% of transgender people lived in poverty in the U.S. in 2021 compared to 20% of cisgender bisexual women
• 26% of LGBT families with children experienced poverty in 2021

The report also indicated that LGBTQ+ people of color—notably, "Black, Latinx/Hispanic, Native Hawaiian/Pacific Islander (NH/PI), American Indian/Alaskan Native (AI/AN), and Multiracial people"—are more likely to experience poverty compared to White or Asian Americans.

How Poverty Is Measured

Poverty is commonly measured using income thresholds in many countries. Centralized bodies like the Census Bureau collect data and update the information on an annual basis based on inflation.

This information, which, in the U.S., is reported through the Consumer Price Index for All Urban Consumers (CPI-U), generally includes income thresholds compiled from different sizes and types of families or households. Each family member in a household that falls under the threshold is considered to be in poverty, according to the Census Bureau.

Certain types of individuals are not included in the count, as their level of poverty cannot be determined. These groups include:

• People within certain group settings like prisons and nursing homes
• Individuals living in military barracks
• Those living in college dorms
• People under the age of 15 whose income cannot be determined

Keep in mind that using income thresholds is just one way that countries measure poverty.

How To Reduce Poverty

The United Nations and the World Bank are major advocates of reducing world poverty. The World Bank has an ambitious target of reducing poverty to less than 3% of the global population by 2030. Some of the actionable plans to eliminate poverty include the following:

• Installing wells that provide access to clean drinking water
• Educating farmers on how to produce more food
• Constructing shelter for those in need
• Building schools to educate disadvantaged communities
• Providing enhanced access to better healthcare services by building medical clinics and hospitals

For poverty to be eradicated as the World Bank intends, communities, governments, and corporations need to collaborate to implement strategies that improve living conditions for the world’s poor.

Some of these strategies may include boosting socioeconomic conditions, fighting and eliminating systemic racism, establishing minimum wages that align with the cost of living, providing paid leave, and promoting pay equity.

The Bottom Line

Poverty is defined as the state or condition where people and communities cannot meet a minimum standard of living because they lack the proper resources. These include (but aren't limited to) financial resources, basic healthcare and education, clean drinking water, and infrastructure.

Living in the socioeconomic condition of poverty is a result of multiple factors such as race, sexual identity, sexual orientation, and access to education, among others.

Organizations such as the United Nations and the World Bank, which believe that poverty will continue to grow well beyond 2030, urge nations to fight it by implementing policies and regulations that can drastically improve the quality of living for all communities.