The poverty line was first established in 1964 by the federal government as a measure of 'need'. The measure was based on the assumption that a poor family spends one-third of their budget on food. The measure is an estimate of the cost of an "economy food plan," essentially how much food is required for temporary use, and then multiplying this cost by three. The poverty level is readjusted annually by the Consumer Price Index to account for inflation, but the logic and assumptions for the estimate have remained the same since 1964. The official poverty line is the same across the 48 contiguous states (Hawaii and Alaska have different measures). In 2009 the poverty line for a family of four is $22,050. In 2000, the poverty line for a family of four was $17,050.
Critics of the poverty line point-out that some of the assumptions used to create the measure are outdated. Today, other costs take up larger portions of families' budgets: for example, housing costs; transportation costs; health insurance and medical costs; and childcare to name a few. Also the measure ignores the wide regional variation in the cost of living. Many social scientists argue that if current social and economic considerations were part of the assumptions behind the logic of the poverty measure, the official poverty line would be at least 50% higher than the current measure: the nation's gauge of poverty has worn out.
Leslie Hossfeld, University of North Carolina Wilmington