- While the poverty thresholds had been calculated on the basis of after-tax money income, they were applied to income data — the Census Bureau's Current Population Survey — that used a before-tax definition of money income; this was done because when the thresholds were being developed, the Current Population Survey was the only good source of nationally representative income data. Orshansky was aware of the inconsistency involved, but there was no other alternative; she reasoned that the result would yield "a conservative underestimate" of poverty.
Numerous regulations for government assistance programs depend on the poverty level or threshold.
Problems with America's official definition
The Hoover Institution says:
- America’s most relied-upon metric for charting a course in our national effort to reduce and eliminate poverty appears to offer unreliable, and indeed increasingly misleading, soundings on where we are ...
- In fact, over the past three decades, the relationship between the [Official Poverty Rate] and ... other indicators has been perversely discordant.
- the material circumstances of persons officially defined as poor have improved broadly and appreciably over the past four decades.
- The official poverty rate is incapable of representing what it was devised to portray: namely, a constant level of absolute need in American society. The biases and flaws in the poverty rate are so severe that it has depicted a great period of general improvements in living standards — three decades from 1973 onward — as a time of increasing prevalence of absolute poverty.
- As technology progresses and the general standard of living rises, new consumption items are introduced. They may at first be purchased and used only by upper-income families; however, they gradually diffuse to middle- and lower-income levels. Things originally viewed as luxuries—for instance, indoor plumbing, telephones, and automobiles—come to be seen as conveniences and then as necessities.
- The Development and History of the U.S. Poverty Thresholds — A Brief Overview Gordon M. Fisher, Department of Health and Human Services
- Hoover Institution - The Mismeasure of Poverty Nicholas Eberstadt
- Relative or Absolute — New Light on the Behavior of Poverty Lines Over Time Gordon M. Fisher, Department of Health and Human Services