In determining the poverty status of families and unrelated individuals, the Census Bureau uses thresholds (income cutoffs) arranged in a two-dimensional matrix. The matrix consists of family size (from one person to nine or more people) cross-classified by presence and number of family members under 18 years old (from no children present to eight or more children present). Unrelated individuals and two-person families are further differentiated by age of reference person (householder) (under 65 years old and 65 years old and over).

To determine a person's poverty status, one compares the person's total family income in the last 12 months with the poverty threshold appropriate for that person's family size and composition (see example below). If the total income of that person's family is less than the threshold appropriate for that family, then the person is considered "below the poverty level," together with every member of his or her family. If a person is not living with anyone related by birth, marriage, or adoption, then the person's own income is compared with his or her poverty threshold. The total number of people below the poverty level is the sum of people in families and the number of unrelated individuals with incomes in the last 12 months below the poverty threshold.

Since ACS is a continuous survey, people respond throughout the year. Because the income questions specify a period covering the last 12 months, the appropriate poverty thresholds are determined by multiplying the base-year poverty thresholds (1982) by the average of the monthly inflation factors for the 12 months preceding the data collection. See the table in Appendix A titled "Poverty Thresholds in 1982, by Size of Family and Number of Related Children Under 18 Years (Dollars)," for appropriate base thresholds. See the table "The 2012 Poverty Factors" in Appendix A for the appropriate adjustment based on interview month.

For example, consider a family of three with one child under 18 years of age, interviewed in July 2012 and reporting a total family income of $14,000 for the last 12 months (July 2011 to June 2012). The base year (1982) threshold for such a family is $7,765, while the average of the 12 inflation factors is 2.35795. Multiplying $7,765 by 2.35795 determines the appropriate poverty threshold for this family type, which is $18,309. Comparing the family's income of $14,000 with the poverty threshold shows that the family and all people in the family are considered to have been in poverty. The only difference for determining poverty status for unrelated individuals is that the person's individual total income is compared with the threshold rather than the family's income.

Poverty status was determined for all people except institutionalized people, people in military group quarters, people in college dormitories, and unrelated individuals under 15 years old. These groups were excluded from the numerator and denominator when calculating poverty rates.

Specified poverty levels are adjusted thresholds that are obtained by multiplying the official thresholds by specific factor. Using the threshold cited from the previous example (a family of three with one related child under 18 years responding in July 2012), the dollar value at 125 percent of the poverty threshold was $22,886 ($18,309 x 1.25).

Income deficit represents the difference between the total income in the last 12 months of families and unrelated individuals below the poverty level and their respective poverty thresholds. In computing the income deficit, families reporting a net income loss are assigned zero dollars and for such cases the deficit is equal to the poverty threshold.

This measure provides an estimate of the amount, which would be required to raise the incomes of all poor families and unrelated individuals to their respective poverty thresholds. The income deficit is thus a measure of the degree of the impoverishment of a family or unrelated individual. However, please use caution when comparing the average deficits of families with different characteristics. Apparent differences in average income deficits may, to some extent, be a function of differences in family size.

Aggregate income deficit refers only to those families or unrelated individuals who are classified as below the poverty level. It is defined as the group (e.g., type of family) sum total of differences between the appropriate threshold and total family income or total personal income. Aggregate income deficit is subject to rounding, which means that all cells in a matrix are rounded to the nearest hundred dollars. (For more information, see "Aggregate" under "Derived Measures.")

Mean income deficit represents the amount obtained by dividing the aggregate income deficit for a group below the poverty level by the number of families (or unrelated individuals) in that group. (The aggregate used to calculate mean income deficit is rounded. For more information, see "Aggregate Income Deficit.") As mentioned above, please use caution when comparing mean income deficits of families with different characteristics, as apparent differences may, to some extent, be a function of differences in family size. Mean income deficit is rounded to the nearest whole dollar. (For more information on means, see "Derived Measures.")

Since poverty is defined at the family level and not the household level, the poverty status of the household is determined by the poverty status of the householder. Households are classified as poor when the total income of the householder's family in the last 12 months is below the appropriate poverty threshold. (For nonfamily householders, their own income is compared with the appropriate threshold.) The income of people living in the household who are unrelated to the householder is not considered when determining the poverty status of a household, nor does their presence affect the family size in determining the appropriate threshold. The poverty thresholds vary depending upon three criteria: size of family, number of children, and, for one- and two- person families, age of the householder.

Question/Concept History -

Derivation of the Current Poverty Measure

When the original poverty definition was developed in 1964 by the Social Security Administration (SSA), it focused on family food consumption. The U.S. Department of Agriculture (USDA) used its data about the nutritional needs of children and adults to construct food plans for families. Within each food plan, dollar amounts varied according to the total number of people in the family and the family's composition, that is, the number of children within each family. The cheapest of these plans, the Economy Food Plan, was designed to address the dietary needs of families on an austere budget.

Since the USDA's 1955 Food Consumption Survey showed that families of three or more people across all income levels spent roughly one-third of their income on food, the SSA multiplied the cost of the Economy Food Plan by three to obtain dollar figures for total family income. These dollar figures, with some adjustments, later became the official poverty thresholds. Since the Economy Food Plan budgets varied by family size and composition, so too did the poverty thresholds. For two-person families, the thresholds were adjusted by slightly higher factors because those households had higher fixed costs. Thresholds for unrelated individuals were calculated as a fixed proportion of the corresponding thresholds for two-person families.

The poverty thresholds are revised annually to allow for changes in the cost of living as reflected in the Consumer Price Index for All Urban Consumers (CPI-U). The poverty thresholds are the same for all parts of the country; they are not adjusted for regional, state, or local variations in the cost of living.

Limitation of the Data - Beginning in 2006, the population in group quarters (GQ) is included in the ACS. The part of the group quarters population in the poverty universe (for example, people living in group homes or those living in agriculture workers' dormitories) is many times more likely to be in poverty than people living in households. Direct comparisons of the data would likely result in erroneous conclusions about changes in the poverty status of all people in the poverty universe.

Comparability - Because of differences in survey methodology (questionnaire design, method of data collection, sample size, etc.), the poverty rate estimates obtained from American Community Survey data may differ from those reported in the Current Population Survey, Annual Social and Economic Supplement, and those reported in Census 2000. Please refer to (http://www.census.gov/acs) for more details.

There were two types of coding operations: (1) automated coding where a write-in response was automatically coded if it matched a write-in response already contained in a database known as the "master file," and (2) expert coding, which took place when a write-in response did not match an entry already on the master file, and was sent to expert coders familiar with the subject matter. During the coding process, subject-matter specialists reviewed and coded written entries from the "Yes, another Hispanic, Latino or Spanish origin" write-in response category on the Hispanic origin question.

If an individual did not provide a Hispanic origin response, their origin was allocated using specific rules of precedence of household relationship. For example, if origin was missing for a natural-born child in the household, then either the origin of the householder, another natural-born child, or spouse of the householder was allocated. If Hispanic origin was not reported for anyone in the household and origin could not be obtained from a response to the race question, then the Hispanic origin of a householder in a previously processed household with the same race was allocated. Surnames (Spanish and Non-Spanish) were used to assist in allocating an origin or race.

Question/Concept History

Beginning in 1996, the American Community Survey question was worded "Is this person Spanish/Hispanic/Latino?" In 2008, the question wording changed to "Is this person of Hispanic, Latino, or Spanish origin?" From 1999 to 2007, the Hispanic origin question provided an instruction, "Mark (X) the "No" box if not Spanish/Hispanic/Latino." The 2008 question, as well as the 1996 to 1998 questions, did not have this instruction. In addition, in 2008, the "Yes, another Hispanic, Latino, or Spanish" category provided examples of six Hispanic origin groups (Argentinean, Colombian, Dominican, Nicaraguan, Salvadoran, Spaniard, and so on).

Limitation of the Data

Beginning in 2006, the population in group quarters (GQ) is included in the ACS. Some types of GQ populations may have Hispanic or Latino origin distributions that are different from the household population. The inclusion of the GQ population could therefore have a noticeable impact on the Hispanic or Latino origin distribution. This is particularly true for areas with a substantial GQ population.

Comparability

The ACS question on Hispanic origin was revised in 2008 to make it consistent with the 2010 Census Hispanic origin question. The reporting of specific Hispanic groups (e.g., Colombian, Dominican, Spaniard, etc.) increased at the national level. The change in estimates for 2012 may be due to demographic changes, as well as factors including questionnaire changes, differences in ACS population controls, and methodological differences in the population estimates. Caution should be used when comparing 2012 estimates to estimates from previous years. The 2012 Hispanic origin question is different from the Census 2000 question on Hispanic origin, therefore comparisons should be made with caution. More information about the changes in the estimates is available (http://www.census.gov/population/hispanic/files/acs08researchnote.pdf).

See the 2012 Code List on the ACS website (http://www.census.gov/acs) for Hispanic Origin Code List.