The term "poverty threshold" is used to refer to the dollar amount that a household needs to meet its needs. Any individuals or families whose pretax income falls below this dollar amount are considered to be "poor" in the technical sense of the word.
As of 2014, the poverty threshold for an individual under 65 years of age was 12,316 USD. For a household of two people the poverty threshold was set at 15,379 USD, for three people it was 18,850, and this dollar amount increases along with the number of people in a household until it reaches an amount of $49,021 for a household of nine people (these numbers vary for the amount of children under 18 in a home). The "poverty threshold" concept was originally developed by the American economist Mollie Orchansky in the 1960s. In any given year, the poverty threshold is determined by the United States census bureau.
What Makes a State Poor?
Among the factors that are common to the poorest states in the United States are high unemployment rates, low minimum wages, and a deficient social safety net. Furthermore, even when there are jobs in these states, they tend to be different kinds of jobs and in different industries than those that are prevalent in states with the lowest poverty rates. Specifically, low-paying manufacturing jobs and jobs in the customer service sector tend to be more common in states with the highest poverty rates. Higher paying jobs such as those in information technology, professional services, and finance are far more common in states with the lowest poverty rates.
In 2014, Louisiana was the state with the highest rate of poverty in the United States, with 23.1% of its citizens living below the poverty threshold. By contrast, the state with the lowest poverty rate in the country was New Hampshire, with 7.2% living below the poverty threshold.
The Poor States
Many of the states with the highest rates of poverty in the USA are located in the country's south, and these include West Virginia, Kentucky, and Louisiana.
Compounding its high rate of poverty, Louisiana has a particularly bad problem with income disparity across gender, with women's average earnings being only two-thirds that of what men in Louisiana make. Additionally, the unemployment rate in Louisiana is 20% higher than the national average. However, this is not to say that there are not plenty of people who live comfortably in the poorest states. In Louisiana, the wealthiest fifth of the population earns 18 times more than the poorest fifth.
Problems with the poverty threshold
Although the poverty threshold is an accurate metric when it comes to determining poverty rates in the United States by state, it is by no means a perfect one.
For instance, a college student from a well-off middle-class family from Connecticut (one of the states with the lowest rate of poverty in 2014 with 8.6% living below the poverty threshold) who is living out of the family home may be considered poor. Likewise, a single mother who earns 23,000 annually, but still has to rely on government assistance and food programs to feed herself and her child will not be considered to be below the poverty threshold.