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From Hunter to Orshansky: An Overview of (Unofficial) Poverty Lines in the United States from 1904 to 1965 — Summary

Gordon M. Fisher
(202)690-6143
March 1994

(NOTE — The 75-page paper which is summarized here was presented October 28, 1993, at the Fifteenth Annual Research Conference of the Association for Public Policy Analysis and Management in Washington, D.C. [The paper was revised in August 1997 and is now 98 pages. The revised paper is available on the Census Bureau's Poverty Measurement Web site at the specific address. The views expressed in both this summary and the full paper are those of the author, and do not represent the position of the U.S. Department of Health and Human Services.])

After quasi-official use beginning in 1965, Mollie Orshansky's poverty thresholds were adopted as the federal government's official definition of poverty in 1969. Perhaps because of the prominence and official status of Orshansky's thresholds, some people think that they were the first American poverty lines. However, there were a number of unofficial poverty lines in the U.S. before 1965, although their history is not widely known. I believe that the "ancient history" of 1904-1965 American poverty lines is relevant to poverty definition and measurement today because I look at the drawing of poverty lines as a social process — not merely a technical economic exercise.

Early U.S. poverty lines grew out of a context of conflict during the late nineteenth and early twentieth centuries between two social groups with sharply opposed interests — urban industrial workers (many of them immigrants from southern and eastern Europe) and their families, and factory owners and industrialists who often violently resisted paying the workers a living wage. Early poverty lines and family budgets were developed not by the workers themselves, but by reformist social workers and others who were trying to improve the wretched living conditions of the industrial workers and their families. After a period of "prehistory" of working-class family expenditure studies during the last third of the nineteenth century, poverty or minimum subsistence lines during a period from roughly 1899 to roughly 1946 were generally derived from the study of "standard budgets" — lists of goods and services that a family of a specified size and composition would need to live at a designated level of well-being (together with the estimated monthly or annual costs of those goods and services). Some of the standard budgets of this period were developed to represent levels of living higher than poverty or minimum subsistence — a fact partially obscured by the wide variation in terms used to characterize various budgets.

The first(1) American I found who used the word "poor" together with a specific dollar figure was W.E.B. DuBois, who became one of the most prominent Afro-American scholars and leaders of the twentieth century. In an 1899 book, The Philadelphia Negro, DuBois included an implicit poverty line for the Philadelphia Negro community. He did not apply this poverty line to the nation as a whole or even to the city as a whole.

The first national poverty line that I have found was set by social worker Robert Hunter in his 1904 book, Poverty — $460 per year for the then-average family of five in the industrial states of the North, and $300 for such a family in the South. (After adjustment for inflation, the $460 figure would be equal to about 43 percent of Orshansky's nonfarm poverty threshold for a family of five.)

Although many poverty lines during the first third of the twentieth century were derived from standard budgets, three prominent book-length studies published in 1907-1910 did not use standard budgets. Instead, these studies assessed income adequacy for specific groups on the basis of families' actual consumption patterns rather than hypothetical budgets that families "ought" to be able to live up to. Margaret Byington, the author of one of these books, had a keen awareness of the unrealistically high expectations that the standard budget method imposes on the families for whom such budgets are developed, as indicated by a statement in a 1913 article: "Now that the theorists have effectively laid at rest the ghost of the economic man, there seems to be danger that the cost-of-living statisticians will create a new bogey, that of the economic woman; the woman who, without waste or extravagance, can on 22 cents per man per day for food, and 400 cubic feet of air space per adult, create a real home life and preserve the physical efficiency of her family."

As early as 1913 — less than a decade after the first budget-based minimum income standards — social worker John Shillady published an article in which he denounced private charities (run by fellow social workers) for making relief payments at levels well below these minimum income standards. This shows the deep roots in American social policy history of the current phenomenon of public assistance (Aid to Families with Dependent Children and Supplemental Security Income) payment levels being significantly lower than the official poverty level.

In 1917, a book on American labor conditions by a labor advocate and a U.S. Public Health Service statistician noted a "definite line of adequate subsistence" which was based not on standard budget studies but on recent studies of infant mortality by the U.S. Children's Bureau.

Most standard budget studies during this period were done by private or municipal researchers. During the New Deal, however, several low-income lines were developed in studies by federal government agencies, even though none of these lines was adopted as an official measure of poverty. In 1937, the Works Progress Administration issued standard budgets at two relatively low levels of living. In 1938, a report on the recent Study of Consumer Purchases included a low-income figure which was essentially an operationalization of President Roosevelt's "I see one-third of a nation ill-housed, ill-clad, ill-nourished."

After World War II there was a major break in the tradition of American poverty line studies. Poverty lines generally were derived not from standard budgets but by simply setting dollar figures, with greater or lesser amounts of supporting details and rationales. Poverty lines before about 1958 were relatively primitive; most of them did not have separate figures for different family sizes, and a number of them did not even adjust their figures for year-to-year price changes. After about 1958, poverty lines were less rudimentary; about half of them had separate figures for different family sizes. The post-1958 poverty lines were also generally higher in real terms than the pre-1958 poverty lines.

In 1949, the Congressional Joint Committee on the Economic Report [now the Joint Economic Committee] appointed a Subcommittee on Low-Income Families [SLIF] to do a study on that subject. A staff report cited figures of $2,000 (in 1948 dollars) for nonfarm families and $1,000 for farm families as designating the income group that the SLIF would study. In the relatively sparse poverty literature of the 1949-1958 period, the SLIF's $2,000 figure was adopted by a large majority of those articles which used someone else's poverty line rather than setting their own. [The best brief description of the status of the $2,000 figure would perhaps be "semi-unofficial."]

In December 1949 hearings, a representative of the Congress of Industrial Organizations (CIO)(2) rejected the $2,000 figure as too low; in 1953, CIO President Walter Reuther began using a $3,000 low-income line (the first person that I have found who did so).

In the 1954 and 1955 Economic Reports, President Eisenhower's Council of Economic Advisers quietly tried to replace the SLIF's $2,000 figure with figures of $1,500 and then $1,000. [The Council simply used the lower figures in brief discussions, without explicitly labelling them as poverty or low-income lines.] This attempt to push down the level of the poverty/low-income line was not successful.

In a chapter on poverty in The Affluent Society (1958), John Kenneth Galbraith used a low poverty line which must be classed with similar pre-1958 poverty lines. His eloquent conceptual description of poverty, however, may be classified as belonging with the post-1958 period of poverty studies: "People are poverty-stricken when their income, even if adequate for survival, falls markedly behind that of the community. Then they cannot have what the larger community regards as the minimum necessary for decency; and they cannot wholly escape, therefore, the judgment of the larger community that they are indecent. They are degraded for, in the literal sense, they live outside the grades or categories which the community regards as acceptable."

Poverty line studies were more frequent after 1958 than before 1958, reflecting — and also contributing to — an increasing concern about poverty in the U.S. Among those setting poverty lines in the post-1958 period were Robert Lampman (1959), Michael Harrington (The Other America, 1962), Leon Keyserling's Conference on Economic Progress (1962), and Gabriel Kolko (1962). In January 1964, when the War on Poverty was announced, President Johnson's Council of Economic Advisers (CEA) set a poverty line of $3,000 for families and $1,500 for unrelated individuals; this remained the quasi-official U.S. poverty line for a little over a year.

In 1960, Mollie Orshansky of the Social Security Administration had developed her first measures of income inadequacy in two publications which remain almost totally unknown to this day. In July 1963, Orshansky had published "Children of the Poor," describing an initial version of her poverty thresholds for families with children only; this article was cryptically referred to in the Council of Economic Advisers' January 1964 discussion of its $3,000/$1,500 poverty line. Disturbed by the CEA's failure to adjust its poverty line for family size (which had the effect of underestimating the number of poor children), Orshansky published "Counting the Poor: Another Look at the Poverty Profile" in January 1965. This article included a refined and extended version of her poverty thresholds(3) for all household types — families without children and unrelated individuals as well as families with children.

Two interesting developments closely followed Orshansky's January 1965 article. In February 1965, the American Enterprise Institute published a pamphlet by Rose Friedman containing a set of poverty lines roughly 30 percent lower than Orshansky's poverty thresholds; Friedman's poverty lines represented an effort to push the poverty line down below the Johnson CEA's $3,000 figure. In the spring of 1965, Victor Fuchs published a paper which was the first paper in the United States to propose a relative (half-of-median-income) definition of poverty(4); he noted that "The fact that these [absolute] standards [of poverty] have varied enormously with time and place indicates that the search for an absolute standard is like the pursuit of a will-o'-the-wisp....attempts to define poverty in absolute terms are doomed to failure because they run contrary to man's nature as a social animal."

In May 1965, the poverty thresholds in Orshansky's January 1965 article were adopted by the Office of Economic Opportunity as a working definition of poverty, marking the end of the pre-Orshansky era in U.S. poverty definition and measurement.

This overview of American poverty lines from 1904 to 1965 has led me to the following preliminary conclusions:

  1. Over time, there is no such thing as an "absolute" poverty line. As the real income of the general population has risen, poverty lines and subsistence budgets which were developed as purely "absolute" poverty lines have also risen in real terms. This has already been demonstrated in the literature on the income elasticity of the poverty line by Kilpatrick, Rainwater, Leveson, Appelbaum, and others. The findings in this paper — since they add "derivative" poverty lines, early informal estimates, and several standard budgets to the budgets assembled by Ornati — provide further evidence supporting the earlier findings. In constant dollars, pre-World-War-I poverty lines and minimum subsistence budgets were generally in the range of 43 to 54 percent of Orshansky's poverty threshold. By 1923, Dorothy Douglas' "minimum of subsistence" level was equal to 53 to 68 percent of Orshansky's threshold. Margaret Stecker's "emergency budget" for the Depression year of 1935 (published by the U.S. Works Progress Administration in 1937) was equal to 65 percent of Orshansky's poverty threshold. Robert Lampman's low-income line for 1957 (published in 1959) was equal to 88 percent of Orshansky's poverty threshold. Looking at the question from another direction, families in 1907 with constant-dollar incomes equivalent to 92 percent of Orshansky's poverty threshold were described as "liv[ing] well" and "satisfy[ing]...the reasonable ambitions of an American who puts his life into his work"; in 1965 — and even more so in 1993 — no reasonable person would describe a family with that real income as "living well."

     

  2. Hypothetical, "scientific" minimum-cost food budgets are an unsatisfactory means of determining the level of food expenditures that a real, living family needs to have a nutritionally adequate diet. I encountered a number of hypothetical food budgets about which the budgeters themselves commented that only a "super-woman" (to use Scott Nearing's trenchant phrase) would be able to feed a family adequately at the dollar cost indicated; this pattern goes back decades before the 1961 economy food plan. Lower-income homemakers were consistently being expected to show a skill in food buying that would have actually been greater than that of most middle-class homemakers — and were being stigmatized as "ignorant" and having "poor buying habits" when they failed to exhibit such impossible talents. Yet despite the "poor buying habits" stereotype, Agriculture Department and other studies have repeatedly shown that lower-income families get more calories and nutrients per food dollar than higher-income families. An explanation of these contradictions concerning minimum-cost food budgets can be found in the fact that the tradition of American nutrition research began in an effort (under Wilbur Atwater in the 1880's and 1890's) to purport to offer the working poor a higher standard of living while protecting employers from having to offer any increase in wages. (Atwater argued that if workers' families would only learn to buy their food more efficiently, the funds released would enable them to raise their standard of living in other areas without requiring businesses to increase the wages paid to workers. This argument appealed to businessmen who at the time were often using outright violence against employees striking for higher wages, and gave "scientific" backing to the widely prevalent cultural stereotype that the poor were poor only because they made wasteful, extravagant expenditures.)

     

  3. Poverty lines have usually been developed by advocates of the disadvantaged rather than by theoretical social scientists elucidating abstract concepts about minimum consumption. One frequently finds someone developing a poverty line or standard budget because s/he was angry about some social injustice and wanted to do something about it (hoping that more factual knowledge would help in combating the injustice). A number of early budgeters were indignant about industrialists conspicuously consuming luxuries while paying workers "starvation wages." The New York State Bureau of Labor Statistics in 1902 made a guess about what was an inadequate income level when it was investigating harsh working conditions among immigrants working in their often windowless tenements. Daisy and Wood Worcester developed a pair of standard budgets in 1908 because they were angry about six-year-old children being forced to labor in cotton mills and about the brutal working conditions in those mills. The 1949 Subcommittee on Low-Income Families was appointed out of concern for low-income families who were unable to pay market-level rents for housing and who were suffering the ravages of the severe post-war inflation.

    One noteworthy exception to this generalization about the role of advocates is that a few poverty lines were put forward by people whom one might call anti-advocates, since their goal was to push the level of the poverty line below a currently accepted level. Examples include the Eisenhower Council of Economic Advisers in 1954-1955 and Rose Friedman in 1965. (Presciently, Robert Lampman in 1965 noted another way in which such persons might operate: instead of proposing a lower dollar figure, they might change the definition of income used.)

     

  4. Throughout the first two thirds of the twentieth century, a noticeable proportion of the persons involved in developing poverty lines (and standard budgets generally) were women. This conclusion is well illustrated by a striking statement made in 1965 by Eugene Smolensky (then an associate professor of business economics at the University of Chicago): "...of course this field [counting the poor] belongs to these ladies of the Federal Government, not only the ones who are here [Mollie Orshansky, Helen Lamale, and Faith Clark], but you know all the names: Faith Williams, Lenore Epstein, and Margaret Stecker, and Eleanor Snyder, and the woman who taught me everything I know in this area, Dorothy Brady....What these ladies do, obviously, is eminently sensible: they draw a poverty line; they try to establish some kind of minimum income on the basis of some kind of definition of need." (Among the "ladies" Smolensky named were employees of the Social Security Administration's Division/Office of Research and Statistics, in which the poverty thresholds had just been developed; employees of the Bureau of Labor Statistics who had helped developed the City Worker's Family Budget; and employees of the Bureau of Human Nutrition and Home Economics who had helped develop the Agriculture Department's food plans.) Further examples can be found back as far as the first decade of the twentieth century.

     

  5. (Macro)economists did not get involved in poverty line studies in large numbers — and poverty studies did not become a distinct field as such — before the beginning of the War on Poverty in 1964. Most of the literature that I used to write this paper was found outside traditional economic publications.

 

1.  [Since writing the original paper, I have found one earlier instance of the use of the word "poverty" together with a specific dollar figure — in the 1870-1871 report of the Massachusetts Bureau of Statistics of Labor. At that time, the Bureau was controlled by labor reformers who were advocating that the standard workday be reduced to only ten hours.]

2.  [Before the 1955 merger of the American Federation of Labor and the CIO, the CIO was the more liberal of the two labor federations.]

3.  In both the July 1963 article and the January 1965 article, Orshansky actually described two sets of poverty thresholds, one derived from the Agriculture Department's low-cost food plan and one derived from the cheaper economy food plan. It was the lower of these — the set of thresholds based on the economy food plan — that was adopted by the Office of Economic Opportunity in May 1965.

4.  However, note that Peter Townsend (the dean of post-World-War-II British poverty studies) had proposed this relative poverty definition in a paper published in a British journal three years earlier.