Poverty Thresholds

In 1963-1964, Molly Orshansky of the Social Security Administration developed poverty thresholds. Orshansky based her poverty thresholds on the "thrifty food plan," which was the cheapest of four food plans developed by the Department of Agriculture. The food plan was "designed for temporary or emergency use when funds are low," according to the USDA. Based on the 1955 Household Food Consumption Survey from the USDA (the latest available survey at the time).


Orshansky knew that families of three or more persons spent about one third of their after-tax income on food. She then multiplied the cost of the USDA economy food plan by three to arrive at the minimal yearly income a family would need. Using 1963 as a base year, she calculated that a family of four, two adults and two children would spend $1,033 for food per year. Using her formula based on the 1955 survey, she arrived at $3,100 a year ($1,033 x3) as the poverty threshold for a family of four in 1963.


Orshansky differentiated her thresholds not only by family size, but also by farm/non-farm status, by the number of family members who were children, gender of the head of household, and by aged/non-aged status. The result was a detailed matrix of 124 poverty thresholds. Generally, the figures cited were weighted average thresholds for each family size.