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Image: Rural Economy & Population

Poverty Overview

In 2012, 15 percent of the nation’s population lived in poverty, and poverty rates were higher in rural than in urban areas. In 2012, 17.7 percent of the population living in nonmetropolitan (nonmetro) areas, or about 8.5 million people, were poor. This poverty rate is slightly higher than the 2011 poverty rate (17.0 percent). The metropolitan (metro) area poverty rate was 14.5 percent in 2012, not statistically different from 2011 (14.6 percent). As a result, the gap between nonmetro and metro poverty rates widened, from 2.4 percentage points in 2011 to 3.2 percentage points in 2012. (See How Is Poverty Defined? for more about definitions and income thresholds used in determining poverty rates.)

The higher incidence of nonmetro poverty relative to metro poverty has existed since the 1960s when poverty rates were first officially recorded. In the 1980s, average poverty rates were 4.5 percentage points higher in nonmetro areas than in metro areas; in the 1990s, the average difference was 2.6 percentage points; from 2000 to 2009, the average difference was 2.7 percentage points. The difference in 2010 (1.6 percentage points) was the smallest on record and was only the second time since 1959 that the nonmetro/metro poverty rate gap had fallen below 2 percentage points (it was 1.8 in 1994). The uneven pace of the economic recovery following the 2007-09 recession has reversed, at least temporarily, the narrowing rural/urban poverty gap.

During the 1990s, the nonmetro poverty rate declined fairly steadily from a high of 17.2 percent in 1993 to a record-low rate of 13.4 percent in 2000. The decline in poverty during the 1990s was mirrored by growth in the economy overall. Between 1993 and 2000, the economy grew by 4 percent per year, significantly higher than the average growth rate of 2.7 percent during the 20 years prior to 1993. Nonmetro poverty rose during the 2001 recession to 14.2 percent where it remained for 3 consecutive years before increasing once again. The average nonmetro poverty rate from 2004 to 2007 was 15.0 percent. The nonmetro poverty rate grew by 1.9 percentage points from 2008 (15.1 percent) to 2011 (17.0 percent). In 2012 it increased again, to 17.7 percent, reaching its highest rate since 1986 when it was 18.1 percent. This indicates that due to the most recent economic downturn and subsequent slow recovery, an additional 1.1 million nonmetro residents fell below the poverty line from 2007 to 2012. Urban poverty rates have recently declined from their 2010 (14.9 percent) peak. It is too early to tell if 2012 will mark the highpoint in rural poverty rates following the 2007-09 recession.

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Child Poverty

An important indicator of the nation’s long-term well-being is poverty among children, since child poverty often has an impact that carries throughout a lifetime, particularly if the child lived in poverty at an early age. As with the early 1980s recession, rural children have been disproportionately affected by the recent economic downturn. Child poverty is more sensitive to labor market conditions than overall poverty, as children depend on the earnings of their parents. Older members of the labor force, including empty nesters and retirees, are less affected by job downturns, and families with children need higher incomes to stay above the poverty line than singles or those married without children.

Like the overall poverty rate, rural child poverty has also been historically higher than urban, and has increased to record high levels in 2012.

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Deep Poverty

"Deep poverty" is commonly defined as having cash income below half of one’s poverty threshold. In 2012, that meant a subsistence level of less than $1,000 a month for a family of 4. A total of 6.6 percent of the U.S. population experienced deep poverty in 2012, and 9.7 percent of all children. Unlike trends in the official poverty statistics, there is not a pronounced and consistent rural-urban gap in the share of the population experiencing deep poverty over time. Nonetheless, the slow rate of the economic recovery in rural areas following the recent recession is evident in the deep poverty trends, just as it was following the 1980-81 recessions. As with overall poverty, deep poverty among children is more acute in rural areas (12.2 percent) than in urban areas (9.2 percent). Not only are deep poverty rates among children higher than those for the overall population, but children have experienced higher rates of growth in deep poverty over the last decade, particularly in rural areas. While the 2012 rural/urban gaps in both total and deep poverty are not as large as they were in the 1980s, estimates indicate that, with child poverty increasing in rural areas in 2010-12 and urban child poverty declining, rural/urban gaps in child poverty may yet reach their mid-1980 levels.

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How Is Poverty Defined?

In the U.S., being in poverty is officially defined as having an income below a federally determined poverty threshold.  Poverty thresholds were developed in the 1960s and are adjusted annually to account for inflation. They represent the Federal Government’s estimate of the point below which a family of a given size has cash income insufficient to meet basic needs. Any family/individual with total income less than an amount deemed to be sufficient to purchase food, shelter, clothing, and other essential goods and services is classified as poor. (For details, see "How the Census Bureau Measures Poverty.") The amount of income necessary to purchase these basic needs is set by the Office of Management and Budget (OMB). The 2012 poverty line for an individual under 65 years of age was $11,945. The poverty line for a three-person family with one child and two adults was $18,480 in 2012; for a family with two adults and three children the poverty line was $27,400. For a complete list of poverty lines by size of family and number of children, see the U.S. Census Bureau's tables of Poverty Thresholds.) Income includes cash income (pretax income and cash welfare assistance), but excludes in-kind welfare assistance, such as food stamps and Medicaid. Poverty thresholds are set for families by size and composition, and they are updated annually to correct for inflation.

Metro-nonmetro comparisons of poverty rates pose some measurement issues that are worth bearing in mind. As one example, U.S. poverty rates do not make any adjustments for differences in cost of living across areas. If the cost of purchasing basic needs is lower in nonmetro areas, then the nonmetro poverty rate would overstate the actual level of poverty experienced by nonmetro residents. There are many other examples though, and the effect they would have on an area’s actual level of poverty can go in either direction. For example, the poverty thresholds do not account for the possibility that basic needs will differ across areas. Transportation to work in nonmetro areas may be much more expensive than in metro areas where access to public transit is greater. Similarly, the measure of poverty does not account for access to other "public goods" such as health care, schooling, or communication networks, or "public bads" such as noise and air pollution, which also differ systematically across metro and nonmetro areas.

Last updated: Friday, February 28, 2014

For more information contact: Tracey Farrigan