America's poverty formula began with a grocery budget

A food budget became a measure of poverty

In the early 1960s, economist Mollie Orshansky needed a practical way to estimate how much income a family required. The federal government had developed low-cost food plans, and household spending data suggested that families spent about one-third of their income on food. Orshansky used a simple multiplier: the cost of the food plan times three. That produced a broader budget estimate without requiring a detailed price tag for every household need.

The resulting thresholds varied by family size and composition. They were meant to mark an income level below which a family was unlikely to be able to afford basic necessities—not to describe the exact budget of every family.

Why the old calculation persists

The official poverty thresholds were set using that 1960s method and are adjusted over time for inflation. They are not recalculated each year from current grocery prices or from a modern estimate of how families divide spending among food, housing, child care, and other costs. The original food-budget relationship remains embedded in the measure.

That continuity makes the threshold useful for tracking poverty over time: a stable method helps distinguish changes in living standards from changes in the measuring rule. But it also means the line may not reflect how much a family needs in a particular place today, especially when housing or other expenses take up far more than one-third of its budget.

One official line, not the whole picture

The official measure is widely used to count people in poverty and guide policy, but it is not the only federal approach. The Supplemental Poverty Measure, for example, considers a broader set of expenses and resources, including housing costs and certain government benefits.

So the 1960s formula survives not because food still costs what it did then, but because it became the anchor for a consistent national yardstick. Its strength is comparability; its limitation is that a family’s real budget can look very different from the one that first set the line.