Guidelines on What Is Considered Low Income

There are two primary sets of statistics the federal government and other entities use to determine income eligibility for different types of assistance program--the federal poverty line and the Department of Housing and Urban Development's (HUD's) income limits. While most federal programs use the poverty line to regulate program access, HUD's income limits are more precise in regards to expressing the extent to which a household is low-income, relative to other segments of the population.

Discussion

• As the Department of Health and Human Services (HHS) explains, two agencies issue federal poverty line figures--HHS and the U.S. Census Bureau. Both thresholds provide one number that varies with family size, but does not take into account geography. For example, the federal poverty line is the same in New York City and San Francisco as it is in less-expensive places.

Function

• As noted, governments and other providers of public assistance rely on income statistics to limit access to programs. As the HHS website states, for instance, HHS uses the poverty line for programs such as Head Start and the Community Services Block Grant, while the Department of Labor uses it for Job Corps and the National Farmworker Jobs Program. Often, agencies indicate that a family's income can be a certain percentage, such as 125 or 150 percent, of the poverty line to qualify for benefits.

Categories

• Three main categories result from HUD's income limits. As the HUD Data Sets website points out, HUD considers families with household earnings at or below 80 percent of their area's median income "low-income." HUD classifies a household with income at or below 50 percent of their area's median "very-low income." Families whose combined household earnings top out at or below 30 percent of their area's median fall into the "extremely low-income" group. The federal poverty line, on the other hand, is essentially a dichotomous measure.

Geography

• HHS's federal poverty line takes geography into account only to the extent that it provides three sets of figures--one for the contiguous 48 states and the District of Columbia, one for Alaska and one for Hawaii. The Census Bureau publishes the same numbers for all 50 states and D.C., according to HHS. HUD calculates 80, 50 and 30 percent of the median income for metropolitan areas and counties throughout the United States to come up with its figures.

Example

• In Orange County, California, HUD considers a six-person household earning $86,200 or less "low-income." If the same size family has income of $32,350, HUD puts it in the "extremely low-income" group. These numbers drop considerably in California's less-affluent enclaves, such as Bakersfield, Chico and Fresno where $52,300 and $19,650 represent the cut-offs for the "low-income" and "extremely low-income" classifications, respectively, as of 2010.