This report presents data for calendar year 1996 on the social and economic characteristics of the population living below the poverty level. These data were compiled from information collected in the March 1997 Current Population Survey (CPS) conducted by the Census Bureau. The poverty definition used in most of this report was originally adopted for official government use by the Office of Management and Budget in 1969. Poverty status is defined by a set of money income thresholds that vary by family size and composition. Families or individuals with income below their appropriate poverty thresholds are classified as poor.

The official poverty definition is based on pre-tax money income only, excluding capital gains, and does not include the value of noncash benefits such as employer-provided health insurance, food stamps, medicaid, medicare, or public housing. In the early 1980s the Census Bureau embarked on separate research programs to examine the effect of government noncash benefits on poverty and the effect of taxes on measures of the distribution of income. This report has a section entitled "Alternative Definitions of Poverty'' which presents updated estimates of the incremental effects of benefits and taxes on poverty for 1996.¹

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¹ For more information on the incremental effects of benefits and taxes on income, see the report entitled Money Income in the United States: 1996 (P60-197).

(The figures in parentheses denote 90-percent confidence intervals.)

• The poverty rate and the number of people living below the official government poverty level remained statistically unchanged between 1995 and 1996. In 1996, the number of persons in poverty was 36.5 (± 0.9) million, representing 13.7 (± 0.3) percent of the population.
• Between 1995 and 1996, there were no significant changes in poverty rates for Whites, Blacks, people of Hispanic origin, or Asians and Pacific Islanders.
• The poverty rate for people residing inside central cities declined significantly between 1995 and 1996, from 20.6 (± 0.8) percent to 19.6 (± 0.8) percent.
• There was a significant increase in the number (though not the percent) of the very poor (those whose total income was less than one-half of their poverty threshold). In 1996, 14.4 (± 0.3) million people were in this category, up from 13.9 (± 0.3) million in 1995.
• Based on comparing the two-year moving average of 1994-1995 with that for 1995-1996, eight states had statistically significant changes in their poverty rates. The poverty rate dropped in five states—Indiana, Louisiana, Michigan, Missouri and Texas—while three states—Arizona, Montana and Vermont—showed an increase.
• Using an alternative definition of income that added the value of means-tested noncash transfers (e.g. food stamps, housing subsidies, and medicaid) to post-tax cash income from the private and government sectors would result in 27.1 (± 0.8) million people being poor, and a corresponding poverty rate of 10.2 (± 0.5) percent, neither significantly changed from 1995.