Learning Objectives
- Understand how official poverty in the United States is measured, as well as its limitations.
- Describe the extent of poverty and economic inequality.
- Summarize how the classical sociological theoretical perspectives frame or explain poverty and economic inequality.
- Identify differences in poverty by social location and other factors such as race, gender, age, and family structure.
- List some of the consequences of poverty.
- Summarize the causes and consequences of increasing economic inequality.
- List successful and promising strategies to reduce poverty and economic inequality.
Sociologists group people according to how much they have. However, sociologists consider more than money in their defining of these groups. Instead, they define stratification as a socioeconomic system that divides society’s members into categories ranking from high to low based on things like wealth, power, and prestige. Systems of stratification can be as extreme as slavery or apartheid. They can be as long-lasting as caste. Or they can be as common as social class, a group that shares a common social status based on factors like wealth, income, education, and occupation.
This picture demonstrates stratification. In the front, we can see the tarps and belongings of houseless people. In the background, we see the skyscrapers of a modern wealthy economy. Where do you see stratification at work in your own life?
“Photo” by Alan Taylor is licensed under CC BY-2.0d
Wealth includes anything you own – your house, your car, and perhaps your inheritance from your great-grandmother. Income is the money a person earns from work or investments. Income may include your paycheck or royalties from the book that you wrote. Another term for this combination of factors is socioeconomic status (SES), an individual’s level of wealth, power, and prestige.
Karl Marx, the German philosopher introduced in the Sociology chapter, focused on ownership of wealth or businesses to define class. In his model, workers who own nothing except the clothes on their backs would always conflict with the rich, those who owned businesses and property. Max Weber, another German sociologist from the prior chapter, added ideas of skill status and power to the concept of social class.
The chart below shows one model of class in the US, comparing the education, occupation, income, housing status, and percentage of population for each social class. Although sociologists don’t always agree on the names of the classes or where the boundaries are, we can begin to see how social stratification itself changes people’s life chances. For example, people in the capitalist class, who are only about 1% of the total population, not only have more money, but more access to prestigious education and jobs. These connections help them maintain their wealth and power.
US Social Class Structure, 2020
| Social Class |
Percent of Population |
Household Income |
Education |
Occupation |
Housing |
| Capitalist |
1% |
$650,000+ (often inherited) |
Elite university, private tutoring |
Investors, heirs, and executives |
Own multiple personal homes and others’ homes; concentrated in large cities |
| Upper-class |
9% |
$200,000- $650,000 |
Prestigious university |
Executives, professionals,and investors |
Own a primary home and a vacation home |
| Upper-middle-class |
8% |
$150,000- $200,000 |
College, university, or advanced degree |
Professionals and upper managers |
Own at least a primary home |
| Middle-class |
27% |
$75,000- $149,000 |
High school, some trade school or apprentice- ship |
Lower managers, supervisors, trades, farmers |
Depending on race may own or rent a home |
| Lower-middle-class |
17% |
$50,000- $75,000 |
High school |
Factory workers |
Rent a home |
| Working-class |
20% |
$25,000- $49,000 |
Some high school |
Service workers, retail or tourist economy workers |
Rent homes, but housing insecure |
| Lower-class / Poverty |
18% |
Under $25,000 |
Less than high school |
Unemployed, disabled, or receiving other government assistance |
Housing insecure or houseless |
This table shows the characteristics of each social class in the United States, and the percent of each class in the United States population. Do you know anyone who has changed their social class?
No credit provided
On the other hand, people of the lower class may experience poverty. Poverty is the state of lacking the material and social resources an individual requires to live a healthy life. In this social class, people are often housing insecure or houseless. They may experience hunger and can’t access medical care. Social justice advocates often argue that stabilizing a person’s housing is the first thing that should happen when someone is houseless. This stability supports people in addressing other concerns such as partner violence or chronic health conditions. We will discuss housing instability further in the following chapter. This chapter focuses on other aspects of the social problem of poverty, as well as the widening gap between those at the bottom and those at the top of the social class hierarchy.
Measuring Poverty
The US Department of Health and Human Services (HHS) today uses two slightly different models when calculating poverty: Poverty thresholds and poverty guidelines.
When US officials became concerned about poverty during the 1960s, they quickly realized they needed to find out how much poverty we had. To do so, a measure of official poverty, or a poverty threshold (the 'poverty line'), was needed. A government economist, Mollie Orshansky, first calculated this threshold in 1963 by multiplying the cost of a very minimal diet by three, as a 1955 government study had determined that the typical American family spent one-third of its income on food. Thus a family whose cash income is lower than three times the cost of a very minimal diet is considered officially poor.
This way of calculating the official poverty line has not changed since 1963. It is thus out of date for many reasons. For example, many expenses, such as heat and electricity, child care, transportation, and health care, now occupy a greater percentage of the typical family’s budget than was true in 1963. In addition, this official measure ignores a family’s noncash income from benefits such as food stamps and tax credits. As a national measure, the poverty line also fails to take into account regional differences in the cost of living. All these problems make the official measurement of poverty highly suspect. As one poverty expert observes, “The official measure no longer corresponds to reality. It doesn’t get either side of the equation right – how much the poor have or how much they need. No one really trusts the data” (DeParle et. al. 2011).
Further, the 'poverty line' does not capture the many hardship experiences of people who live under it or right above it. Poverty scholar Matthew Desmond (2023: 23) explains:
"Poverty is often material scarcity piled on chronic pain piled on incarceration piled on depression piled on addiction––on and on it goes. Poverty isn't a line. It's a tight knot of social maladies. It is connected to every social problem we care about––crime, health, education, housing––and its persistence in American life means that millions of families are denied safety and security and dignity in one of the richest nations in the history of the world."
Thus, when we discuss the poverty line, we should keep in mind the lived experiences of the people who live under or near it, rather than focusing exclusively on how many people fall under it.
The measure of official poverty began in 1963 and stipulates that a family whose income is lower than three times the cost of a minimal diet is considered officially poor. This measure has not changed since 1963 even though family expenses have risen greatly in many areas.
Wikimedia Commons – public domain
The poverty threshold is adjusted annually by the US Census and is used mainly for statistical purposes, for instance measuring how many people are in poverty. Poverty guidelines, on the other hand, are released yearly by the secretary of the Department of Health and Human Services and are a simplified version of the thresholds. Poverty guidelines are used for administrative purposes, to help determine who qualifies for federal programs. It is adjusted for inflation and takes into account the number of people in a family. In 2025, the poverty guideline for a family of four within the 48 contiguous states and the District of Columbia was $32,150. This means that the poverty guidelines are different for persons living in Alaska or Hawaii. For four persons living in Alaska it is $40,190, and is $36,980 for four persons in Hawaii (ASPE 2025). Thus, a four-person family earning even one more dollar than $32,150 in 2025 in Texas, for example, was not officially poor, even though its 'extra' income could hardly lift the family out of dire economic straits.
Poverty experts have calculated a no-frills budget that enables a family to meet its basic needs in food, clothing, shelter, and so forth. This budget is about twice the poverty line. Families with incomes between the poverty line and twice the poverty line (or twice poverty) are barely making ends meet, but they are not considered officially poor. When we talk here about the poverty level, then, keep in mind that we are talking only about official poverty and that there are many families and individuals living in near poverty who have trouble meeting their basic needs, especially when they face unusually high medical expenses, motor vehicle expenses, or the like. For this reason, many analysts think families need incomes twice as high as the federal poverty level just to get by (Wright, Chau, & Aratani 2011). They thus use twice-poverty data (i.e., family incomes below twice the poverty line) to provide a more accurate understanding of how many Americans face serious financial difficulties, even if they are not living in official poverty.
The Extent of Poverty
With this caveat in mind, how many Americans are poor? The US Census Bureau gives us some answers that use the official measure of poverty developed in 1963. In 2023, 11.1% of the US population, or 36.8 million Americans, lived in official poverty (Census 2025). The figure below shows the trend in official poverty since 1959. Poverty rates declined substantially over the 1960s, before rising and falling over the subsequent decades.
This chart displays the number of people in poverty (top) and the percentage of people in poverty (bottom) from 1959 to 2023. Notice the decline over the 1960s. What do you think helped reduce the poverty rate in that decade?
Source: Shrider 2024; U.S. Census Bureau
Another way of understanding the extent of poverty is to consider episodic poverty, defined by the Census Bureau as being poor for at least two consecutive months. In the US in 2022, more than 1 in 6 individuals (16%) experienced episodic poverty, and more than 1 in 5 children (21.3%) experienced it (King 2024). As these figures indicate, people go into and out of poverty, but even those who go out of it usually do not move very far from it.
Problems in the official poverty measure have led the Census Bureau to develop the Supplemental Poverty Measure (SPM) in 2009. This measure takes into account the many family expenses in addition to food, as well as geographic differences in the cost of living, taxes paid and tax credits received, and the provision of food stamps, Medicaid, and certain other kinds of government aid. This measure yields an estimate of poverty that is typically higher than the rather simplistic official poverty measure that, as noted earlier, is based solely on the size of a family and the cost of food and the amount of a family’s cash income.
The SPM in 2023 was 12.9% (Census 2024a), far higher than the 11.1% figure calculated with the official poverty measure. Without the help of Social Security, SNAP (food stamps), and other federal programs, at least 25 million additional people would be classified as poor (Sherman 2011). These programs thus are essential in keeping many people above the poverty level, even if they still have trouble making ends meet and even though the poverty rate remains unacceptably high.
A final figure is worth noting. Recall that many poverty experts think that the twice-poverty threshold – the percentage and number of people living in families with incomes below twice the official poverty level – are a better gauge than the official poverty level of the actual extent of poverty in the US. Using this threshold in 2023, 26.9% of the US population fell below twice the poverty threshold – $61,800 for a family of four (Shrider 2024). Twice-poverty data paint a discouraging picture.
Later in this chapter we will examine more data related to poverty, such as variation by race, gender, and family structure. We will also discuss the consequences of poverty. Now, we turn to the broader issue of economic inequality.
Economic Inequality
Economic inequality refers to the extent of the economic difference between the rich and the poor. Because most societies are stratified, there will always be some people who are richer or poorer than others, but the key question is how much richer or poorer they are or should be. When the gap between them is large, we say that much economic inequality exists; when the gap between them is small, we say that little economic inequality exists.
There are two common measures of economic inequality: Income inequality, which measures differences in individual or household income, and wealth inequality, which measures differences in individual or household wealth. Household income or wealth is sometimes called family income or wealth.
The US has a very large degree of economic inequality, for both income and wealth. A common way to examine income and wealth inequality is to rank the nation’s families by income from lowest to highest and then to divide this distribution into fifths, or quintiles. We can categorize the poorest fifth of the nation’s families (the 20 percentile of families with the lowest family incomes), a second fifth with somewhat higher incomes, and so on until we reach the richest fifth of families (the 20 percentile with the highest incomes). We then examine income inequality by seeing what percentage each fifth has of the nation’s entire income. In 2023, the poorest fifth earned only 3.1% of the nation’s income, while the richest fifth enjoyed 51.9% (Census 2024b). Another way of saying this is that the richest 20% of the population had more income than the remaining 80% of the population.
We may also look at the wealth distribution. At the end of 2024, the top 10% of households had $8.1 million on average and controlled 67.2% of total household wealth in the nation. In contrast, the bottom 50% of households had only $60,000 on average and held only 2.5% of total household wealth in the nation. Additionally, income and wealth are tightly connected. For instance, the top fifth of households by income held over 71% of total household wealth in late 2024 (Kent 2025).
The video below uses older data – economic inequality is even worse today than when it was made – though it illustrates clearly how uneven the wealth distribution is, and compares the reality to what people think is happening and what people feel should be happening.
This video helps us visualize the extent of economic inequality, though it is larger today than when the video was made. Which distribution do you think is fair, or in other words, how much inequality do you think is too much?
Wealth Inequality in America by politizane is licensed under the standard YouTube license
We will discuss changes in economic inequality over the past five decades on the Patterns page, as well as what factors contributed to increasing inequality.
Global Inequality
As serious as poverty and economic inequality are in the US, poverty in much of the rest of the world may be beyond comprehension to the average American. Many of the world’s poor live in such desperate circumstances that they would envy the lives of poor Americans, though there are some areas of overlap in experience such as lacking access to adequate health care or to clean water.
The data map below displays the proportion of people in poverty across the globe in 2025. We see clear variation in different regions of the world, with poverty concentrated in Africa.
This map illustrates the proportion of people in poverty in 2025, with darker-shaded countries having more poverty. Where does the United States stand relative to other portions of the world?
Source: World Population Review 2025
The highest poverty rate is found in South Sudan at 82.3%, followed by Equatorial Guinea at 76.8%, and Madagascar at 70.7%. In contrast, Ukraine, Belarus, and Vietnam have the lowest poverty rates at 1.6%, 3.9%, and 4.3%, respectively (World Population Review 2025). You might think that the US would be near the bottom with a low poverty rate; however, it is quite far up the list. Feel free to check out the list or the map at the World Population Review's Poverty Rate by Country site.
Lessons from Other Societies
Why the US has More Poverty than Other Western Societies
The chart below displays poverty by nation, as defined by half the median household income of the total population. In 2021, 15.2% of the US population lived in poverty. By comparison, other Western democracies had far lower poverty rates with this measurement. For instance, the poverty rate was 11.7% for the United Kingdom, 10.5% for Canada, and 6.3% for Denmark – less than half of the US rate.
Source: OECD 2025
Why is there so much more poverty in the US than in its Western counterparts? Several differences between the US and the other nations stand out (Brady, 2009; Russell, 2011). First, other Western nations have higher minimum wages and stronger labor unions than the US has, and these lead to incomes that help push people above poverty. Second, these other nations spend a much greater proportion of their gross domestic product on social expenditures (income support and social services such as child-care subsidies and housing allowances) than does the US. As sociologist John Iceland (2006: 136) notes:
“Such countries often invest heavily in both universal benefits, such as maternity leave, child care, and medical care, and in promoting work among [poor] families…The United States, in comparison with other advanced nations, lacks national health insurance, provides less publicly supported housing, and spends less on job training and job creation.”
Block and colleagues (2006: 17) agree:
"These other countries all take a more comprehensive government approach to combating poverty, and they assume that it is caused by economic and structural factors rather than bad behavior."
The experience of the United Kingdom provides a striking contrast between the effectiveness of the expansive approach used in other wealthy democracies and the inadequacy of the American approach. In 1994, about 30 percent of British children lived in poverty; by 2009, that figure had fallen by more than half to 12 percent. Meanwhile, the US 2009 child poverty rate, was almost 21 percent.
Britain used three strategies to reduce its child poverty rate and to help poor children and their families in other ways. First, it induced more poor parents to work through a series of new measures, including a national minimum wage higher than its US counterpart and various tax savings for low-income workers. Because of these measures, the percentage of single parents who worked rose from 45 percent in 1997 to 57 percent in 2008. Second, Britain increased child welfare benefits regardless of whether a parent worked. Third, it increased paid maternity leave from four months to nine months, implemented two weeks of paid paternity leave, established universal preschool (which both helps children’s cognitive abilities and makes it easier for parents to afford to work), increased child-care aid, and made it possible for parents of young children to adjust their working hours to their parental responsibilities (Waldfogel 2010). While the British child poverty rate fell dramatically because of these strategies, the US child poverty rate stagnated.
In short, the US has so much more poverty than other democracies in part because it spends so much less than they do on helping the poor. The US certainly has the wealth to follow their example, but it has chosen not to do so, and a high poverty rate is the unfortunate result.
As the Nobel laureate economist Paul Krugman (2006: A25) summarizes this lesson, "Government truly can be a force for good. Decades of propaganda have conditioned many Americans to assume that government is always incompetent… But the [British experience has] shown that a government that seriously tries to reduce poverty can achieve a lot."
Researchers at the World Bank estimate that across the world in 2019, 648 million people (8% of the world population) lived in extreme poverty, measured with the international poverty line (IPL) of $2.15 per day (equivalent to US dollars). Moreover, if we consider the poverty line of upper-middle-income countries at $6.85 per day, we find a more striking figure: Almost half (47%) of the global population lived below that poverty line (Schoch et al. 2022).
To understand global inequality more broadly, it is helpful to classify nations into a small number of categories based on their degree of wealth or poverty, their level of industrialization and economic development, and related factors. Over the decades, scholars and international organizations such as the United Nations and the World Bank have used various classification systems, or typologies. A popular typology today simply ranks nations into groups called wealthy (or high-income) nations, middle-income nations, and poor (or low-income) nations, based on measures such as gross domestic product (GDP) per capita (the total value of a nation’s goods and services divided by its population size) or gross national income (GNI) per capita (the total income of a nation divided by its population size).
The figure below depicts this typology of nations (with the middle category divided into upper-middle and lower-middle), using GNI. As should be clear, whether a nation is wealthy, middle income, or poor is heavily related to the continent on which it is found. High income nations are concentrated in North America (e.g., the US, Canada) and much of Europe, (e.g., the UK, Spain, France), with a few other areas of the world (e.g., Australia, Saudi Arabia), while low income nations are concentrated in Africa (e.g., Sudan, Niger, Liberia). You may check out an interactive map on the World Bank's site The World by Income and Region.
Global Income Inequality Map
Source: World Bank Group 2025
While this textbook focuses primarily on social problems in the US, we include a global perspective here due to the high degree of inequality that exists in poverty and economic inequality across the world.
––
In the following pages, we frame poverty and economic inequality using the classical sociological theoretical perspectives: Structural functionalism, conflict theory, and symbolic interactionism. We also discuss individualistic versus structural explanations of poverty. Next, we explore patterns in poverty and economic inequality, including variation in poverty rates, the many consequences of poverty, the connection between economic inequality and policy, and the consequences of economic inequality. We then discuss various strategies to address poverty and economic inequality.
