One thing I have been having trouble finding is how the federal poverty level is actually adjusted every year. Here is how Health and Human Services describes the process:
To calculate the 2009 poverty guidelines, do you use a projection of what the Consumer Price Index (CPI-U) will be for 2009?
No. ASPE does not project price changes for the current year; instead, we issue guidelines based on price changes through the most recent completed year. Accordingly, the 2009 poverty guidelines, issued in January 2009, reflect actual price changes through calendar year 2008.
Now going by this method I found that something doesn’t add up. Let’s compare 1980 to 2009. Going by the explanation above we would use the CPI-U for 1979 and 2008 respectfully. I found the historical charts here and will do a quick calculation:
- 1979 average CPI-U: 72.6
- 2008 average CPI-U: 215.3
Going by those numbers we can quickly calculate that the CPI-U has gone up 2.93 times since 1979.
Next let’s look at the FPL for 1980 and 2009:
Again a quick calculation and we can see that this number has gone up only 2.52 times. So why the difference?
Let’s do another quick calculation. What if the $4,284 FPL was increased the same rate as the CPI-U was, or by 2.93 times? Well that would give us a new FPL of $12,552 – or an additional $1,722 for a single person. That also seems like a much more realistic number when you consider how much things cost in 1980 compared to today.