How is the federal poverty line determined?

If you go to data.census.gov, you can find the number of people in poverty in your state, county, city, or even zip code. Scrolling through, you can see breakdowns of who is in poverty by race, gender, household size, and a number of other characteristics.

In 2026, the federal poverty line is $33,000 for a family of four. Does this sound reasonable to you? There are certainly people who want to make this number lower, higher, or different. But the determination of the federal poverty threshold is a bureaucratic process that is in the hands of analysts every single year.

Who sets the federal poverty line?

While the United States Census Bureau in the United States Department of Commerce is the federal agency we most associate poverty measurement with, it is the United States Department of Health and Human Services that is in charge of issuing the federal poverty guidelines. These guidelines include the thresholds for a number of household sizes and include formulas for determining poverty status for very large families as well.

The Department of Health and Human Services has been in charge of issuing poverty guidelines since 1981, when Congress tasked the Secretary of the Department with issuing them every year. Prior to 1981, the guidelines were issued by the Community Services Administration, an independent agency that was folded into the Department of Health and Human Services in 1981 under the first budget of the Reagan administration.

According to the Department of Health and Human Services, the calculation is quite simple: analysts take the previous year’s poverty thresholds then adjust them for inflation, using the Consumer Price Index for All Urban Consumers as their inflation metric.

But where did the federal poverty line originate?

Where the federal poverty line came from

In 1964, President Lyndon B. Johnson launched his War on Poverty with the goal of “total victory” over poverty in the United States. To wage war against poverty, Johnson needed a metric to estimate the impact policies were having on poverty. This necessitated an official poverty measure.

Social Security Administration Economist Mollie Orshansky had been working on a threshold for poverty since 1963. By 1965, the Office for Economic Opportunity (which later became the Community Services Administration) adopted Orshansky’s measure.

Orshansky’s model was simple. At the time of the Great Society War on Poverty, the average American household spent one third of their income on food. Orshansky then wagered that three times the cost of a “thrifty food plan” would constitute poverty income.

This measure has changed very little over the six decades since its adoption. In the early days of the measure, Orshansky updated the measure annually to adjust for the cost of food. In 1969, the updates were simplified to be tied to the Consumer Price Index instead. Early measures of the official poverty threshold estimated different income needs for male- and female-headed households and farm- and non-farm households. These were all eliminated in a 1981 reorganization of the measure. Subsequent changes to the calculation of the Consumer Price Index have changed the trajectory of the measure over time. But at its core, the official poverty measure has barely changed since it was first introduced in 1965.

Problems with the federal poverty line

The world has changed over the past six decades. The core conceit of Orshansky’s original official poverty measure was that multiplying a thrifty food plan by three would give a reasonable estimate for the income needed to survive in the United States.

Over the past six decades, though, the cost of food has plummeted compared to the cost of other goods. The average family spends about an eighth of their income on food now. Other costs have risen: medical expenses have increased from 7% of GDP in 1970 to 18% of GDP in 2024. Housing prices have doubled the pace of overall inflation since the 1960s.

Changes in housing prices have led to significant divergences in cost of living across the country. While a nationwide poverty measure may have been reasonably accurate in the 1960s, there are now vast differences in the cost of living across states. Because of these changes, the assumption that escaping poverty takes the same amount of income in California as it does in West Virginia is now much weaker.

Income sources have also changed dramatically since the War on Poverty. The Official Poverty Measure was an excellent tool for measuring poverty when incomes were largely just wages and social security. The institution of large safety net programs like the Supplemental Nutrition Assistance Program (formerly “food stamps”), the Earned Income Tax Credit, free school lunches and the Child Tax Credit have led to much of income for lower-income people coming from places other than wages and social security.

Alternatives to the official poverty measure

In 1995, the National Research Council convened a consensus group to recommend updates to the federal poverty guidelines. This project culminated in the release of a consensus report that recommended changes to the federal poverty calculation: tying it to a broader range of goods than just food, adjusting for cost of living in different parts of the country, including income from new safety net measures in the calculation of income resources. This report sat on a shelf for over a decade until New York City became the first place to put the measure into action, calculating its New York Poverty Measure using the new methodology. The Census Bureau followed suit the following year, calculating the first Supplemental Poverty Measure, which is now released every year alongside the Official Poverty Measure numbers. States like California, Wisconsin, and Ohio have their state versions of these.

The Supplemental Poverty Measure made major headlines in 2022 when the Census Bureau reported on the record reduction in poverty made by the 2021 expansion of the federal child tax credit. Because the Supplemental Poverty Measure included the child tax credit in its income calculation, it was able to do something the official poverty measure could not: show the impact of public programs on poverty.

Another rival to the Official Poverty Measure is “relative poverty,” which is usually defined as having less than half of the median income. This is a popular measurement for poverty in the Organisation for Economic Co-operation and Development since it gives a good benchmark for poverty across countries. It’s also easier to calculate and a little bit of a different take on the suspect “subsistence needs” approach to poverty that the Official Poverty Measure takes.

To this day, the Supplemental Poverty Measure is the most widely accepted measure among poverty researchers, but it is still supplemental. Since the Supplemental Poverty Measure shows higher poverty rates in coastal areas and lower poverty rates in the middle of the country than the Official Poverty Measure, adopting it as a guidance for issuing federal benefits would lead to a redistribution of resources that would be politically difficult to say the least. For the time being, Molly Orshansky’s Official Poverty Measure will continue to be the measure of poverty in America, with little change from its inception in 1965.

Can Ohio learn from an immigration crackdown a century ago?

This month, Ohio landed in international news. The Guardian reported on ICE’s new “Operation Buckeye,” an initiative to deport Somali residents of central Ohio and throughout the state.

While deportations represent the most visible and sometimes violent policy being enacted in the United States today, the largest impacts on immigration in today are coming from limiting immigration.

According to researchers at the Brookings Institution and the American Enterprise Institute, 100,000 more people left the United States in 2025 than in 2024. But nearly 2 million fewer people immigrated into the United States in 2025 compared to the previous year.

When all is said and done, reductions in immigration were 19 times as high as total increase in emigration.

This means that the United States had a historically low net immigration rate, with about as many people leaving the Land of Opportunity in 2025 as came in.

I have written in the past about how slowing immigration will impact Ohio in the future.

I also asked a question to Scioto Analysis’s Ohio Economic Experts Panel about how the state’s immigration slowdown will impact the economy.

Most economists said it would lead to higher prices, nearly all said it would lead to less small business formation, and all of them said it would lower tax revenue.

A conversation I had on social media recently about an article written on that experts panel led me to an interesting question: has this happened before?

Douglas Buchanan of the Columbus Metropolitan Club asked me if there was economic fallout from U.S. restrictions on immigration enacted in 1924.

The Immigration Act of 1924 is considered by many to be the among most restrictionist immigration law passed in U.S. history, often mentioned alongside the Chinese Exclusion Act of 1882.

Responding to public fears about demographic change, Congressman and Eugenics Advocate Albert Johnson championed legislation that enacted quotas on immigration in an attempt to keep the country’s “white” population at the level established by the 1920 census.

The economic literature shows a range of economic effects from this legislation, mostly negative.

Danish economists studying the change found the immigration crackdown led to long-term population declines for areas in the U.S. that previously relied on immigration.

They also found manufacturing productivity dropped due to less availability of labor and that native worker job quality dropped, presumably due to fewer people buying goods due to fewer immigrants coming into the country to buy goods.

An international team of researchers looked at how farms responded to the reduction, finding they moved from labor-intensive agricultural techniques to more reliance on technology.

In short, restricting immigration led to more jobs…for tractors.

According to one Chinese researcher, the 1924 crackdown did have one interesting side effect: spurring the Great Migration.

With many employers in large northern cities looking for workers, they turned to Black migrants from the South, which led to new opportunities for Black American workers.

On balance, restricting immigration leads to fewer consumers, fewer workers, fewer entrepreneurs, fewer inventions, fewer ideas, fewer skills, and less of an edge for Ohio’s economy.

As the state and local governments are trying to figure out how much to support or oppose federal efforts to deport and restrict immigration, they cannot ignore that the damage they do to the lives of immigrants will spill into the lives of American-born residents as well.

This commentary first appeared in the Ohio Capital Journal.

Survey: Economists mixed on how H2Ohio bonds will impact Ohio’s economy

In a survey released this morning by Scioto Analysis, 11 of 17 economists agreed that statewide bonds for the H2Ohio program will reduce the cost of water treatment and public health services for local governments.

Governor DeWine is currently speaking with legislative leaders about placing a bond measure on Ohio’s fall ballot in an attempt to ensure continued funding of H2Ohio, Governor DeWine’s water quality initiative. H2Ohio includes farmer financial incentives to reduce agricultural runoff and investments toward restoring wetlands, funding sewer and water infrastructure projects, and removing dams.

Most respondents agreed that statewide bonds for the H2Ohio program will reduce the cost of water treatment and public health services for local governments, with 5 economists uncertain and 1 economist disagreeing. According to Bill LaFeyette of Regionomics, “The algal bloom the other year in Lake Erie that crippled Toledo's water supply is just one example of the costs of inattention to agricultural runoff.” Other economists showed uncertainty on the cost-effectiveness and magnitude of the statewide bonds. 

9 of 17 economists agreed that statewide bonds for the H2Ohio program will increase the size of Ohio's outdoor recreation industry. However, economists’ confidence in this statement varied widely. For example, Kevin Egan of the University of Toledo agreed that costs would go down “only if the program spends the money wisely and actually solves the harmful algal bloom problem in Lake Erie and other lakes”. Of the 8 remaining economists, 1 economist disagreed and 7 economists were uncertain. 

Opinions on whether statewide bonds for the H2Ohio program will grow Ohio’s economy were more mixed, with 6 economists uncertain, 5 economists agreeing, and 3 economists disagreeing. Charles Kroncke of Mount Saint Joseph University who strongly agreed with the statement explained, “If Ohio is known as a state that thinks ahead and has infrastructure that supports generational health, companies and individuals will feel good about locating here.” On the other hand Curtis Reynolds of Kent State University strongly disagreed, indicating the impacts on Ohio’s economy would not exist “in any measurable way, just not enough to make an impact on "Ohio's economy" as commonly understood by voters.”

The Ohio Economic Experts Panel is a panel of over 30 Ohio Economists from over 30 Ohio higher educational institutions conducted by Scioto Analysis. The goal of the Ohio Economic Experts Panel is to promote better policy outcomes by providing policymakers, policy influencers, and the public with the informed opinions of Ohio’s leading economists. Individual responses to all surveys can be found here.

Does inequality matter?

In a couple of months, Scioto Analysis will be releasing its second study on inequality in Ohio. This study will be an update of the  2022 study it produced in collaboration with graduate students at the University of California, Berkeley’s Goldman School of Public Policy.

In 2018, I wrote a blog post for Gross National Happiness USA’s blog post Serious About Happiness. In this blog post, I argued that there are five frameworks that can be used to assess whether a society is serving its residents well: economic growth, poverty, inequality, human development, and subjective well-being.

Of these five frameworks, inequality can sometimes raise the most objections. Only extreme partisans object to the benefits of economic growth or poverty reduction. Almost everyone supports human development (income, health, and education) and subjective well-being as social aims. But inequality can sometimes cause pause for people.

Philosophical approaches to inequality

In his 2018 book Why Does Inequality Matter?, American Ethicist T.M. Scanlon lays out six justifications for why inequality carries moral weight. Without getting into the details of the book, here are his justifications:

1. Inequality arises because certain people were not given proper consideration.

2. Inequality creates unjustified inequalities in status.

3. Inequality gives some people control over other people.

4. Inequality makes economic institutions unfair.

5. Inequality makes political institutions unfair.

6. Inequality arises from unfair institutions.

Scanlon’s justifications for the moral weight of inequality make sense on their surface. They seem a step away, though, from the criticism John Rawls levies at inequality in his political philosophy classic A Theory of Justice.

In A Theory of Justice, Rawls invites readers to place themselves behind a “veil of ignorance.” Behind this hypothetical veil, people know nothing of their place in society, their race, their gender, their abilities, their family, their wealth, their height, their charisma, their anything. He then asks people to imagine what a just society would look like to someone living behind that veil.

Rawls argues that someone behind the veil would want (1) access to freedoms that allow them to experience the many lives that they may want to live beyond the veil, and (2) access to equal resources, with any inequality of resources only justified by increasing the total resources for the least well-off in society.

Arthur Okun: a policy analytic approach to inequality

Economist Arthur Okun brings up a similar thought experiment in his “leaky bucket” analogy, which undergirds the policy analytic concept of equity-efficiency tradeoffs. Okun argues that social welfare programs can be characterized as “leaky buckets,” where redistributive policies, through market distortions and administrative spending, cause “leakage” in the economy while resources are being redistributed.

He, like Rawls, argues we can use our intuition to determine how much leakage we are willing to accept to reduce inequality. To Okun, the problem with inequality is self-evident, and the problems with policies to reduce it are tradeoffs inherent in public policy.

Marx: the political problem with inequality

Marxist approaches to inequality argue that inequalities lead to social collapse. Marx argued that capitalist society was inherently unequal, that capital inherently created inequality between two classes: capital owners and workers. Marx’s perspective was that this inequality would ultimately lead to revolution.

More contemporary Marxists use this historical determinism as a justification for strong social safety net systems. As far back as the 1880s, Otto von Bismarck of Germany was credited with pioneering the first social welfare state as a tool for social stability. He was fending off challenges from socialist political rivals but also characterized universal health and accident insurances and old age and disability pensions as tools for creating social and political stability.

The economic problem with inequality

More contemporary economists have argued that inequality hampers economic growth. There are a number of reasons this may be the case. Inequality could lead to more centralization of consumption or production, allowing producers to exercise market power to keep wages artificially low or consumer good prices artificially high. 

Inequality could also stifle innovation. A 2018 study provocatively titled “Lost Einsteins” found evidence that children born into the top one percent of the income distribution are ten times more likely to be inventors than children born into the bottom 50 percent of the income distribution. Unequal access to resources in childhood could be choking innovation, which, along with people and capital, is one of the three drivers of economic growth under the classical economic growth model.

The intuitive problem with inequality

Of all these approaches to understanding inequality, the types that ring the most true to me are those Rawls and Okun put forth. There is something inherently troubling about inequality.

When I consider the richest people in the world, most of them are the opposite of the “lost Einsteins” found in the U.S. innovation ecosystem: they started with a leg up. Elon Musk is an heir to an emerald fortune. Google Co-Founder Larry Page’s father Carl Victor Page Sr. was a pioneer in computer science and artificial intelligence. His co-founder Sergey Brin was a third-generation computer scientist.

The amount of their wealth is staggering. Each of these people is a centibillionaire, with net worth of $839 billion, $257 billion, and $237 billion respectively. Elon Musk’s wealth is the same as the income of 25 million families of four at the U.S. federal poverty line.

I think the strongest objection to inequality is one that Rawls alludes to in his “difference principle.” This is his claim that differences in resources should be justified by improvements in resources for the least well-off in society. Maybe inequality is not so great, but maybe it unlocks other things by giving people incentives to create social goods like Tesla, Google, Amazon, and Facebook.

But this is why I like inequality–as a part of a portfolio of outcomes for a good society. Inequality should not stand on its own as the only yardstick for a good society. But this is why policymakers should be considering economic growth, poverty, human development, and subjective well-being alongside it. Maybe there will be policies that reduce poverty and increase inequality, which is what Rawls alludes to in his “justice as fairness.” Or maybe we are okay with a little bit of inequality if it leads to a lot of economic growth, or increases in education, or increases in health outcomes, or increases in happiness.

But we’re fooling ourselves if we don’t think, all else being equal, that a more equal society is better than a more unequal one. While reducing inequality cannot be the only goal of society, it certainly should be among its goals.

What is the impact of paid paternity leave?

This year, Minnesota became the thirteenth state to offer paid family and medical leave for all workers. Paid leave has been a topic we’ve been following for some time, with both myself and my colleague Rob writing multiple blog posts about it.

One of the reasons I’ve been so interested in paid leave policies is because they are an interesting case study in how one policy can be viewed through different lenses. Our first time studying paid family leave was part of our work with an anti-poverty group, but most people approach it from a labor market perspective. 

The reason paid leave policies get so much attention from people studying labor markets is because they attempt to address the gender wage gap. The idea is that by allowing paid leave policies allow mothers to remain more attached to the workforce, which in turn might lead to higher wages should they choose to return. Results looking at the introduction of paid leave programs so far have been mixed on its impacts. 

However, a new study on reform in the paid leave program in Denmark offers some new insights about this issue. 

Denmark has long had a paid parental leave program that combines some weeks reserved for each parent with additional weeks that families can divide however they choose. In 2022, Denmark reformed the system to require a more even split between mothers and fathers.

Before the reform, mothers had 14 weeks of non‑transferable leave and fathers had just two, with another 32 weeks that either parent could use. After the reform, both parents received 11 weeks of earmarked leave, and the shared portion shrank to 26 weeks.

Importantly, Denmark didn’t expand the total amount of leave, families still get 48 weeks off in total. The change was purely about how those weeks are allocated.

 The first thing the researchers find is that the reform worked exactly as intended. Fathers increased their leave by about three and a half weeks, and mothers reduced theirs by a bit more than five. These researchers weren’t just measuring labor market outcomes though, they also surveyed parents to understand their attitudes about people taking leave. 

After the reform, parents became more supportive of paternity leave and more likely to say that fathers taking leave is socially acceptable at work. They changed their responses to certain questions about traditional gender roles, for example being less likely to agree that young children suffer when mothers work full time.

These belief changes translated into behavior. The study finds that the reform narrowed gender gaps in earnings and hours worked. Some of this is mechanical in the first year because fathers are out of work more and mothers less, but the effects persist into the second year, after both parents have returned to work. The earnings gap shrank by nearly three percentage points in year two, and the hours gap by about one and a half. 

But the study also highlights a real tradeoff. Parents were less satisfied with their leave arrangements after the reform, largely because they felt mothers should have had more flexibility. By reducing the number of flex weeks from 32 to 26, the state is meaningfully reducing the number of options people have when deciding how to split up their paid leave time. 

This Danish reform is a useful reminder that the same policy can look very different depending on the lens we use. From a labor‑market perspective, it clearly narrowed gender gaps and shifted norms in a more equal direction. From a family‑autonomy perspective, it reduced flexibility and left many parents less satisfied. As more states adopt paid leave, this case study shows why it’s important to consider a range of relevant outcomes when considering policy reforms. Policy myopia can make a policy look good while ignoring broader impacts that can be very relevant to the policy at hand.

What does daylight savings time do to the economy?

My alarm went off this morning at 6:30 like it does every weekday, but something was different today. I was noticeably more tired than I normally would be at and it was much darker than usual outside. 

Unless you live in Arizona or Hawaii, you probably had a similar experience this weekend as the country collectively shifted its clocks one hour forward in observance of daylight savings time, the bi-annual tradition of causing avoidable problems and making people ornery. 

Why we change our clocks

The reason we have daylight savings time is that in the summer months, there is an excess of daylight. People thought that it would be nice since the sun rose before many workers began their days to take an hour of sunlight away from the morning and give it to the evening so people could stay out later. 

Additionally, it is commonly thought that daylight savings reduces our energy consumption because we can rely less on electric light during the summer months. In fact, savings from electric light consumption were cited as the original reason that Germany first implemented daylight savings time during the first world war. 

However, if you live in a northern state near the eastern edge of a timezone, this may not be quite so appealing in the winter months. Residents of the town of Fortuna, ND wouldn’t see the sunrise until almost 10:00 am on the shortest days of the year if they had permanent daylight time.

What happens when we change our clocks

While switching between daylight and standard time seems like the best of both worlds, it comes at the cost of everyone collectively feeling more drowsy than usual twice a year. These disruptions to our circadian rhythm have very tangible costs.

Studies have found that this switch leads to modest increases in cardiovascular problems, and it has led to more fatal car crashes. Add to that the fact that this drowsiness leads to short-term losses in productivity and it starts to seem like switching isn’t such a good idea after all.

In 2023, we conducted a cost-benefit analysis of ending daylight savings time in Ohio. We estimated that these two switches cost the state about $40 million per year. 

Standard time or daylight time

If we decide we no longer want to change our clocks twice a year, we will then need to agree on what time it should be. In our study, we found that there are benefits to both permanent standard time and permanent daylight time. 

Permanent standard time means more light in the morning and less in the evenings. A study looking at daylight savings time in Indiana found that contrary to popular belief, daylight savings actually increased energy use. While this study did find that electric light use decreased because of daylight savings time, that reduction was outweighed by increased costs associated with heating and cooling. This means that by adopting permanent standard time, we’d expect the amount of energy we consume to actually decrease over the course of a year.

The main benefit of permanent daylight time is that the sunlight lasts later into the evening. One notable effect this has is a reduction in crime due to the shift of light later into the evening. 

From a cost-benefit perspective, we find that these two benefits are roughly equivalent to each other. It’s a fascinating policy analytic case where there really isn’t a clear winner, but rather a matter of preference.

Either way, it’s clear the costs of changing each year outweigh the benefits. To those who might balk at the change, worrying about the sun not rising till almost midday or setting in the early afternoon, I offer this advice: move closer to the equator. 

Until humans develop a way to slow the rotation of the earth, we won’t be able to actually change the amount of sunlight we get each day. Shifting it around might make us feel like we have some control over the sun, but at the end of the day if you live farther north in this country you get less daylight. If policymakers accept this fact and stop messing with people’s sleep schedules each year, the economy and its participants will thank them.

Is it time for Ohio to embrace the land value tax?

Nearly 150 years ago, American Economist Henry George wrote his magnum opus, “Progress and Poverty.”

The book made a splash and gained in popularity over the years, to the point that it outsold nearly every book written in the English language in the last decade of the 19th century — only beat by the Bible.

George wrote about a range of topics of economics and ownership in his book, but the lasting policy legacy of his wildly popular book is a policy option that to this day has still not garnered widespread adoption: a tax on land.

In today’s era of rapidly rising property tax liabilities due to rapid appreciation of housing values in the state of Ohio, many policymakers are trying to find ways to reduce the burden of property taxes on homeowners and renters (though admittedly more on the former than the latter).

Last week, state Sen. Louis Blessing put forth one of the most promising policy options to reduce property tax burdens, dusting off this bestseller from the turn of the century.

Blessing introduced legislation to change the Ohio Constitution to allow municipalities to levy land value taxes.

To talk about why land value taxes are so attractive as an alternative to property taxes, we have to first understand the problems with property taxes.

Property taxes are valuable because they allow for local governments to pay for community services. Schools, public safety, administration of safety net services: these are all funded through property taxes.

A benefit of property taxes is that local residents pay for their services, which allows mobile residents to locate in communities that provide the services they prefer at the price they prefer to pay.

Property taxes have major drawbacks, though.

For one thing, they are a tax on development. Since building on a property increases its value, property taxes increase as property is developed. That creates a disincentive to develop properties, which leads to an underprovision of development such as housing.

This means landowners are incentivized by property taxes to sit on empty lots and underdeveloped land rather than developing them to meet market needs.

The other major drawback is their regressivity.

Low-income people spend a larger proportion of their paychecks on housing than upper-income people and in turn pay a large proportion of their income on property taxes.

Renters are not immune from these costs, either: researchers at MIT estimate 80% to 90% of landlord property taxes are passed on to renters in the form of higher rents.

Land value taxes take away these disincentives to develop land by taxing only the value of the land, not the property built on it.

Allentown, Pennsylvania is one of the few examples of communities that have implemented land value taxes. After their system was put in place, replacing some property taxes, they saw a surge in development and economic growth.

Land value taxes also are more equitable, with the burden shouldered by landlords rather than renters.

Since the overall supply of land cannot be increased or decreased, development can meet market demands, which means landlords need to shoulder the burden of the tax. This takes the burden off renters and improves equity outcomes.

Land value taxes would not solve all problems in Ohio, but they would encourage development and make the tax system more equitable, even if they are levied to replace property taxes in a revenue neutral manner.

That’s about as good as you can ask for in tax reform.

This commentary first appeared in the Ohio Capital Journal.

How do we pay for local homelessness services?

Each year, the U.S Department of Housing and Urban Development coordinates a massive nationwide effort to take a snapshot of homelessness across the country. The department’s “Point-in-Time” count gathers information from hundreds of local administrative bodies and estimates the number of people experiencing homelessness on a single night in January. 

In 2024, the most recent year we have data from, the department counted 771,480 people experiencing some form of homelessness. With an increase of about 18 percent from 2023, homelessness reached its highest level ever recorded on a single night. Approximately 2 in every 1,000 people in the U.S were living in an emergency shelter, safe haven, transitional housing, or were unsheltered.

Homelessness is particularly pronounced among a few categories. Roughly 150,000 children experienced homelessness that night in 2024. As an age group, children faced the greatest increase in homelessness, with the 2023 count rising by about 33 percent into 2024. Black U.S. residents constituted roughly a fifth of the total homeless count. A third of all individuals who are not in families with children reported experiencing chronic homelessness.

One bright spot in the report related to veteran homelessness. The number of veterans experiencing homelessness on the night of the count fell by 18 percent in 2024 from its 2023 baseline.

The heightened incidence of homelessness may have been driven by several factors. High costs of housing likely drove the most housing insecure out of housing markets. The expiration of pandemic-era spending for children and rental assistance programs may have exacerbated financial challenges as well. Some evidence suggests that inflows of migration, particularly asylum-seeking immigration, also contributed to rising homelessness. Natural disasters in 2023, such as Hawaii’s unprecedented wildfire on the island of Maui, destroyed swathes of housing stock, leaving many on the street without housing options.

Policy approaches to homelessness

Action against homelessness is largely local, but financed with federal and state dollars. Across the country, local administrative bodies called Continuums of Care coordinate the provision of local services and housing. Numbering more than 400 across the country, Continuums of Care identify local needs for transitional housing and permanent supportive housing. The federal government’s Emergency Solutions Grants Program allocates funding to states and urban areas for emergency shelters. These three approaches to putting roofs over heads, in addition to an array of other services, constitute key pillars of policy responses to homelessness. It follows that the way policymakers allocate funding to each reflects a belief about the relative efficiency of each pillar.

Two underlying strategies to reduce homelessness dominate the current policy landscape. “Housing-First” approaches prioritize placement into permanent housing. Proponents of housing-first policy claim that individuals and families provided the stability of a home can more effectively address the root causes of homelessness. Critics of housing-first take issue with the scalability of housing-first models. Even if housing-first does strengthen residential stability, they say, it might not effectively address behavioral disorders or substance abuse. They further question the cost-effectiveness of housing-first at the community level. 

Critics of housing-first often favor an alternative strategy we can call“Treatment-First”. Treatment-first approaches require participants to graduate through a series of services that address the root causes of homelessness before permanent supportive housing is offered.

Proponents of each philosophy believe there is a gap between the pillars of homelessness policy. Proponents for each philosophy would fund the pillars differently. Housing-first funding would go disproportionately to permanent supportive housing, while treatment-first funding designs would favor emergency shelters and transitional housing.

Changing attitudes toward financing homeless services

Each year, the Department of Housing and Urban Development releases a notice of funding opportunities outlining available funds and priorities. This notice allows Continuums of Care to renew a certain portion of their funding. Within each Continuum of Care, specific projects compete for a portion of the renewed funding. During the fall of 2025, the Department of Housing and Urban Development planned to split significantly from the previous status quo.

Declaring housing-first a failed ideology, the department capped funding for permanent supportive housing at 30 percent of total expenditures within the program. That level marked a 57 percentage point decrease from the prior level of funding for permanent supportive housing. Funding would be redirected to transitional housing and supportive services. 

The notice was met with legal challenges. Lawsuits challenging it were filed in November and December of 2025. That December, the department withdrew the notice and a District Court issued a preliminary injunction directing the department to process grant renewals. After another notice of funding was issued, Congress required that programs expiring in March 2026 would be renewed for 12 months.

My work on homelessness

I have spent the last couple months conducting a cost-benefit analysis on homelessness policy in Hawaii. 

At the time of the 2024 count, homelessness in Hawaii was surging. With 11,637 people experiencing homelessness in its most recent point-in-time count, Hawaii faced high per-capita homelessness. Its rate of 81 people experiencing homelessness per 10,000 people exceeded that of Washington (40), California (48), and Oregon (54). Among U.S states, Hawaii’s rate of homelessness tied New York’s for the highest (Washington DC surpassed both with 83 per 10,000). The Maui fires likely contributed significantly to this state of affairs.

We know homelessness is associated with a number of detrimental health conditions. Homelessness can also perpetuate cycles of incarceration and raise mortality rates for those experiencing it. Homelessness can reduce a child’s future adulthood earnings too.

Yet, meeting the challenge of homelessness is not without its costs. My work analyzes how various levels of funding to the pillars of homelessness policy in the context of Hawaii impact homelessness and social outcomes. It seeks to estimate how funding levels corresponding to housing-first and treatment-first philosophies might generate a range of possible outcomes for the state. In this way, I hope to understand how each policy path could enhance the well-being of some of society’s most disadvantaged members.

Results are forthcoming. I look forward to sharing them here over the next couple of months

Which states spend the most on welfare?

We live in a post-welfare reform world.

In the 1990s, President Bill Clinton and House Speaker Newt Gingrich worked together to reform welfare in the United States. A large part of the bargain struck by these two figures on opposite sides of the political aisle was to devolve the system of care for the poor and the national safety net to the states. Decisions on parameters around work requirements, time limits, and other elements of cash assistance that began under the Johnson Administration were devolved to the states, creating a patchwork of safety nets across the country rather than the “Great Society” envisioned during the War on Poverty waged thirty years prior.

As we look back on that era thirty years hence, we see a safety net has developed that is based on state policy.

So how much are states providing in social welfare for their vulnerable residents?

To answer this question, I referred to the Survey of State and Local Government Finances, a survey of state and local governments conducted by the United States Census Bureau. This survey asks a series of questions about revenues and expenditures by state and local government entities across the country and is the best centralized source of information on spending at the state and local level in the United States.

One question the Survey of State and Local Government Finances poses is around public welfare expenditures. The surveyors ask state and local governments how much they spend on support and assistance to “needy persons.” They ask for operating expenses and capital outlay for nursing homes, veterans' homes, homes for the elderly, and “indigent care institutions” as well as cash assistance, housing assistance, medical care at private facilities, and other elements of public welfare like administration, foster care, and community action programs. The most recent survey was released in July of 2025, which was for data collected in 2023.

The American Community Survey makes annual estimates of state population, which allows us to estimate the per-capita state and local public welfare spending by state. We use American Community Survey one-year 2023 data so our spending year matches with our population year.

So, without further ado, this is the per-capita spending for U.S. states on public welfare in 2023.

You can see some trends here. The top states are not particularly surprising: California, New York, and Massachusetts are widely known as high-tax states and a good portion of those taxes are spent on supporting needy residents. Oregon, Vermont, and Minnesota are other states in the top 10 that also fit that profile, with Minnesota being notably the only Midwest state in the top 10 for per-capita public welfare spending.

New Mexico and Kentucky are a little bit different from these other states. These are both relatively low-population states that have high poverty rates. Much of public welfare spending is ultimately financed by the federal government through programs like Medicaid, so states like this are likely spending a lot of money as a pass-through because of their high-poverty population.

Other anomalies in the top 10 are Alaska and Maine. Alaska tends to benefit from a lot of federal programs due to its small population and unique strategic importance. Alaska is also one of the states with the most federal employment, which means more federal workers could be benefiting from public programs. Maine is a relatively low-poverty state so you could lump it in with the high-tax states listed above, but it has had more mixed governance in the past that makes it a little different from the six solid blue states.

The bottom ten states are a different story altogether. All ten have had Republican governments for decades with one exception. More restrictive social welfare policy and lower tax rates have likely put these states at the bottom of the list. Many of these states also have lower cost of living than the national average, which could help contribute to less need for public welfare.

The one exception is an interesting one, though: solid blue Connecticut. Connecticut may be benefiting from a low poverty rate and less of an appetite for taxes from people who commute into the New York City metropolitan area for work.

As long as states are in the driver’s seat for safety net policy in the United States, state tax policy and state willingness to use federal funds to support their needy residents will determine the level of support the states will provide. I will be interested to see what this chart looks like in another 30 years.