I added bold emphasis for a few key points.
Following the Office of Management and Budget's (OMB) Statistical Policy Directive 14, the Census Bureau uses a set of money income thresholds that vary by family size and composition to determine who is in poverty. If a family’s total income is less than the family’s threshold, then that family and every individual in it is considered in poverty. The official poverty thresholds do not vary geographically, but they are updated for inflation using Consumer Price Index (CPI-U). The official poverty definition uses money income before taxes and does not include capital gains or noncash benefits (such as public housing, Medicaid, and food stamps).
Income used to compute poverty status:
* Money income
o Includes earnings, unemployment compensation, workers’ compensation, Social Security, Supplemental Security Income, public assistance, veterans’ payments, survivor benefits, pension or retirement income, interest, dividends, rents, royalties, income from estates, trusts, educational assistance, alimony, child support, assistance from outside the household, and other miscellaneous sources.
o Noncash benefits (such as food stamps and housing subsidies) do not count.
o Before taxes.
o Excludes capital gains or losses.
o If a person lives with a family, add up the incomeof all family members. (Non-relatives, such as housemates, do not count.)
Measure of need(poverty thresholds):
* Poverty thresholds are the dollar amounts used to determine poverty status
* Each person or family is assigned one out of 48 possible poverty thresholds
* Thresholds vary according to:
o Size of the family
o Ages of the members
* The same thresholds are used throughout the United States(do not vary geographically)
* Updated annually for inflation using the Consumer Price Index for All Urban Consumers (CPI-U).
* Although the thresholds in some sense reflect families needs,
o they are intended for use as a statistical yardstick, not as a complete description of what people and families need to live
o many government aid programs use a different poverty measure, the Department of Health and Human Services (HHS) poverty guidelines, or multiples thereof
* Poverty thresholds were originally derived in 1963-1964, using:
o U.S. Department of Agriculture food budgets designed for families under economic stress
o Data about what portion of their income families spent on food
Census poverty thresholds are only useful when comparing census data. It's a good measure against other census bureau numbers but not necessarily useful for program eligibility determination (aid programs often use locally calculated poverty measures that more closely reflect the regional cost of living. For example, some housing programs compute eligibility based on a benchmark of local median income levels.
The percentage in poverty citations in the Grist article seem to track back to a census bureau product, the Current Population Survey (they are from a special supplement which includes data from the American Housing Survey and the Survey of Income and Program Participation.) For those of you whose eyes haven't glazed over yet, these data are some of the gold standards of federal measurement.