Correct!

In the 1960s, Molly Orshansky, an employee of the Social Security Administration, developed the original poverty thresholds by using the U.S. Department of Agriculture's Economy Food Plan, which she used to estimate a family's minimum food needs. In 1955, Orshansky had determined that most families spent approximately one-third of their after-tax income on food. Therefore, the Economy Food Plan for various family sizes was multiplied by three to determine the poverty threshold figures.

The Census Bureau later adopted these figures as the official poverty thresholds. The Census Bureau updates the figures each year for inflation using the consumer price index; however, there have only been minor changes in the way the figures are calculated since their adaptation. See http://aspe.os.dhhs.gov/poverty/poverty.htm for current poverty guidelines.

Many argue that this method of calculation is obsolete and does not show the true picture of poverty. Over time, it has been discovered that families now spend less than one-fifth of their income on food. Housing prices, health care expenses and child care costs have increased, forcing families to spend more of their income on these items.

The poverty thresholds have also not been adjusted for standards of living. As incomes have grown over time, the poverty figures have not been adjusted at the same rate of growth.

There are other arguments that the current poverty thresholds do not adequately reflect what it takes to make ends meet in today's society. To read more about this subject, see http://www.census.gov/hhes/www/povmeas.html or or The National Center for Children in Poverty’s Measuring Poverty in the United States” and Link it to http://www.nccp.org/publications/pub_825.html.