Final answer:
The U.S. poverty line assumes the poor spend a third of their budget on food, but its accuracy in reflecting the number of working poor is debatable since it does not account for non-cash government aid. The poverty line could undercount the poor rather than overcount due to neglecting the value of these benefits.
Step-by-step explanation:
The U.S. poverty line is based on the assumption that the poor spend a third of their budget on food and the threshold for poverty reflects this. This assumption originated from Mollie Orshansky's studies in 1955 which found that families spent one-third of their income on food. Multiplying the cost of a nutritionally adequate diet by three, she formulated the poverty line used by the U.S. government.
However, the poverty line only factors in cash income, not accounting for non-cash government programs like Medicaid and federal housing assistance. Given this, it may not accurately reflect the true breadth of poverty or the number of working poor, as it neglects the value of non-cash benefits that assist low-income families.
The statement that the poverty line assumes the poor spend a third of their budget on food is true. The assertions that it currently undercounts the poor and accurately reflects the number of working poor are debatable, as the poverty line does not consider non-cash government assistance. Yet, the statement that it currently overcounts the poor can be misleading because the inadequacy of the poverty line in reflecting non-cash benefits may indeed lead to an undercount of the true state of poverty.