Fact of the Week: Millions of People are Lifted Out of Poverty by Programs Like Social Security, Low-income Tax Credits, and SNAP/Food Stamps


October 16, 2014

SPM arrowMore than 48 million people were poor in the U.S. in 2013. But if Social Security did not exist, more than 75 million people would have been poor. Most of us have elderly parents or other relatives for whom Social Security is an absolutely essential part of their monthly budget. A new report by the U.S. Census Bureau shows just how essential Social Security is. And not only Social Security – two tax credits that provide refund checks lift 8.8 million people in working families out of poverty (EITC and the Child Tax Credit).  SNAP/food stamps keeps 4.8 million people from being poor.
The Census Bureau has been doing research into a more accurate way of assessing poverty. Since 2009, it has been calculating a Supplemental Poverty Measure (SPM), taking into account income and expenses that don’t count in the official poverty statistics. For example, SNAP/food stamps and refundable tax credits are not counted in the income estimates in the official poverty measure, but they are counted in the Supplemental Poverty Measure. It’s also true that failing to count work-related expenses, housing costs, out-of-pocket medical expenses, tax payments, or child support paid will reduce the accuracy of poverty surveys. The Supplemental measure counts those; the official poverty calculations do not.

The upshot of all this? This research shows that critically important programs help people. That may not seem like a brilliantly incisive insight, but when right wing policy makers and pundits dispute the effectiveness of most programs, it helps to document the good they do. A graph below from the Census Bureau has more examples of helpful programs (and expenses that drop people below the poverty line).

The report makes some other points as well. It shows less poverty among children, as compared to the official poverty stats, because children are most likely to benefit from SNAP and the refundable tax credits. Counting those benefits reduces the number of children in extreme poverty – living in families below 50 percent of the poverty line. Using the official measure, 9.3 percent of all children were living in such deep poverty. The SPM reduces the proportion of extremely poor children to 4.4 percent. There is more poverty among people over 65, in large part because they have high medical costs that are not covered by insurance.

Using the Supplemental Poverty Measure illuminates a greater percentage of people living in near poverty. While the SPM, by counting means-tested benefits, bumps people over the poverty line, there are increased numbers living just over the line: while the official measure counted 9.6 percent living between 100 percent and 149 percent of the poverty line, the SPM finds 14.4 percent at that modest level (for SPM, a family with 2 adults and 2 children would have income of less than $25,639 to be poor; between that and $38,202 to be below 150 percent of the poverty threshold). Those proportions are growing because benefits decline while work expenses and taxes rise.

In addition, while the anti-poverty effectiveness of most programs has not changed much the last couple of years, this is not true of Unemployment Insurance. In 2011, taking away unemployment benefits would have increased the poverty rate by 1.2 percentage points (from 15.5 percent to 16.7 percent). In 2013, eliminating unemployment insurance would raise the poverty rate of working age adults from 15.5 percent to 16 percent – only a half-percentage point increase. Unemployment benefits lifted fewer out of poverty because fewer people got them. In 2012, 7.4 percent of people in families received UI benefits, but in 2013, only 6.1 percent of people in families did so.

A Different Way of Measuring Poverty

With Election Day less than 3 weeks away, it’s important that we do what we can to make sure these issues are a part of the debates happening all across the country. When Congress returns for its lame duck session in November, they’ll resume work on the budgets for these critical programs for the remainder of this fiscal year. And it’ll be just as important that we all use this data to remind them that behind the dollars are children and adults whose lives can be dramatically improved by these programs if we fund them adequately.

Census Bureau
Fact of the Week
Income Support
Poverty and Income
unemployment insurance