What does the government do to help poverty?

From 2016 to 2017, the official poverty rate fell by 0.4 percentage points, as household income rose modestly, albeit unevenly, throughout the income distribution. This was the thi

What does the government do to help poverty?

From 2016 to 2017, the official poverty rate fell by 0.4 percentage points, as household income rose modestly, albeit unevenly, throughout the income distribution. This was the third year in a row that poverty declined, but the poverty rate remains a full percentage point higher than the low of 11.3 percent it reached in 2000.

Since 2010, the U.S. Census Bureau has also released an alternative to the official poverty measure known as the Supplemental Poverty Measure (SPM).

The SPM corrects many potential deficiencies in the official rate. For one, it constructs a more realistic threshold for incomes families need to live free of poverty, and adjusts that threshold for regional price differences. For another, it accounts for the resources available to poor families that are not included in the official rate, such as food stamps and other in-kind government benefits.

As shown in Figure A, a larger proportion of Americans are in poverty as measured by the SPM than the official measure reports. (Importantly, however, researchers who constructed a longer historical version of the SPM found that it shows greater long-term progress in reducing poverty than the official measure.) In 2017, the SPM declined by 0.1 percentage points to 13.9 percent. Under the SPM, 45.0 million Americans were in poverty last year, compared with 39.7 million Americans under the official poverty measure.

Poverty rates, official and Supplemental Poverty Measure (SPM), all people and children, 20002017SPM (all people)Official poverty (all people)SPM (children)Official poverty (children)200011.3%16.2%200111.7%16.3%200212.1%16.7%200312.5%17.7%200412.7%17.8%200512.6%17.6%200612.3%17.4%200712.5%18.0%200813.2%19.0%200914.3%20.7%201015.1%22.0%201115.0%21.9%201215.0%21.8%201315.9%14.8%18.1%21.5%201415.6%14.8%17.1%21.1%201514.5%13.5%16.2%19.7%201614.0%12.7%15.2%18.0%201713.9%12.3%15.6%17.5%ChartData Download data

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The data underlying the figure.

Note: 2013 values reflect the CPS ASEC redesigned income questions.

Source: EPI analysis of Current Population Survey Annual Social and Economic Supplement Historical Income Tables and Supplemental Poverty Measure Tables

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The SPM data also show a lower rate of child poverty than the official statistics, primarily as a result of the SPMs inclusion of noncash income from government assistance programs. In 2017, the official child poverty rate was 17.5 percenta decline of 0.5 percentage points as compared to both 2016 and 2007, prior to the Great Recession. Nevertheless, the official child poverty rate remains 1.3 percentage points higher than it was in 2000. Using the SPM, the child poverty rate rose 0.4 percentage points to 15.6 percent, which is not significantly different than the 15.2 percent child poverty rate in 2016.

Because it incorporates noncash sources of income into its calculations, the SPM allows us to see the enormous impact that the full spectrum of government anti-poverty programs have in reducing hardship for millions of Americans. As shown in Figure B, government assistance programs are directly responsible for keeping tens of millions of people out of poverty. Social Security is, by far, the most powerful anti-poverty program in the United States. In 2017, it was responsible for keeping 27.0 million people, or 8.4 percent of Americans, above the SPM poverty threshold. Refundable tax credits, such as the Earned Income Tax Credit and the Child Tax Credit, kept 8.3 million, or 2.6 percent of Americans above the SPM poverty threshold. Smaller (but still vital) programs, such as the Supplemental Nutrition Assistance Program or SNAP (commonly known as food stamps) and Supplemental Security Income each prevented over 3 million people from falling into poverty.

Without government programs, millions more would be in poverty: Number of people in poverty, as measured by the Supplemental Poverty Measure, and additional number that would be in poverty without specified government program, by age group, 2017Under 18 years18 to 64 years65 years and overAll people11,521,00026,244,0007,207,000000Social Security1,442,0007,931,00017,653,0000Refundable tax credits4,496,0003,688,00087,0000SNAP1,473,0001,646,000306,0000SSI472,0002,054,000664,0000Housing subsidies897,0001,381,000656,0000School lunch722,000483,00016,0000TANF/general assistance296,000231,00016,0000Unemployment insurance151,000366,00025,0000Workers compensation29,000156,00017,0000WIC156,000120,0003,0000LIHEAP47,00090,00047,0000ChartData Download data

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The data underlying the figure.

Source:EPI analysis of Liana Fox, The Supplemental Poverty Measure: 2017, U.S. Census Bureau report #P60-258, September 2018.

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Government assistance programs were particularly important in keeping children out of poverty. As shown in Figure B, of the 8.3 million Americans that refundable tax credits lifted out of poverty, 4.5 million were children. Similarly, of the 3.4 million Americans that SNAP kept out of poverty, 1.5 million were children. Housing subsidies shielded almost 900,000 children from poverty. Even Social Securitytoo-often thought of as strictly a program for older Americanshas a large impact on the welfare of children, lifting 1.4 million kids above the poverty line.

With recent budget proposals calling for cuts to these programs, lawmakers need to recognize how critical these programs are for helping families stay afloat. The lowest-income households in America (the lowest two deciles the income distribution) suffered the largest average percentage losses of any income group in the Great Recession, and they are the only income group whose average household income remains significantly lower than in 2000 (when the economy was closer to full employment). Under such circumstances, there can be little justification for weakening the programs upon which many of these households rely.

In 2016, the Census Bureau made minor changes to the SPMs methodology. At this time, they have only published historical SPM poverty rates under this new methodology back to 2013.

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