Safety Net More Effective Against Poverty Than Previously Thought

Source: Arloc Sherman and Danilo Trisi, Center on Budget and Policy Priorities, Policy Futures, May 6, 2015

Correcting for Underreporting of Benefits Reveals Stronger Reductions in Poverty and Deep Poverty in All States.

Previous analysis of Census data showed that safety net programs cut the poverty rate nearly in half. Recently released data from the Urban Institute, which correct for underreporting of key government benefits in the Census survey, reveal an even stronger impact: the safety net reduced the poverty rate from 29.1 percent to 13.8 percent in 2012 and lifted 48 million people above the poverty line, including 12 million children. (See Figure 1.) Correcting for underreporting reveals that the safety net also did more to reduce deep poverty than previously shown, although 11.2 million Americans remained below half the poverty line.

The appendix tables provide state-by-state data showing that the safety net lifted thousands out of poverty and deep poverty in every state, ranging from 61,000 in Wyoming to 4.9 million in California.

Social Security raises more Americans out of poverty than any other program: 27.4 million in 2012. Among programs limited to people with low or modest incomes, SNAP (formerly food stamps) has the greatest poverty-reducing impact, lifting 10.3 million people out of poverty in 2012. SNAP also lifts more Americans out of deep poverty (5.2 million) than any other means-tested program.

The refundable tax credits for low-income working families — the Earned Income Tax Credit (EITC) and the Child Tax Credit (CTC) — have an impact comparable to that for SNAP. Together they, too, lifted 10.3 million people out of poverty in 2012. ….

Safety Net Cut Poverty Rate in Half in 2012