By | November 5, 2014

For a family trying to make ends meet, each addition to and subtraction from the monthly budget can mean the difference between ending the month with food on the table and skipping meals. For folks in poverty, day-to-day financial decision-making often requires sacrificing one basic need to meet another. Recent data on the Supplemental Poverty Measure (SPM), released on October 16 by the Census Bureau, show that important programs, like nutrition assistance and housing subsidies, prevent millions of families from dropping below the poverty threshold.

Critics of anti-poverty programs often cite the high official poverty measure as evidence that anti-poverty programs have been a failure. What they ignore is that the official poverty measure omits important income support programs like SNAP benefits (Food Stamps) and low-income tax credits from its calculations. The inadequacies of the official poverty rate motivated fifteen years of research on poverty measurement that culminated in the introduction of the SPM, which includes the value of non-cash benefits in its resource estimates and takes into account other important factors, like geographic variation in the cost of living, to measure poverty. By including these additional factors, the Census Bureau can provide a more accurate measure of poverty as well as data on how many Americans are kept out of poverty by particular programs. Based on the Census Bureau’s analysis, in 2013, anti-poverty programs prevented 39 million people from dropping below the poverty threshold. Without these programs, poverty in America would be a shocking 28.1 percent applying the SPM.

Here are some additional noteworthy successes for 2013:

  • Without Social Security, the overall poverty rate would have risen from 15.5 percent to 24.1 percent, trapping 26.9 million more people in poverty.
  • Without refundable, low-income tax credits, including the Earned Income Tax Credit (EITC) and the child tax credit, the poverty rate would have risen from 15.5 percent to 18.4 percent. These credits helped 8.8 million Americans avoid poverty
  • SNAP (formerly food stamps) lifted 4.8 million Americans out of poverty, and school lunch programs kept 1.4 million children out of poverty.
  • Under the SPM, the poverty rate for Americans living in deep poverty (less than half of the poverty threshold) was 5.2 percent while the official poverty rate estimated 6.5 percent of Americans lived in deep poverty. Significantly, the percentage of African Americans in deep poverty is reduced from 12.3 percent (official poverty rate) to 7.7 percent (SPM)

Even with all the support these programs provide to Americans, the SPM is still 15.5 percent, a percentage point higher than the official poverty rate. Since its first release in 2011, the SPM has been consistently higher than the official poverty rate because, just as the SPM accounts for more financial supports than the official poverty rate, it also includes more essential costs in its analysis. Americans over 65 exemplify this discrepancy: even though 38 percent of seniors relied on Social Security to keep them out of poverty in 2013, the SPM for this group was 14.6 percent compared to the official poverty rate of 9.5 percent. In other words, if social security did not exist the poverty rate for seniors would have been 52.6 percent, largely due to the high medical out-of-pocket expenses many older Americans face.

So while the SPM highlights the importance of non-cash benefits and tax credits in reducing poverty and enhances our understanding of demographic trends, it also acknowledges necessary expenses for critical goods and services that the official poverty rate ignores. Under any measure, poverty remains a large and complex problem. The 48.7 million Americans still in poverty, and those hovering above it, deserve the most comprehensive set of solutions necessary to reduce poverty.

The author thanks MacKenzie Speer, Economic Justice and Opportunity VISTA, for her extensive work on this blog.

 

 

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