Government programs kept tens of millions out of poverty in 2018
**Correction: The SSI number in Figure B was corrected to 2,949,000 from 3,949,000.**
From 2017 to 2018, the official poverty rate fell by 0.5 percentage points, as household incomes rose modestly, albeit at a slower pace than the previous three years. This was the fourth year in a row that poverty declined, but the poverty rate remains half a percentage point higher than the low of 11.3% 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 deficiencies in the official rate. For one, it constructs a more comprehensive 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 as measured by the official measure. (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 2018, the SPM increased by 0.1 percentage points to 13.1%. Under the SPM, 42.5 million Americans were in poverty last year, compared with 38.1 million Americans under the “official” poverty measure.
Poverty rates, official and Supplemental Poverty Measure (SPM), all people and children, 2017 and 2018
|SPM (all people)||13.0%||13.1%|
|Official poverty (all people)||12.3%||11.8%|
|Official poverty (children)||17.5%||16.2%|
Source: EPI analysis of Current Population Survey Annual Social and Economic Supplement Historical Income Tables and Supplemental Poverty Measure Tables
The SPM data show a lower rate of child poverty than the official statistics, primarily as a result of the SPM’s inclusion of noncash income from government assistance programs. In 2018, the official child poverty rate was 16.2%—a decline of 1.3 percentage points from 2017. Using the SPM, the child poverty rate rose 0.3 percentage points to 14.5%, which is not significantly different than the 14.2% child poverty rate in 2017.
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 2018, it was responsible for keeping 27.3 million people, or 8.4% of all people in America, above the SPM poverty threshold. Refundable tax credits, such as the Earned Income Tax Credit and the Child Tax Credit, kept 7.9 million people, or 2.4% of people in America, 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 about 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, 2018
|Under 18 years old||18 to 64 years old||65 years old and older|
|Number of people in poverty||10,674,000||24,637,000||7,189,000||0|
|Refundable tax credits||4,157,000||3,612,000||101,000||0|
Notes: SSI refers to Supplemental Security Income, SNAP refers to Supplemental Nutrition Assistance Program, TANF refers to Temporary Assistance for Needy Families, WIC refers to the Special Supplemental Nutrition Program for Women, Infants, and Children, and LIHEAP refers to the Low Income Home Energy Assistance Program.
Source: EPI analysis of Liana Fox, The Supplemental Poverty Measure: 2018, U.S. Census Bureau report #P60-268, September 2019.
Government assistance programs were particularly important in keeping children out of poverty. As shown in Figure B, of the 7.9 million people that refundable tax credits lifted out of poverty, 4.2 million were children. Similarly, of the 3.9 million people that SNAP kept out of poverty, 1.3 million were children. Housing subsidies shielded over 900,000 children from poverty. Even Social Security—too-often thought of as strictly a program for older Americans—has a large impact on the welfare of children, lifting 1.5 million children 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 of the income distribution) suffered the largest average percentage income losses of any income group during the Great Recession. Under such circumstances, there can be little justification for weakening the programs upon which many of these households rely.
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