Social Security Keeps 22 Million Americans Out Of Poverty: A State-By-State Analysis

PDF of this report (5pp.)

By Paul N. Van de Water, Arloc Sherman, and Kathy Ruffing[1]

October 25, 2013

Social Security benefits play a vital role in reducing poverty.  Without Social Security, 22.2 million more Americans would be poor, according to the latest available Census data (for 2012).  Although most of those whom Social Security keeps out of poverty are elderly, nearly a third are under age 65, including 1 million children.  (See Table 1.)  Depending on their design, reductions in Social Security benefits could significantly increase poverty, particularly among the elderly.

Social Security Lifts 15 Million Elderly Americans Out of Poverty

Almost 90 percent of people aged 65 and older receive some of their family income from Social Security.[2]   Without Social Security benefits, 44.4 percent of elderly Americans would have incomes below the official poverty line, all else being equal; with Social Security benefits, only 9.1 percent do.  These benefits lift 15.3 million elderly Americans — including 9.0 million women — above the poverty line.

Social Security reduces elderly poverty dramatically in every state in the nation, as Figure 1 and Table 2 show.  Without Social Security, the poverty rate for those aged 65 and over would meet or exceed 40 percent in 39 states; with Social Security, it is less than 10 percent in the large majority of states.  Social Security lifts more than 1.2 million elderly people out of poverty in California and Florida, >nearly 900,000 in New York and Texas, almost 800,000 in Pennsylvania, and over half a million in Ohio, Illinois, Michigan, and North Carolina.

Table 1
Effect of Social Security on Poverty, 2012
Age Group Percent in Poverty Number Lifted Out Of Poverty By Social Security
Excluding Social Security Including Social Security
Children Under 18 23.2 21.8 1,021,000
Adults Ages 18-64 16.7 13.7 5,886,000
Elderly Age 65 And Over 44.4 9.1 15,281,000
Total, All Ages 22.1 15.0 22,188,000
Addendum:
Women Age 65 And Over 48.6 11.0 9,005,000
Source: Center on Budget and Policy Priorities based on data from the U.S. Census Bureau, Current Population Survey, March 2013.

 

Social Security Lifts 1 Million Children Out of Poverty

Social Security is important for children and their families as well as for the elderly.  About 6 million children under age 18 (8 percent of all U.S. children) lived in families that received income from Social Security in 2012, according to Census data.  This figure includes children who received their own benefits as dependents of retired, disabled, or deceased workers, as well as those who lived with parents or relatives who received Social Security.  In all, Social Security lifts 1 million children out of poverty.

Social Security records show that 3.3 million children under age 18 qualified for Social Security payments themselves in December 2012.  (See Table 3.)  Of these, 1.2 million were the survivor of a deceased worker.  Another 1.7 million received payments because their parent had a severe disability.  And 322,000 children under 18 received payments because their parent or guardian was retired.[3]

Technical Note

This analysis uses the Census Bureau’s official definition of poverty.  In determining poverty status, the Census Bureau compares a family’s cash income before taxes with poverty thresholds that vary by the size and age of the family.  The poverty thresholds in 2012 were $11,011 for an elderly individual, $13,878 for an elderly couple, and $23,492 for an average family of four.[4]   To calculate the anti-poverty effects of Social Security, we determined each family’s poverty status twice — first excluding and then including the family’s Social Security benefits.

Our analysis considers the non-institutionalized population using data from the Census Bureau’s Current Population Survey (CPS), the survey that is used to produce official poverty estimates.[5]   Each March the CPS collects information on personal income, health coverage, and other social and economic characteristics for the previous year.  The national estimates reported here are for 2012.  The state-by-state estimates are based on a three-year average (for 2010, 2011, and 2012) to improve their reliability.

One critic of estimates such as these argues that they “do nothing to answer the question of what would have happened if Social Security had not existed.”[6]   Indeed, this analysis does not take into account other changes that would occur in the absence of Social Security.  If Social Security did not exist, many elderly individuals likely would have saved somewhat more and worked somewhat longer, and many might live with their adult children rather than in their own households.  Other studies confirm, however, that Social Security has made a very large contribution to reducing poverty and that cutting Social Security benefits could substantially increase poverty among the elderly.[7]

Table 2
Effect of Social Security on Poverty Among the Elderly by State, 2010-2012
  Percent in Poverty Number Lifted Out of Poverty by Social Security
Excluding Social Security Including Social Security
Alabama  47.7 7.8 255,000
Alaska 35.1 9.2 16,000
Arizona 42.4 8.5 295,000
Arkansas 55.1 11.9 194,000
California 38.1 8.8 1,284,000
  Colorado 39.6 7.6 191,000
Connecticut 35.9 6.3 145,000
Delaware 41.6 7.5 47,000
District of Columbia 34.7 16.2 14,000
Florida  46.4 9.7 1,223,000
Georgia  46.9 9.4 383,000
Hawaii 33.8 8.5 51,000
Idaho 44.2 7.4 80,000
  Illinois 43.1 8.3 585,000
Indiana  46.5 8.0 347,000
  Iowa  48.5 5.9 168,000
Kansas 40.0 6.0 135,000
Kentucky 53.2 9.0 250,000
Louisiana 49.9 14.3 208,000
Maine 44.4 8.1 76,000
Maryland 35.5 7.8 203,000
Massachusetts  42.0 7.8 328,000
Michigan 46.3 7.6 550,000
Minnesota 44.7 7.4 264,000
Mississippi 53.5 11.8 165,000
Missouri 46.6 6.5 340,000
Montana  44.8 8.2 62,000
Nebraska 38.9 7.0 76,000
Nevada 42.2 9.1 114,000
New Hampshire  44.2 6.4 68,000
New Jersey  37.9 7.4 365,000
  New Mexico  42.0 9.7 96,000
New York 44.5 11.3 886,000
North Carolina 52.6 10.4 559,000
North Dakota 42.0 8.6 28,000
Ohio 46.5 7.8 638,000
Oklahoma 42.0 8.3 174,000
Oregon 41.6 5.7 194,000
Pennsylvania 48.4 8.9 773,000
Rhode Island 46.1 8.3 60,000
South Carolina 51.5 12.5 254,000
South Dakota 44.5 8.0 41,000
Tennessee 54.8 12.1 372,000
Texas 43.1 10.7 871,000
Utah 42.6 7.1 100,000
Vermont 46.3 7.7 36,000
Virginia 36.6 10.4 262,000
Washington 38.2 6.2 281,000
West Virginia 51.9 9.9 110,000
Wisconsin 41.8 5.2 296,000
Wyoming 38.6 6.0 22,000
Source: Center on Budget and Policy Priorities based on data from the U.S. Census Bureau, Current Population Survey, March 2011-2013.
Table 3
Social Security Beneficiaries by State and Age, December 2012
  Total Age 65 and Older Age 18-64 Children Under Age 18
Alabama 1,060,625 647,359 332,545 80,721
Alaska 84,875 55,585 21,595 7,695
Arizona 1,141,080 820,651 258,497 61,932
Arkansas 657,754 410,353 196,912 50,489
California 5,280,104 3,839,895 1,165,435 274,774
Colorado 748,595 540,025 169,479 39,091
Connecticut 640,252 484,396 125,810 30,046
Delaware 182,065 129,769 43,021 9,275
District of Columbia 77,277 53,597 19,198 4,482
Florida 4,004,631 2,939,422 871,059 194,150
Georgia 1,582,070 1,031,445 440,813 109,812
Hawaii 240,456 184,086 44,688 11,682
Idaho 288,285 201,302 70,527 16,456
Illinois 2,102,955 1,513,697 477,449 111,809
Indiana 1,244,610 844,162 325,071 75,377
Iowa 600,699 445,043 129,908 25,748
Kansas 507,529 362,172 116,721 28,636
Kentucky 930,153 564,601 297,145 68,407
Louisiana 826,385 524,420 236,222 65,743
Maine 314,392 211,908 84,857 17,627
Maryland 895,225 649,913 195,624 49,688
Massachusetts 1,185,319 841,846 277,068 66,405
Michigan 2,061,941 1,373,208 566,014 122,719
Minnesota 927,488 678,095 206,853 42,540
Mississippi 621,969 375,448 193,952 52,569
Missouri 1,212,560 812,991 325,490 74,079
Montana 203,292 145,328 47,718 10,246
Nebraska 317,489 235,858 66,337 15,294
Nevada 442,298 316,633 101,439 24,226
New Hampshire 271,189 186,216 67,947 17,026
New Jersey 1,525,539 1,132,456 315,809 77,274
New Mexico 382,365 258,328 98,692 25,345
New York 3,394,475 2,411,519 800,013 182,943
North Carolina 1,859,584 1,245,926 505,134 108,524
North Dakota 122,104 92,648 24,265 5,191
Ohio 2,204,313 1,537,362 549,935 117,016
Oklahoma 730,060 491,540 190,131 48,389
Oregon 757,029 544,547 180,178 32,304
Pennsylvania 2,660,380 1,894,316 630,363 135,701
Rhode Island 210,975 147,745 51,847 11,383
South Carolina 986,228 650,230 275,287 60,711
South Dakota 159,453 119,385 32,829 7,239
Tennessee 1,322,096 859,269 376,536 86,291
Texas 3,657,907 2,505,687 900,555 251,665
Utah 346,961 244,907 77,007 25,047
Vermont 135,597 94,295 34,067 7,235
Virginia 1,353,738 949,743 327,999 75,996
Washington 1,164,430 832,234 276,720 55,476
West Virginia 455,850 285,570 141,441 28,839
Wisconsin 1,110,160 789,938 266,819 53,403
Wyoming 96,294 69,518 21,658 5,118
Totala. 56,758,185 39,613,754 13,885,983 3,258,448
Source: Social Security Administration, Annual Statistical Supplement, 2013, Table 5.J5.  a. Includes outlying areas and foreign countries (not shown).

End notes:

[1] The authors wish to thank William Chen for his assistance in preparing this paper.

[2] Policy Basics: Top Ten Facts About Social Security, Center on Budget and Policy Priorities, November 6, 2012, http://www.cbpp.org/cms/index.cfm?fa=view&id=3261.

[3] Social Security Administration, Annual Statistical Supplement to the Social Security Bulletin, 2013, Table 5.J10.

[4] Poverty thresholds depend on the size of the family and the ages of its members; this figure is a weighted average for families of four.  For more information, see http://www.census.gov/hhes/www/poverty/data/threshld/index.html.

[5] U.S. Census Bureau, Income, Poverty, and Health Insurance Coverage in the United States: 2012, Series P60-245, September 2013.

[6] Charles P. Blahous III, Reforming Social Security for Ourselves and Our Posterity, Westport, CT: Praeger, 2000, p. 13.

[7] Eugene Smolensky, Sheldon Danziger, and Peter Gottschalk, The Declining Significance of Age in the United States: Trends in the Well-Being of Children and the Elderly Since 1939, in John L. Palmer, Timothy Smeeding, and Barbara Boyle Torrey, eds., The Vulnerable, Washington: Urban Institute, 1988; Gary V. Engelhardt and Jonathan Gruber, Social Security and the Evolution of Elderly Poverty, National Bureau of Economic Research Working Paper 10466, May 2004.

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